Africa – an unwired legacy

by david.nunes
Mark_WilsonIssue:Africa and the Middle East 2009
Article no.:9
Topic:Africa – an unwired legacy
Author:Mark Wilson
Title:Senior Vice President, MEA and India
PDF size:179KB

About author

Mark Wilson is the Senior Vice President MEA and India at Fujitsu. Prior to his current position Mr Wilson served first as Financial Director of Fujitsu Siemens Computers and then as its Managing Director. Mr Wilson began his career as a costing clerk and rapidly progressed through the ranks to become the regional accountant for a large international shipping concern, but he moved to Siemens Nixdorf to gain International experience and exposure. Mark Wilson studied Management Accounting at The University of the Witwatersrand, South Africa.

Article abstract

The relatively low cost of wireless communications have made them a viable business proposition for Africa’s telecom operators in regions where fixed infrastructure is prohibitively costly. Wireless telecommunications are changing Africa; they are changing local economies, regional economies, helping raise the standard of living. Wireless is at the heart of a social revolution based upon better earnings and better access to education, healthcare, government services and, importantly, mobile banking services for the common citizen- in even the most remote regions.

Full Article

Wired telecommunications had an extremely limited penetration rate in Africa. Wired telecommunications are a prohibitively expensive technology, so making a business case for infrastructure investment has been difficult. The African market, overall, has limited disposable income to spend on telecommunications. In addition, the market is widely dispersed and there is little technological infrastructure available to expand telecommunications systems. The vast distances between settlements – many informal – and the general lack of access to basic infrastructure such as electricity and water, compounds the problem by pushing the need for information and telecommunication infrastructure further down the populace’s hierarchy of needs. Against this backdrop, telecommunications companies were loathe to even consider investing in Africa, fearing they would not be able to generate a return on investment. This lack of telecommunications infrastructure left Africa out in the cold, particularly from a business perspective. Pockets of infrastructure investment occurred, specifically in agricultural or mineral- rich areas where multinational corporations saw the opportunity to extract a profit and required the communications network to communicate with external offices and markets. In addition, in some of the wealthier countries such as South Africa, the state invested heavily in telecommunications and established a sophisticated infrastructure. Some two decades ago, Africa was far behind first world markets in terms of information and telecommunication infrastructure. There was a rapid expansion in wireless and cellular telecommunications but, at that time, the ICT gap was just too large for African states to bridge. Key ICT sector players were generating substantial profits in first-world markets so, initially, they ignored emerging markets. The potential of emerging markets was not understood. The wireless revolution The advent of cellular telephone technology, GSM technology in particular, in Africa had, and is continuing to have, a profound effect on the overall connectivity of the continent. The rapid and universal acceptance of cellular telephony resulted in exponential market growth. Demand far outstripped expectations and acceptance of the new technology was instantaneous. The pre-conceived notion that sophistication of cellular technology would make it inaccessible to the average user was soon proved to be unfounded – there are many amusing anecdotes regarding cellular telephones being owned and used in the most unlikely places by the most unlikely individuals. Wireless telecommunication has been Africa’s knight in shining armour, and the African market immediately, gratefully, recognised its gift of a low cost/high quality alternative to wired telecommunication. The penetration of wireless telecommunication in the African market brings Sun Tzu’s observation to mind: “Armies march fastest through territory where enemy is not.” The African market, was ready for expansion and exposure to the ‘outside’ world, but needed a conduit through which to communicate. The opportunities brought about by wireless communications have increased the access to global markets. In addition, they have enhanced the ability of individuals and businesses to build relationships with institutions and with one another. Wireless has given rise to innovative business solutions that address African-specific requirements; it has created new business opportunities and given expression to a hitherto untapped entrepreneurial spirit. Africa, a relatively untapped market, is increasingly adopting wireless communications; this provides unique opportunities as Africa’s appetite for more sophisticated modern technology has grown apace. In practice, we see a growing demand for the latest technologies. The learning curve is steeper, but shorter, in the African market and the adoption of new technology is rapid since there are very few legacy systems in place to hamper the process. This has an impact on all aspects of business. One trend that we have observed in the African market – the demand for mobility products – has been an eye-opener. There is a strong call for mobility devices, particularly those with built-in UMTS (3G) connectivity Connectivity and competitiveness An independent survey conducted in South Africa by World Wide Worx (SME Survey 2007, found that there is a clear correlation between the use of technology and competitiveness. Wireless communications have opened up the African continent to compete in previously inaccessible markets. Arthur Goldstuck, principal researcher for the SME Survey said, “Entrepreneurs who take advantage of high speed Internet connectivity, mobile solutions including WiFi, multifunction devices and the services of specialist software and hardware companies tend to be more competitive”. Connectivity is the key to doing business and the research found there to be a direct relationship between higher connectivity speeds and competitiveness. “Technology is a real business enabler,” says Goldstuck. “Today, companies are far savvier about technology and constantly seek to optimize their business efficiency through harnessing the opportunities that technology brings them. The business world has reached a level of IT-maturity with IT playing a core role in enabling the company to deliver on its strategy.” Connectivity and technology It is all well and good to identify technology as the business driver, but one must also acknowledge that opportunities are limited without connectivity. Africa’s constantly increasing connectivity, spurred on by wireless innovation, has created opportunities for exposure to the global marketplace. Nevertheless, technology and connectivity are not only connecting Africa with the world, internally, they are opening the doors wide to sources of information and enhancing education and development. There are several initiatives to increase the use of modern technology by educational institutions. Leading IT vendors have donated a number of e-learning centres to schools. Lack of access to important sources of information no longer limits students; they can now can access these sources over the Internet. With the knowledge sharing this makes possible and improved educational standards comes greater social development and better social services. It is true that Africa has the world’s highest rate of HIV-infection; however, better education will improve awareness and facilitate better prevention of this disease. Wireless connectivity is also making inroads in the arena of government and government services. Healthcare services are benefitting from the ability to gather data regarding individual patient records. Furthermore, they are better equipped to manage disease outbreaks in underserved areas and to develop data sets for better long-term management. Yet another area where Africa is benefitting from increased connectivity and mobility is the arena of mobile banking. Mobile banking frees the business and individual from rigid, often inconvenient, banking hours. It also ensures accessibility to funds and banking services on a 24/7 basis. One of the key benefits of mobile banking is that as sophistication levels increase, so do requirements for downstream services. Mobile banking, is an ideal way to build local markets, because it provides secure access to money and secure transaction services, including for the ‘unbanked’ – those without bank accounts or credit cards. Wireless technology is enabling Africa to bypass the need for wired telephony – with its prohibitive infrastructure costs – and step right into the era of modern technology. It has also shrunk the distances in this vast continent by increased the levels of communication, both internally and externally. In the future, wireless technology will be seen as the innovation that changed perceptions of Africa from a third world environment to an emerging economy.

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