|Issue:||Africa and the Middle East 2007|
|Topic:||Connecting Africa – the way it should be|
Alan Knott-Craig is the CEO of the Vodacom Group. Mr Knott-Craig serves as a Commissioner on the Presidential National Commission on Information Society & Development for the Information and Communications Technology (ICT) industry. He joined the SA Posts and Telecommunications Corporation, later known as Telkom, in 1971 and in 1992 became Senior General Manager of Mobile Communications before joining Vodacom as its founding CEO in 1993. Mr Knott-Craig received a number of industry awards, including the Data Communications Personality of the Year award from the Computer Society of South Africa in 1988, the Telkom Managing Directorís Award in Recognition of Exceptional Achievement and the Computer Society of South Africaís Computer Personality of the Year award. Mr Knott-Craig was inducted as one of only eight Gold members worldwide of the GSM Associationís 2001 inaugural Roll of Honour for the role he played in making mobile communications accessible to Africans. Mr Knott-Craig graduated cum laude with a BSc honours degree in electrical engineering at the University of Cape Town and Master of Business Leadership (MBL) degree at Unisa Graduate School of Business Leadership (SBL). In 2006 he received an honorary doctorate from the University of South Africa.
Africa has 12 per cent of the worldís population but only two per cent of its phones. The rapid growth of mobile telephony, however, is bringing both voice and data connectivity to the masses. Mobile phones are no longer a luxury in Africa, ëbut a commodity it cannot do withoutí. Selling airtime has become good business for bars, shops and even hair salons doubling as mobile phone voucher outlets. Mobile connectivity is driving an economic revolution in Africa.
A few years ago, when we celebrated the tenth anniversary of the mobile telephone industry in South Africa, our former president, Nelson Mandela, made some comments that have in many ways been the guiding light of the industry in Africa. Madiba, the clan name that we use fondly for Mandela, spoke about the human cost of inadequate telephones: ìIn 1993 there were three million telephones in South Africa, of which only one per cent were owned by black people. Behind that statistic are the thousands of stories of people who died when a telephone call to a doctor could have saved them, husbands in distant cities who couldnít phone home or schools in far-flung rural areas crippled by lack of communication.î This is the human face of low telephone density in Africa, although the situation in South Africa was unique, with telephones, water, electricity and roads deliberately withheld under apartheid. Madiba said: ìThe social fabric of our people was torn apart,î but then added happily, ìToday, wherever I go, I see people talking. I hear phones ringing in the streets of Soweto. I even see people talking on their mobile phones in my hometown of Qunu, a rural village that in the past only had a few public telephones. There are millions of South Africans in every corner of the country talking on mobile phones. They are ordinary people calling their loved ones, helping people in emergencies and doing businessî. ìAnd that is how it should be.î1 Indeed. It is, after all, a basic right for all people to have access to communications. Continent of potential Africa still falls woefully short. By the end of January 2005 there were 82 million GSM mobile phone users in Africa, a penetration of only 9.25 per cent of the population. In 2005, Africa – with 12 per cent of the worldís population – had only two per cent of global telephones and less than one per cent of the population had Internet access2. Yet within this inadequacy, we can highlight a positive story of dynamic change, ingenuity and one of the last markets in the world with the potential for massive organic growth. Increasingly, GSM cellular networks are not a luxury Africa cannot afford, but a commodity that it cannot do without. Most African fixed-line networks have deteriorated beyond repair and if the continent is to catch up with the rest of the world, it has to place its faith in wireless communication. There is no doubt that GSM mobile telephone networks have made the biggest strides towards helping to democratise telephones in Africa. Outside South Africa, GSM mobile phone networks in Tanzania, the Democratic Republic of Congo, DRC, Lesotho and Mozambique, now serve well over seven million customers. With the exception of South Africa, the unreliability and sometimes near absent fixed-line infrastructure means that, for at least a decade to come, the network will make extensive use of satellite communications as the quickest and cheapest way of building its backbone in Africa. The power to change society GSM technology has had a dramatic effect on the way society operates in Africa. The DRC is an area that most would shy away from. War, disease and death have gripped the country for decades and access to even the barest necessities has remained elusive for millions. Before our network rollout started, there were only 7,000 landlines for 60 million Congolese. Investing in a country gripped by civil war would be considered high risk by most, yet it is a strategy that has paid off. By the end of the 2007 financial year we had provided coverage in 238 towns, giving millions of people meaningful access to telephones for the first time in their lives. In Tanzania, the mobile networks offer the countryís first reliable telephone service, something the countryís older fixed-line operator has long battled to do. All over Africa, selling airtime has produced a thriving industry with everyone wanting a share of the booming sales. Selling airtime vouchers has become a lucrative extra income for bars, shops and even hair salons doubling as mobile phone voucher outlets. In Mozambique, the mobile phone networks have created the first reliable communications link between rural and urban areas, which has had a big positive impact on society. Communication has boosted the fight against diseases like HIV/Aids and Malaria and has helped to develop communities. Internet and email: the next wave GSM network operators in Africa are now in the ideal position to democratise Internet and email access in the same way as telephones. All over the continent mobile operators are meeting a growing demand to become more than a provider of telecommunications. In addition to providing voice services, mobile operators are increasingly becoming providers of technology: data transfer, Internet and email access, entertainment and information platforms and video communication. In South Africa, more than 98 per cent of the population live and work within a mobile networkís footprint. The demand for 3G in South Africa has grown as fast as operators can supply the service, which even offers mobile TV and video SMS on 3G networks. We have marketed 3G with a free data card and a free laptop if customers sign up for a three-year contract. This kind of incentive marketing points the way to growing the Internet and e-mail market for millions of people in Africa. At the same time, operators have made substantial investments in building the infrastructure to make this possible. The cumulative capital expenditure in our non-South Africa operations, for example, is just short of a billion US dollars (R6.5 billion) and, in the past financial year alone, our capital expenditure additions in these operations totalled US$225 million3 (R1.6 billion). This investment includes building high-speed data networks in most of these countries. More people in Africa have mobile phones than computers, and mobile devices getting more and more computer-like accelerates this. You can get your email, get to the Internet – for many people thereís no need to get a computer. In the DRC, Internet Service Providers complement the telecommunications offering to the corporate business market. There is a GPRS network in the DRC, Mozambique and in Tanzania, which has a core data network for 3G/HSDPA, as well as GPRS/EDGE and WiMax product offerings. In Mozambique, there is a free email service for contract customers. A taxing obstacle However, one of the biggest obstacles to higher teledensity in Africa is a shortsighted approach to taxation. Although most African countries have liberalised the telecommunications industry, allowing private players to partner governments in developing their telecommunications capacity, cellular telephony is one of the most taxed industries on the continent. The challenge is to persuade governments to shift their focus from the short-term benefits of taxation to the long-term and more lucrative benefits of boosting economic growth through telephone penetration. High taxes reduce return on investment, limiting investorsí interest in capital-intensive network expansion. When thereís no network growth, telephone penetration doesnít increase and prices remain high. Government taxation policies in Africa have often been haphazard. In one country, network investment was encouraged by removing import duties on equipment, but they then slapped a 25 per cent duty on the import of handsets. A climate that nurtures economic growth encourages a healthy cycle of investment, network expansion, higher telephone penetration and affordable service. This is the cycle that can help Africa to bridge the digital divide and achieve sustainable economic growth. The ingenious continent Finally, Africaís most powerful advantage has nothing to do with investment, policy or technology. It is the ingeniousness of Africans themselves that will eventually allow the continent to hurtle over the digital divide. Wherever we do business and the more challenging and difficult the environment is, the more I have been awed and impressed by the ingenuity of people. A picture taken in the Democratic Republic of Congo tells this story. The picture shows a tall tree in an open patch of forest surrounded by a wall of green trees. High up in the tree, probably about eight metres up, a man had made a ramshackle tree house consisting of nothing more than a platform built from pieces of wood of varying lengths. A rather frail looking ladder is secured to the tree with horizontal lengths of wood. At the top of this tree the man receives a clear cellular signal well above the impenetrable jungle foliage. In his tree house he runs a flourishing business allowing his customers to make phone calls. At the base of this tree in the middle of nowhere he sells airtime to his customers who have mobile phones. Enabled by the cellular infrastructure, this man has used his incredible ingenuity to leapfrog single-handedly the digital divide. In an instant, he became a participant in the formal economy. Now combine this ingenuity with cutting-edge technology and the worldís best advances in quick, easy and cheaper communications and you have a winning formula to connect millions of Africans via mobile telephones, Internet and email. To paraphrase Nelson Mandela: ìAnd that is how it should be.î