The future of Africa is wireless

by david.nunes
Stephen NolanIssue:Africa and the Middle East II 2003
Article no.:9
Topic:The future of Africa is wireless
Author:Stephen Nolan
Title:Country Manager
Organisation:Motorola Southern Africa
PDF size:40KB

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Article abstract

Wireless communications have decreased the pressure on fixed-line operators to meet societal demands for access. In developing countries, mobile networks, which are faster and cheaper to build, have resulted in increased tele-density in rural and underserved areas. More than half of Africa’s telephone customers are mobile. In Africa, where most survive on less than $2 per day, users spend more than their European counterparts. Wireless communication is booming due to the informal economy, often underestimated in the first world.

Full Article

“Since the rollout of the first cellular mobile network in 1994, Africa has seen explosive growth in the use of cell phones. The cell phone has become an indispensable tool for communications, business and trade in Africa, not least because the fixed-line infrastructure is not well developed. Wireless communications have undoubtedly become the most effective means of universal access to telecommunications. This has decreased the pressure on fixed-line operators to meet societal demands for access. In developing countries where fixed-line access is traditionally concentrated in urban areas, mobile networks have made significant inroads in increasing coverage in rural and underdeveloped areas. This has resulted in increased teledensity in these locations. Not only are mobile networks easier and faster to build, but also mobile telecommunications permit pre-paid billing, which is better suited to low-income subscribers. For years, analysts have also touted wireless communications as a way for developing countries to leapfrog older, more traditional technologies such as fixed-line phones. The mobile sector has helped fuel growth in the telecommunications markets in sub-Saharan Africa over the last decade. On average, mobile customers make up more than 60% of the total number of telephone customers in Africa. The introduction of cheap, pre-paid calling plans has made mobile phones accessible to low-income Africans. Incredibly, for a continent where half the people survive on less than $2 per day, African mobile-phone users now spend more time and money on calls, according to the 2000 – 2002 Africa Technology Forum, than their counterparts in Europe. In Botswana, more than one person in eight has a mobile phone. In South Africa, there are more than 8 million mobiles, compared with just 5 million fixed-line phones. In war-torn Somalia, an IDRC study found that mobile phones are popular because they don’t depend on overhead wires that are vulnerable to looters hunting for copper. Wireless systems are now seen as one of the most important means of communication. With an increasing array of technologies able to work well with wireless, and considering the costs of laying cable, it is clear that the future of Africa is wireless. Smart wireless products that support communities – and community service programmes for health, education and entrepreneurship – are key to the development of Africa. For instance, cell phones are already being used by the health sector in South Africa with encouraging results. The use of cell phones for reporting diagnostic results of ‘tuberculosis control programmes’ in remote areas is being pilot tested. Cell phone technology has been used to create communication links to rural areas that circumvent the hurdles of poor or non-existent roads, lack of telephone and fax facilities in many clinics, and lack of control programmes. Similarly, there are broadband wireless access technologies that are ideal for fast deployment of Internet access. Using such a system, one base station on top of a roof can link up to 1,200 Internet users, at speeds of up to 10 megabits per second; moreover, it can be installed within weeks. The deployment of this wireless broadband Internet access would enable even small businesses in rural areas to compete in the global economy. This technology can also play a big role in providing broadband connectivity to schools, government offices, community centers and SMEs. Accordingly, it could give great impetus to economic and social development, in urban as well as rural areas. The above are examples of how the use of wireless communication can aid in the development of Africa At a recent GSM CEO forum Adrian Wood, the CEO of MTN Nigeria, indicated that the current population in Africa is estimated at 924 million people, with approximately 45 million of these people subscribers on GSM networks – making it a penetration rate of 5%. In his address, Wood indicated that this figure should double and that the industry is working towards reaching the 100 million-subscriber mark. What needs to be done? · Government legislative and regulatory issues Among the greatest obstacles facing the implementation and rollout of wireless communication solutions in many African countries, especially for high-speed broadband Internet access, are restrictive telecommunications legislation and regulations. Exclusive rights given to operators often prevent entry into the market of new broadband operators. At times, these rules prevent even the private use of broadband technologies. However, there is a growing awareness within the governments and regulatory agencies that the sooner telecommunications can be freed from these unnecessary and obstructive restrictions, the sooner true competition will become a driver for consumer satisfaction and socio-economic development. · Costs The argument most commonly raised in discussions about wireless systems and communications is cost. Admittedly the initial cost of deployment is higher for wireless than for fixed-line systems, however, the long-term benefits present a cost effective alternative. Wireless systems, particularly the cellular networks can immediately take advantage of advances in technology. Other points to consider are that GSM networks are more flexible and allow for a faster roll-out. These systems are also less susceptible to theft and vandalism and more cost effective to roll-out in rural or low density areas. How do we plan to get there? The co-operation between government and the private sector, through initiatives such as the New Partnership for Africa’s Development (NEPAD) are crucial to unleash the vast economical potential of the continent. Technology must be at the forefront of this change. According to NEPAD, the integration of technology constitutes one of the six sectoral priorities it has identified as crucial to eradicating poverty in Africa and placing Africa’s countries on a path of sustainable growth and development. Technology can have a positive effect on achieving social and economic development goals as well as play a key role in national development strategies. The real benefits come not just from the availability of technology, but also from its application to create powerful social and economic networks. The principal drivers for the development of wireless telecommunications markets have been, and will continue to be, increased competition and investment in infrastructure and technology, as well as political stability and economic development. Other more tangible, and possibly more immediate solutions include: – Making the acquisition and usage of cell phones more affordable – Stimulating increased competition to meet subscribers’ demands for the service – Encouraging investment through competitive, reasonably assured, return on investment offerings Investment in wireless systems in Africa remains a viable option. The demand for services is still great, and the amount people spend on communications from their income, is significantly higher than that in the developed world. It would seem, therefore, that GDP per capita alone is certainly not an indicator of how much wealth exists in a country. Developing markets, including Africa and even South Africa, are no longer an exciting investment novelty, but a critical investment for companies that want to compete globally. From a return on investment perspective, a key criterion for investing in Africa is that projects must exceed certain hurdle rates and/or internal rates of return, relative to the risk profile of the country. However, these returns are achieved over the lifespan of a project. According to BMI-Techknowledge, it normally takes three to five years to turn a profit from operations in this market. MTN in Uganda for instance, turned a profit within three years of starting operations; they consider this to be a very good timeframe. In spite of economic downturns, wireless communication is booming throughout Africa on the strength of the informal economy, which is often underestimated by first world economies. Despite political and financial challenges, Africa is ultimately a rewarding market. The success of companies like MTN and Vodacom have gone a long way towards proving that wireless technology is not an elitist luxury, but has real and immediate benefits to citizens in developing markets. The successful growth of the wireless market will position Africa on par with western countries in terms of the world competitiveness report and encouraging foreign direct investment.” Conclusion There is no doubt that the future of Africa is wireless. It will be the catapult that Africa needs to change it from the developing region we know today to a first world economy. This will only happen when all parties – government, operators and the private sector – work together to ensure that the benefits of new wireless technologies can bring are adapted and adopted to benefit health, education and entrepreneurship. It is up to us to use the technology appropriately as a powerful tool to improve the quality of life in Africa.

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