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Africa: Fast-Paced Mobile Growth Continues

AfricaFocus Bulletin
Nov 16, 2011 (111116)
(Reposted from sources cited below)

Editor's Note

"With over 620 million mobile connections as of September 2011, Africa has overtaken Latin America to become the second largest mobile market in the world, after Asia. Over the past 10 years, the number of mobile connections in Africa has grown an average of 30% per year and is forecast to reach 735 million by the end of 2012." - GSMA African Mobile Observatory

It is no longer news that mobile phone usage and applications in Africa have been growing rapidly. But a new report released this month from the GSM Association (GSMA), the operator-led trade association representing the global mobile industry, has fuller documentation, along with a prediction that the rapid pace of expansion is set to continue for some years to come. Although the figures quoted above overestimate the number of users, because of multiple connections by some users, the growth is still extraordinary. Its implications go far beyond the telecommunications sector, as Africa is also pioneering new mobile uses.

This AfricaFocus Bulletin contains the executive summary and brief excerpts from the full report. The full report, which also contains extensive tables and graphs not easily reproducible here, is available at: http://www.gsmworld.com / direct URL: http://tinyurl.com/cvvrewd

One interesting table that is included below, however, lists the top 25 countries in Africa by mobile connections, along with their percentage of the market. The top five are Nigeria, with 89 million connections; Egypt, with 81 million; South Africa, with 59 million; and Algeria and Morocco, with 37 million each. They are followed by Kenya, Sudan (including both North and South), Tanzania, Ghana, Cote d'Ivoire, Uganda, DR Congo, Tunisia, Ethiopia, Libya, Angola, Cameroon, Mali, Senegal, Zimbabwe, Benin, Mozambique, Burkina Faso, Zambia, and Madagascar.

For previous AfricaFocus Bulletins on information and communication technology issues, and links to other sources, visit http://www.africafocus.org/ictexp.php

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Several weeks ago I was interviewed about AfricaFocus on on Walter Turner's Africa Today program at KPFA in the California Bay Area. The interview ran on November 14, and is available for listening (streaming or download of audio file at http://www.kpfa.org/archive/id/75153

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African Mobile Observatory 2011

Driving Economic and Social Development through Mobile Services

November 2011

For further information please contact: info@gsm.org, GSMA London Office, T +44 (0) 20 7356 0600
http://www.gsmworld.com

Executive Summary

This is the first African edition in the GSMA Mobile Observatory series. This Observatory provides a comprehensive review of the African mobile communications industry. Included are the latest statistics and market developments, as a reference point for mobile industry participants, policy makers and other interested stakeholders. It covers the state of the industry, including the evolution of competition, innovation in new products, services and technologies and the industry's contribution to social and economic development in Africa.

The mobile industry in Africa is booming.

With over 620 million mobile connections as of September 2011, Africa has overtaken Latin America to become the second largest mobile market in the world, after Asia. Over the past 10 years, the number of mobile connections in Africa has grown an average of 30% per year and is forecast to reach 735 million by the end of 2012.

Fierce competition has driven down prices and increased penetration.

Price wars have been common across the continent as operators compete for market share with innovative revenue and pricing options - operators have reduced prices an average of 18% between 2010 and 2011, making mobile connectivity more broadly affordable to the masses. 96% of subscriptions are pre-paid with voice services currently dominating, however the uptake of data services is increasing rapidly. For example in Kenya data revenues, including SMS, have increased at a remarkable 67% CAGR over the last 4 years and now represent 26% of total revenues.

The Mobile Industry in Africa contributes US$56bn to the regional economy, equivalent to 3.5% of total GDP.

In particular, the mobile ecosystem is estimated to employ over 5 million Africans and is contributing to bringing mobile services to customers right across the continent.

However there remains huge untapped potential - 36% of Africans, within the 25 largest African mobile markets (A25), still have no access to mobile services. Projections indicate that raising the whole region to 100% mobile penetration (see figure 3), could add an additional $35 billion in aggregate GDP to the region, equivalent to a further 2% increase.

The mobile industry in Africa is an enabler of economic development far beyond its immediate domain.

Mobile operators have driven the emergence of a unique industry in innovative mobile services in Africa. Mobile Value-Added Services have been launched throughout the continent to enable and support agriculture, banking, education, healthcare and gender equality. In particular, the emergence of mobile money transfers and mobile banking puts Africa firmly at the forefront of the global Mobile Money industry. Beyond mobile services, the mobile industry is also contributing to rural electrical distribution with lower carbon emissions and facilitating the work of NGOs across the continent. Many African governments have prioritized ICT policy as a key driver for development.

Key issues for future growth

For the mobile industry to continue to serve as a catalyst for growth, sufficient spectrum is needed for the provision of mobile broadband services.

African countries have currently allocated considerably less spectrum to mobile services than developing countries in Europe, the Americas and Asia. Allocating the Digital Dividend spectrum to mobile services will enable the mobile industry to accelerate its efforts to bring connectivity and information to large swathes of rural Africa.

African governments are slowly shifting to more transparent ICT regulation, but limited spectrum availability remains a key barrier to sustaining long term growth. The GSMA supports a technology neutral approach to the use of all existing mobile bands; governments in Africa should allow deployment of mobile technologies that can technically coexist according to what are relevant internationally harmonised bands for their region. The GSMA encourages governments in the region to establish clear guidelines for spectrum planning, licensing, pricing and re-farming. African governments must clarify future spectrum availability of both the coverage bands (700, 800, and 900 MHz bands) and the capacity bands (1800, 2100, 2300, 2600, and 3500 MHz bands).

Regulation practices must continue to improve to ensure the effective long term development of the mobile sector.

64% of African countries remain in the bottom quartile of the World Economic Forum's political/regulatory index. GSMA research indicates that total tax intake of governments could be boosted, by reducing mobile specific taxes across Africa. Universal access has also been promoted by most African governments using taxation schemes, but there is limited transparency around the distribution of funds.

By working in partnership, mobile operators and African governments can continue the remarkable growth story of the African mobile industry. The benefits that mobile services have already brought to hundreds of millions of Africans can be extended to those who have yet to connect. By so doing, the African continent can continue to bring not only communication services, but also improved financial services, healthcare and education to its people and drive an increase in the economic wealth and development.


Excerpts from full report:

Geographic Scope of this Study

Africa comprises a vast region of 54 countries covering 30 million square kilometres and 1.0 billion people. Referring to Africa as one continent would be to overlook the intricacies and complexities of life within a huge diversity of peoples, languages and cultures within and across national boundaries. It would be impossible to cover all these countries in the detail and thoroughness that they deserve. Therefore within this report we consider the 25 countries which contain 91% of the continent's mobile connections. These markets (hereafter referred to as the A25) are extremely diverse economically, culturally, geographically and politically and are therefore a good representation of Africa as a whole.

Figure 1: Africa 25 and total mobile connections (2011 YTD)

Country                 Mobile subs                    Percentage of subs

Nigeria         89,343,017                              14%
Egypt           80,616,921                              13%
South Africa    59,474,500                              10%
Algeria         36,741,368                               6%
Morocco         36,522,899                               6%
Kenya           26,135,115                               4%
Sudan (inc.
South Sudan)    24,628,765                               4%
Tanzania        23,334,395                               4%
Ghana           20,049,412                               3%
Cote d'Ivoire   17,991,035                               3%
Uganda          14,754,199                               2%
DR Congo        14,098,685                               2%
Tunisia         12,254,728                               2%
Ethiopia        11,902,288                               2%
Libya           11,158,560                               2%
Angola          10,797,078                               2%
Cameroon        10,658,991                               2%
Mali            10,000,229                               2%
Senegal          9,686,372                               2%
Zimbabwe         8,281,749                               1%
Benin            7,996,577                               1%
Mozambique       7,750,845                               1%
Burkina Faso     6,740,148                               1%
Zambia           6,544,630                               1%
Madagascar       6,147,499                               1%
Others          56,190,285                               9%

Total          619,800,290                             100%

1. Introduction

The Mobile Observatory series includes reports on the large and mature European market, the extensive and dynamically evolving market of the AsiaPacific region and the fast growing Latin-American region. These reports underline the industry's commitment to transparency and to engaging with a wide set of stakeholders in planning its future direction.

This is the first African edition in the GSMA Mobile Observatory series. This Observatory provides a comprehensive review of the African mobile communications industry. Included are the latest statistics and market developments, as a reference point for mobile industry participants, policy makers and other interested stakeholders. It covers the state of the industry, including the evolution of competition, innovation in new products, services and technologies and the industry's contribution to social and economic development in Africa.

The report integrates data from a wide range of existing sources to provide a comprehensive picture of the African mobile industry. These include public sources such as the ITU, World Bank and research by National Regulatory Authorities as well as commercial providers such as Wireless Intelligence, Informa, Gartner, Buddecomm and IDC. Where appropriate, data from different sources has been combined to show more complete industry trends. The regular geographic scope of this study consists of the 54 countries of Africa -- both North Africa and sub-Saharan Africa. All references to 2011 YTD correspond to the first nine months of 2011. All references to African statistics refer to the largest 25 African countries by number of mobile connections unless stated otherwise. This report was commissioned by the GSMA and developed independently by A.T. Kearney.


3. Competitive landscape and consolidation

Key Messages

  • With over 620 million mobile connections as of September 2011, Africa has overtaken Latin America to become the second largest mobile market in the world, after Asia
  • Africa continues to be the fastest growing mobile market in the world
  • The African mobile market is highly competitive and has experienced significant price reductions over the period 2007-2011, with decreases of up to 60% in a matter of months in some markets

3.1. Market dynamics

In 2010, the total number of mobile connections in Africa surpassed both Western Europe and Eastern Europe for the first time. As of September 2011, with 620m connections, Africa has overtaken Latin America, making it the second largest mobile market in the world after Asia Pacific. From 2007-2011, the number of connections has more than doubled from 283m to 620m. This represents a staggering 22% CAGR over these four years and the growth is expected to continue at the fastest rate of all global regions over the next 4 years.

The significant growth in mobile subscribers in Africa has been driven by several key factors:

  • The opening of markets to the forces of globalisation and foreign direct investment
  • The introduction of low-cost handsets and the reduction of mobile usage prices, driving down the minimum cost of mobile ownership
  • Substantial economic development in the region, increasing the prosperity of citizens and hence an increasing affordability of communication services
  • The success of cost-effective pre-paid services (96% of African connections vs 82% in Latin America and 52% in Europe in 2011) allowing consumers to take control of their spending and gain access to flexible, low-cost voice and SMS services
  • The ambitious rollout of mobile network infrastructure by operators to expand geographic and population coverage combined with the lack of adequate fixed-line infrastructure and service

These factors have contributed to a growth in mobile population penetration across Africa from 2% in 2000 to more than 57% ten years later (see Figure 3). 2010 was a landmark year for Africa as mobile penetration passed 50% for the first time. Despite this impressive growth, these figures go to underline the further growth potential and necessary investment required to connect the remaining population. Whilst mobile connection growth is expected to slow to 11% CAGR from 2011 to 2015, in several markets such as Zimbabwe and Rwanda connections are still growing at 50% p.a. from a low existing customer base. By 2015, the total number of connections is estimated to reach 84% of the total African population.

...

Mobile networks are leading the expansion of broadband internet access across Africa, with broadband access today largely confined to a small minority of the more developed Africa countries. Poor infrastructure remains a key barrier to the expansion of broadband. However, the roll-out of 3G services has provided a viable alternative to fixed broadband, in the form of internet enabled handsets and wireless modems/dongles. Whilst penetration rates are still low, to date growth in mobile broadband has been exponential and the explosive growth is expected through to at least 2015. The number of connections has increased from c. 0.2m in 2006 to c. 15m by the end of 2010 and is expected to hit over 230m by 2015 (see Figure 9). Such is the growth predicted, that Cisco estimates that by 2015, sub-Saharan Africa will have more people with mobile access than with access to electricity at home.


6. Corporate sustainability: The environmental and social impact

Key Messages

  • Mobile operators have driven the emergence of a unique industry in innovative mobile services in Africa enabling and promoting agriculture, banking, education, health and gender equality
  • 86% of NGO employees use mobile phones which are considered an essential tool
  • Mobile phones can now be used as a mass communication system throughout Africa in the event of emergencies and environmental disasters
  • The mobile sector now plays a key role in promoting rural access to electricity and sustainable energy

6.1. The social impact of the mobile industry

By 2015, it is predicted that sub-Saharan Africa will have more people with mobile network access than have electricity at home. As mobile service penetration across Africa begins to exceed that of other core infrastructure, the mobile industry is beginning to have an increasingly significant impact on society. As well as improving communication, the mobile phone is facilitating improvements in agriculture, banking, education, healthcare and the empowerment of women.

m-Agri

The International Food Policy Research Institute estimates that 65% of the population in sub-Saharan Africa relies on subsistence farming. Crop yields can be highly variable which can severely strain farmers' ability to feed themselves and their families. One of the key problems is that poor farmers lack access to vital agricultural information, training and advice on topics such as pests, diseases, weather, fertilizers and proven farming practices. Mobile connectivity offers a new opportunity to bridge this gap and to connect the farmer with up-to-date agricultural knowledge.

In Kenya, where 70% of the population is employed in agriculture, the GSMA Development Fund established M-Kilimo, a dedicated helpline providing information and advice to small-hold farmers. Typically, the helpline experts dealt with four main topics of enquiry:

  • Agricultural tips and efficient farming practices
  • Questions on plant and animal diseases and treatment
  • Agriculture-specific weather forecasts
  • Market price information

Since the dialogue between the farmer and the helpline expert occurs in real time, most problems can be resolved during the call. However, complex queries sometimes need more time and M-Kilimo undertakes to try to resolve these more complicated issues within a 24hr period.

m-Banking

Mobile banking services have been widely publicized as revolutionizing access to financial services to low income groups. In Kenya in 2007, Safaricom's M-Pesa money transfer service was the first to launch. In the first 30 months of service, 8.5m Kenyans registered50 as M-Pesa users and US$3.7bn worth of transfers were made (approximately 10% of Kenyan GDP). M-Pesa allows users to deposit, transfer and withdraw cash via Safaricom's M-Pesa agents, of which there were 18,000 in April 2010, compared to 491 bank branches. These developments enable subscribers to transfer money to family members, make a payment for goods or services or simply save their money in a more secure form than cash. Money transfer services have since been launched by many other mobile operators in several other countries including: Ghana, Tanzania, Uganda, Nigeria and South Africa.

Since the original launch of M-Pesa, the mobile money industry has continued to develop in many African countries. Today, it has reached a level of sophistication not seen anywhere else in the world. In addition to transaction services, Africans are now able to use mobile banking to access savings accounts, agriculture insurance, pensions, health insurance, micro-finance loans and life insurance products. For example, Safaricom in partnership with The Equity Bank in Kenya provides customers with an M-KESHO account allowing them to save, buy insurance and arrange micro-finance loans all via mobile banking. Similarly, Tigo Ghana's "Life Care" service offers Life Insurance with monthly premiums as low as GHC1 (Euro 0.54).

Studies have shown that in addition to providing greater stability to low income groups, mobile banking often acts as an entry to more formal banking services. Mbiti and Weil show that the introduction of M-Pesa has led to a 58% increase in the number of Kenyans who have bank accounts. Therefore, not only do these innovative mobile services provide an immediate service to the poor, but they act as a catalyst to the on-going development in the wider economy.

In 2009, the GSMA launched the Mobile Money for the Unbanked (MMU) programme, aimed at accelerating the provision of money services to those living on less than $2 per day. Supported by a grant from the Bill & Melinda Gates Foundation, MMU has the goal of reaching 20 million people by 2012 and ultimately to make mobile money a mainstream business.

m-Learning

Education is widely regarded as the best long-term tool to improve the standards of living for the poor. M-learning initiatives facilitate education and learning in even the most remote locations, and provide a supplement to bricksand -mortar schools in areas where schools are sparse and access to education is limited. Low income groups' access to education is restricted by many factors including: the cost of education and expectations that children may undertake child employment, as well as language and social barriers.

M-learning offers a solution to several of these key challenges. It is inclusive and non-discriminatory, it can be accessed from wherever the user wishes to learn, can be tailored to individual learning needs and can progress at each users' own pace, while fitting around income generating activities. M-learning can also help to overcome the gender inequality in many developing countries, by providing women with a safe learning environment without leaving the household or community.

In addition to providing general education, m-learning is also providing valuable support to professionals in on-thejob training. Community Health Workers (CHW) in the UN's Millennium Villages in Uganda, Rwanda and Kenya have access to m-learning modules on their mobile phones. Information on reproductive health and care for new-borns are two of the subjects CHWs can download from a central database to their mobile phone. Mobile networks provide the privacy, quality of service and interoperability required to deliver this learning application, to improve the lives of the communities that the CHWs serve.

m-Health

Sub-Saharan Africa has the lowest average life expectancy of any region in the world at 52 years. In Lesotho, it is only 46 years. In this context, access to appropriate, quality healthcare remains a major challenge to improving the standard of living for Africa's population.

Mobile technology is emerging as an important tool to improve the delivery of healthcare across Africa and is currently being used in a number of areas:

  • Capturing and analysing data for disease surveillance
  • Providing remote diagnoses via telemedicine
  • Supporting community health workers in gathering and managing health information
  • Improving access to health education, information and resources through health hotlines
  • Coordinating drug and medical supply distribution

In Rwanda, MTN, Voxiva and the GSMA Development Fund have deployed a system to enable healthcare workers in the field to use mobile phones to collect data related to outbreak of contagious disease, numbers of patients, drug stocks etc. The use of mobile technology means that this information is available, and can be acted upon in real time, rather than the traditional paper-based systems which can cause errors, inefficiency, and delay.

In Ghana and Nigeria, systems have been deployed to allow users to check the authenticity of pharmaceuticals. Counterfeit drugs are a major issue in Africa and the scheme, endorsed by the West Africa Health Organization, is being promoted by a number of drug companies. GlaxoSmithKline is one of the recent pharmaceutical firms to sign up to the initiative; which enable users to send a code printed on the drug packet via SMS and receive a reply, either verifying the authenticity of the drugs or giving a warning that the product may be fake and providing a helpline number to call for advice.

m-Women

The GSMA Development Fund formed the mWomen programme after identifying a sizeable gender gap in mobile phone ownership in middle and lower income countries. Across Africa, women are on average 23% less likely to own a mobile phone than men, meaning that women are missing out on many of the social and economic benefits that mobile connectivity brings. A recent survey of female mobile phone users in lower and middle income countries showed that 93% of women say they felt safer and more connected to friends and family with a mobile phone, whereas 85% felt more independent. 41% of women reported an increase in earnings or professional opportunities due to owning a mobile phone, a figure which rises to 55% among female business owners.

In Liberia, MTN recognised that women in the market were underserved and only required regular contact with a small circle of family and friends. MTN developed new tariff plans for the "Her & Home" segment offering discounted calling during relevant times of day and preferential rates for a selected group of friends and family. The marketing of these services were also designed to appeal to the needs of women to encourage uptake.


The Authors

The GSM Association (GSMA) is the operator-led trade association representing the global mobile industry. The GSMA represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world's mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainment organisations. The GSMA is focused on innovating, incubating and creating new opportunities for its membership, all with the end goal of driving the growth of the mobile communications industry.

A.T. Kearney is a global management consulting firm that uses strategic insight, tailored solutions and a collaborative working style to help clients achieve sustainable results. Since 1926, we have been trusted advisors on CEO-agenda issues to the world's leading corporations across all major industries. A.T. Kearney's offices are located in 55 major business centres in 38 countries.

The firm's telecoms practice works with the senior management teams of fixed line, mobile, cable and satellite operators as well as vendors on their most important strategic and operational challenges.


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at africafocus@igc.org. Please write to this address to subscribe or unsubscribe to the bulletin, or to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see http://www.africafocus.org


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