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How Africa will connect to the digital economy

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BYRON CLATTERBUCK, CEO at SEACOM, says there are two major focuses for telecoms players for the next few years: improving links to landlocked countries that don’t have access to international bandwidth, and facilitating the hosting and creation of content.

Since 2009, the African telecoms industry has come a long way in connecting people and businesses to reliable, affordable and fast Internet services. The new submarine cables that started to land off the continent’s east and west coasts from 2009 onwards brought with them more affordable and plentiful international bandwidth. They now circle the continent, offering a reliable and resilient ring of connectivity at faster and faster speeds.

Meanwhile, telecoms players have also invested in connecting metropolitan areas in most major economies with fibre as well as in building national and regional fibre backbones to connect towns and cities to the Internet. We’re also seeing the industry make investments in more fibre to the home and business as well as LTE/4G in many of the larger cities. This offers telecoms users seamless and fast connectivity, as well as a more consistent quality of service.

The effect on many African economies and people has been nothing short of transformative. In many countries, connectivity costs have fallen by a factor of ten and the quality of the Internet experience has dramatically improved for people across the continent. The result is that organisations and consumers have been able to put the Internet to work in powerful ways that helps drive growth while reducing costs.

Two focuses for the future

Against that backdrop, there are two major focuses for telecoms players for the next few years: improving links to predominantly landlocked countries that don’t yet have access to affordable international bandwidth, and facilitating the hosting and creation of content at open and neutral data centres within African countries.

When it comes to the first point, we’ll see innovative partnerships between governments, the private sector and multilateral financing institutions to help the smaller and landlocked countries that risk falling behind the rest of the continent. According to the World Bank, there are many countries in Sub-Saharan Africa with less than 2.5 Internet users per 100 people.

By contrast, Kenya has 43 Internet users per 100 people and South Africa has 49 per 100. Thus, the digital divide is no longer just between Africa and the wealthier economies off-continent, but also between the leading and lagging countries in terms of their access to quality connectivity.

Building terrestrial fibre networks to connect towns and cities with each other, as well as to neighbouring countries and undersea cables, is challenging because of the sheer cost and long payback period involved. The road forward is for governments to work with neighbouring countries, the telecoms industry, and multilateral financing institutions to pool resources and drive efficiency in how those resources get deployed.

Private telecoms operators, like SEACOM, have been driving expansion from the cable stations of key high-speed international subsea cables to more landlocked countries and to the borders of landlocked countries, where regulations often block new private operators from entry. The pace of this is accelerating as more governments recognise that liberalisation, clear regulations, and competition drive Internet growth and the benefits associated with access to quality high-speed Internet.

From consumers to creators

As for hosting more content in Africa, the growing choice of reliable, carrier-neutral, data centres, open peering exchanges, content data networks and cloud ICT infrastructure are quickly changing market dynamics. More and more multinational telcos and Internet companies are now providing their content from within Africa’s borders.

User-generated content and collaboration, especially video, are growing as people flock to Facebook, YouTube, Skype and so on, to share and communicate. As the end-user experience on the web improves, local content proliferates and people become content creators and drivers rather than mere consumers.

We’re also seeing a heavy emphasis on the enterprise market from hosting and cloud companies in Africa, all looking to host locally so as to improve the user experience of cloud-based applications for business users. African enterprises tend to want cloud services hosted in their own countries because laws and regulations in many countries demand that sensitive corporate data be stored within the nation’s borders rather than offshore, and because they want the best possible performance and lowest latency.

The future comes to fruition

We’ve been talking about the cloud, video-on-demand and many other concepts for years, but Africa didn’t have the infrastructure to support these services. Now it’s finally coming to fruition because market deregulation, growing competition and end-user demand in most parts of Africa have forced content, application and infrastructure providers to speed up the deployment of new offerings.

We can expect significant social and economic benefits to follow in the wake of closer digital integration across Africa. Businesses will be able to become more efficient and more integrated with the rest of the world, thanks to the cloud. Governments will be able to deliver richer electronic services – for example, health and education – to their citizens. And for consumers, social media, video streaming, and other rich media services will quickly become a part of everyday life.

Africa News

Africa phones go flat

Africa’s mobile phone market declined 2.1% quarter on quarter in Q3 2018 according to the latest figures from IDC.

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The global technology research and consulting firm newly released Quarterly Mobile Phone Tracker shows overall shipments for the quarter totalled 52.6 million units, with feature phone shipments falling 2.7% QoQ and smartphone shipments declining 1.3% over the same period.

Transsion brands (Tecno, Infinix, and Itel) led the feature phone space in Q3 2018, with a combined unit share of 58.2%. Nokia was next in line with 11.7% share. Transsion, Samsung, and Huawei dominated the smartphone space with respective unit shares of 34.9%, 21.7%, and 10.2%. However, in value terms, Samsung led the smartphone market with 37.2% share, followed by Transsion (21.0%) and Huawei (13.0%).

There were differing fortunes in the region’s three major markets, with Nigeria suffering a heavy 11.6% QoQ decline in mobile phone shipments, while South Africa and Kenya saw respective QoQ growth of 8.5% and 7.9% in Q3 2018.

“The decline in Nigeria stemmed from a slowdown in government spending, ongoing warfare in the country’s northern states, and market uncertainty in the lead up to elections,” says George Mbuthia, a research analyst at IDC. “In South Africa, the market’s growth was spurred by the penetration of low-end devices from brands such as Mobicel, Mint, and Nokia, while the launch of entry-level smartphones helped drive growth in Kenya despite increases in taxes and fuel prices placing a significant burden on disposable income in the country.”

While feature phones remain steadfastly popular across Africa, particularly in more rural areas, consumers are increasingly being attracted by smartphone offerings from Chinese brands such as Xiaomi, Oppo, and Huawei, which are actively targeting feature-oriented customers at more economical price points.

“There is a new wave of Chinese brands aggressively pursuing growth opportunities in the region, while the more-established Huawei is also accelerating its marketing efforts and expanding its distribution budget,” says Ramazan Yavuz, a research manager at IDC. “These brands have quickly progressed along the learning curve and evolved their offerings to perfectly reflect the realities of the region by addressing the diverse pricing and feature needs of the consumer base.”

Looking ahead, IDC expects Africa’s overall mobile phone market to reach 58 million units in Q4 2018, spurred by the festive season and online consumer events such as Black Friday. The introduction of more affordable smartphones in the African market will help drive progress in this space over the coming quarters, while the share of feature phones will decline steadily as the transition to smartphones gathers momentum.

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Africa News

Mobile money to cross borders

Orange and MTN launch pan-African mobile money interoperability to scale up mobile financial services across Africa.

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Two of Africa’s largest mobile operators and mobile money providers, Orange Group and MTN Group, today announced a joint venture, Mowali (mobile wallet interoperability), to enable interoperable payments across the continent. Mowali makes it possible to send money between mobile money accounts issued by any mobile money provider, in real time and at low cost.

Mowali will immediately benefit from the reach of MTN Mobile Money and Orange Money, bringing together over 100 million mobile money accounts and mobile money operations in 22 of sub-Saharan Africa’s 46 markets. Mowali is ready to enable interoperability between digital financial service providers beyond MTN and Orange operations and markets, to support the existing 338 million mobile money accounts in Africa.

Mowali is a digital payment infrastructure that connects financial service providers and customers in one inclusive network. It functions as an industry utility, open to any mobile money provider in Africa, including banks, money transfer operators and other financial service providers.

The objective of Mowali is to increase the usage of mobile money by consumers and merchants.  Mowali enables money to circulate freely between mobile money accounts from any operators in all countries.  From the customer’s point of view, this means “I can pay or receive money anywhere from my mobile account regardless of my operator”. The system will unlock further innovation in the digital financial space within the continent. 

For Stéphane Richard, Chairman & CEO of Orange, “by providing full interoperability between platforms, Mowali will provide an important step forward that will allow mobile money to become a universal means of payment in Africa. Increasing financial inclusion through the use of digital technology is an essential element in furthering the economic development of Africa, particularly for more isolated communities. This solution embodies Orange’s ambition to be a leading player in the digital transformation of the continent. By joining forces with another of Africa’s market leaders, MTN, we aim to accelerate the pace of this transformation in a way that will change the lives of our customers by providing them with simpler, safer and more advantageous services. “

“One of MTN’s goals is to accelerate the penetration of mobile financial services in Africa, Mowali is one such vehicle that will help us achieve that objective. Furthermore, co-operation and partnerships that help us accelerate the pace of development and overcome some of the scale, scope and complexity of challenges that society faces are key. This partnership with Orange is therefore an important step in helping us play a meaningful role in supporting the United Nations’ Sustainable Development Goals related to eliminating extreme poverty and enhancing socio-economic development in the markets we operate in and beyond. Thus giving our customers access to a bright, digital future.” said Rob Shuter, Group President and CEO of MTN.

The GSMA supports the Mowali initiative as interoperability at this scale is a key accelerator for both financial inclusion and Mobile Money usability across Africa.  “Today, there are over 690 million mobile money accounts around the world. Mobile money services have become an essential, life-changing tool across Africa, providing access to safe and secure financial services but also to energy, health, education and employment opportunities. The creation of Mowali will help to further transform mobile financial services throughout the African region. It demonstrates the mobile industry’s continued leadership and commitment to driving financial inclusion and economic empowerment through industry collaboration. The GSMA is proud to support its development,” said Mats Granryd, Director General, GSMA.

“Interoperability of digital payments has been the toughest hurdle for the financial services industry to overcome, in support of financial inclusion. With Mowali, Orange and MTN deliver a solution that will enable them, and other companies, to scale digital financial services across Africa, faster, to everyone—including the poor,” said Kosta Peric, deputy director of Financial Services for the Poor, at the Bill & Melinda Gates Foundation “This is a signal that a new wave of innovation, which can help alleviate poverty and drive economic opportunity, is coming. We’re pleased to see an implementation of Mojaloop—an open source payment platform available to operators across the sector—help achieve that.”

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