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Africa: Why only a few are taking advantage of the booming digital revolution



In his recent book ‘Africa 2.0’, Russell Southwood diligently chronicles the history of Africa’s ongoing mobile and internet revolution – and the reasons why many on the continent are yet to truly take advantage of it.

Southwood is well-placed to write this history. As CEO of Balancing Act, a consultancy and research organisation, he’s been a close observer of the African telecoms, internet, and media industries for more than two decades.

He draws from his own substantial archive of research and newsletters, complementing it with 137 new interviews with key industry figures.

From the travails that the first mobile phone providers faced in securing operating licences, to the complexity of rolling out international fibre optic connectivity, this is a story of liberalisation, privatisation and the people who managed to take advantage of it.

Along the way, governments were often reluctant to give up control of lucrative telecoms monopolies, and when they did, the licensing process was often marred by cronyism and corruption.

Political connection

An account of how Rwandan businessman Miko Rwayitare launched Africa’s first mobile network, Telcel, in then-Zaire in the mid-1980s, shows the centrality of good political connections.

In order to persuade President Mobutu Sese Seko to give the company a foot in the door, Telcel gave 200 mobiles to Mobutu and his officials, who proceeded to call each other for a year without paying any bills – or for the phones.

Still, Telcel succeeded in securing a licence, going on to sell handsets at $5,400 and subscriptions at $100 a month to an exclusive circle of Congolese elites and expats.

Other early mobile entrants, such as Strive Masiywa in Zimbabwe and his Econet network, were to face their own legal battles to get governments to give them operating licences.

Gradually, as liberalisation spread across the continent, regulators began to take over the licensing process, some with more transparency than others.

Throughout, mobile and internet connectivity have been drivers for economic growth, and Southwood argues that telecoms were central to a “shift to a different kind of investment” on the continent, away from extraction and exportation of natural resources.

Price shifts

There was investment based on the promise of African consumers, and the services they would need to improve their lives.

Bringing down prices has been central to much of the communications revolution – first for a subscription, then for a phone and airtime, and later for data bundles.

As prices did reduce, either as handset manufacturers brought out more affordable versions, or fibre connectivity drove down data costs, the aspirational nature of having a phone remained constant.

Along the way, newfound connectivity transformed many lives through services such as mobile money and the financial ecosystems it created. Meanwhile, the explosion of digital media kept people informed and entertained in new ways.

Human behaviour vs technology

And yet a theme running through Southwood’s book is, as he puts it, “the rate of changing human behaviours is far slower than the introduction of technologies”. An illustration of this is the ongoing disparity between the number of people who have a mobile phone subscription, and those who actually use it on a regular basis, particularly for data.

According to the GSMA, 49% of Sub-Saharan Africans can access the internet but don’t.

Bringing down prices has been central to much of the communications revolution.”

A similar issue is faced by mobile money, barring a few big players, notably Safaricom’s M-Pesa which was funded by UK aid.

By 2020, there were 548 million registered mobile money accounts in sub-Saharan Africa, but only 159 million – less than a third – were active.

He identifies a number of key issues holding back the wider take-up of communications, including:

  • Poor education and literacy: less-educated potential internet users have more trouble imagining how they would use it;
  • Language barriers: a paucity of services available in local languages countries also hinders wider take-up;
  • Connectivity remains centred on urban areas, with many who live a few kilometres outside them struggling for data coverage.

Meanwhile, those with a connection have tapped into new opportunities. As Africa’s cybercafes gave way to digital incubators, Africa’s start-up ecosystem flourished.

Disrupting the market

Investment in African start-ups rose from $186 million in 2015 to $701 million in 2020, the majority pouring into South Africa, Kenya and Nigeria.

These start-ups are part of a new way of imagining the continent, the impact of which on young Africans Southwood says “cannot be overestimated”.

Yet, while some of the emerging companies have aimed to disrupt their markets, he questions how innovative many of them really are: “Many African start-ups simply aim to produce knock-offs of European ideas in the hope that they will be acquired, or invested in.”

One reason is that Africa’s start-up ecosystem is dominated by young men, many with little actual business experience, who struggle to convince potential investors to part with their cash.

Meanwhile, the proportion of African smartphone users willing to download apps and actually use them remains small.

One route to scaling up is to try a multi-country approach, but Southwood suggests few digital start-ups currently have sufficient knowledge of markets outside their own to create a real pan-African success story.

Despite this, there’s little doubt that the new connectivity has changed the lives of millions of Africans.

As the continent’s younger generations of digital natives begin to take positions of power in the coming years, it will be their turn to write new chapters in this ongoing revolution.

Source : The Africa Report