May 19, 2020
When the privately-funded Seacom fiber optic cable came on stream last July, East Africa finally joined the ICT revolution. Nik Nesbitt is one very excited Nairobi entrepreneur. He set up his KenCall call center six years ago and soon built a sizeable business doing what we associate with India – business process outsourcing (BPO) for large US and European clients including Orange, Spinvox and the Wall Street Journal. “When I first came here, the supporting infrastructure did not exist,” he says.
Briefly, East Africa was ideal in terms of rate card, time zone, language and geography, but potential clients were put off relying on satellite broadband to carry their business’ critical data when alternative locations offered fiber. In the last six months, Nesbitt’s broadband costs have dropped by 90 percent. “We were at a competitive disadvantage, but now there is no reason not to do business with a Kenya-based company.”
THE FUTURE IS MOBILE
The same thing is happening across sub-Saharan Africa. This year, Phase3 Telecoms plans to launch a fiber network that will plug into undersea cables in Accra, Cotonou, and Lagos, and allow clients in Nigeria, including GSM and CDMA operators, ISPs, banks, and the government, reliable broadband access. In a deal with Nigerian telecom company, 21st Century Technologies, Ericsson is deploying a fiber-optic broadband network in Nigeria.
For the vast majority of Africans, even in South Africa, mobile telecoms is the only viable way to run a business. As we spoke, Nesbitt was on his way through impossible Nairobi traffic jams to redeploy a chunk of his business to focus on local customers. “The cell phone companies are growing like weeds and they need lots and lots of staff doing their customer service. We did not select that as a key market, but it has grown amazingly and more of our resources are devoted to it.”
The best-known mobile banking platform in Africa has to be the M-Pesa system offered by Safaricom to all its subscribers, even if they don’t have a bank account enabling them to transfer money using a mobile phone. It has allowed many niche spinoff technologies to develop, says Nesbitt: “These businesses do mean that trade can mover wider and faster.”
E-MONEY AND MICROFINANCE
Another Kenyan entrepreneur, Ken Njoroge, started Cellulant five years ago as ‘King of the Ringtones’, but moved rapidly on to develop a cashless money transfer system that has rolled out in nine African countries including Nigeria. “More merchants and retail customers will be reached by mobile operators than by banks. We have realized the need for e-money solutions in a country like Nigeria with low security to life and property: the idea is do cash-based business without cash and achieve exactly the same result!”
For many developing economies remittances from abroad form a significant proportion of GDP, says David Smith, head of marketing at Zippcard, which is currently developing its distribution network in Uganda. “Sending £100 to Uganda costs on average 20 percent: poor countries should not be paying large premiums to third party operators in the west,” he believes, and Zippcard expects to be profitable at a margin of around 4 percent. Zippcard is for the rural unbanked, and that’s where most of the growth in technology is expected. In the interim there is always Mama Mikes, an online store created by Segeni Ng’ethe for Kenyans and Ugandans located abroad who want to send vouchers for anything from groceries to electricity bills.
Advanced mapping will drive further applications. The Nigerian mobile phone distributor Telecgsm has just announced the first mobile navigation application there, Geolife UK’s Navmii system. Foluke Oyeleye, CEO of Telecgsm, said: “It is exciting to be raising the bar in value-added services to customers in Nigeria’s telecoms industry.” Anyone who has tried to find their way around Nigeria will agree with her: the operators of the country’s ubiquitous Peugeot taxis will no doubt be early adopters.
Wireless is the major driver for connecting the estimated 500 million people who have yet to make a telephone call in Africa, says Andrew Doyle, regional director of infocomms and media at Mott MacDonald in South Africa. The big indigenous success story here has been MTN, controlled and run by previously disadvantaged people under the black economic empowerment scheme. It is now the second largest mobile operator after Vodacom and has itself become a global player, he says. “Mature markets in Africa are moving towards cost reduction and infrastructure sharing. Solutions like sharing towers between two or three networks are increasingly viable in an African context.”