African mobile subs grew 550 percent in 5 years — MobileMonday Global: Industry News

^{UNCTAD´s Information Economy Report 2009} African mobile subs grew 550 percent in 5 years

25 Oct 2009 at 01:58 GMT Timo Poropudas

Mobile phone penetration has been almost immune to the world economic crisis, shows the just published UNCTAD´s Information Economy Report 2009: Trends and Outlook in Turbulent Times. The report notes that mobile communications have grown especially strongly in Africa. The development has been most dynamic in countries whose economy in is transition phase.

Since 2003, mobile phone subscriptions have grown faster in Africa than in any other region of the world, UNCTAD´s Information Economy Report 2009: Trends and Outlook in Turbulent Times notes.

There are now more than 10 times as many mobile subscriptions as fixed lines in Africa, and more than 20 times as many in Sub-Saharan Africa. But most African nations are failing to keep up with global trends in the use of broadband Internet, which is critical for meeting many economic and social development objectives.

At the end of 2008, the number of mobile subscriptions reached 4 billion. Although growth was somewhat lower than in the previous year, it still remained close to 20 per cent in 2008.

On average, there are now 60 subscriptions per 100 people, and in many developed, developing and transition economies penetration exceeds 100. Reflecting explosive growth, the penetration level in developing countries is now eight times higher than what it was in 2000.

Every second person has mobile phone in developing countries

Almost every second person in developing countries is thought to have a mobile phone and fewer than a dozen developing nations have a mobile penetration of less than ten. Between 2003 and 2008, the most dynamic economies in terms of increased mobile penetration were outside the developed world.

A common feature among these economies is increased liberalization and in some cases catching up with neighbouring nations of similar economic circumstances. Montenegro saw the highest increase in penetration, followed by Qatar, Bahrain and Maldives.

Mobile telephony most widespread The past few years have witnessed a remarkable growth in mobile telecommunications in Africa. Between 2003 and 2008, the continent saw the number of mobile subscriptions surge from 54 million to almost 350 million - an increase of close to 550%. In 2008, Gabon, Seychelles, and South Africa boasted almost 100 subscriptions per 100 inhabitants (chart 1). In North Africa, the average penetration stood at almost two thirds of the population, and for Africa as a whole, it was over one third. Growth is expected to remain robust. Only five African countries - Burundi, Djibouti, Eritrea, Ethiopia, and Somalia - still have a mobile penetration of less than ten per 100 inhabitants.

Uganda saw 100-fold growth

In Uganda, mobile phone penetration rose between 1995 and 2008 from 0.2 to 23 per 100 inhabitants. Operators have made significant investments in infrastructure, particularly in rural areas. Mobile communications have transformed the country socially and economically. Business and social contacts can be established and maintained more easily through use of the phones, and over 100,000 people work in the mobile sector and related industries either through direct employment by operators or indirect employment through the sale of air time or handsets.

The income barrier to mobile ownership continues to drop thanks to more efficient network equipment and more affordable handsets.

More widespread use also has led to the emergence of new services and applications. For many small- and medium-sized enterprises in Africa, the mobile phone has overtaken the computer as the most important information and communication technology (ICT) tool. African countries are pioneering mobile banking and electronic transaction services. In Kenya, South Africa, the United Republic of Tanzania and Zambia, for example, cell phones provide companies and individuals the possibility to make person-to-person payments, transfers and pre-paid purchases without a bank account.

There appears to be continued interest among investors in expanding and upgrading ICT networks in Africa, despite the global economic crisis. For example, France Telecom has forecast higher growth for Africa and the Middle East than for other developing regions, partly due to their phone sectors´ better resistance to the economic downturn.

South-South investment in Africa, already a major source of funding for developing country mobile networks, is also likely to continue despite the crisis. In early 2009, Sudan´s incumbent telecommunication operator, Sudatel, expected the impact of the crisis to be minimal in the countries in which it operates and Zain, MTN Group, and Orascom, which are among the top foreign investors in African telecommunications, may be in a position to further strengthen their positions in the regional wireless market.

Africa needs better broadband connectivity

By contrast, African countries are lagging behind other developing regions in Internet use and even more in broadband connectivity. This is partly due to the lack of fixed telecommunications infrastructure. Most other developing regions boast a broadband penetration ten times higher than Africa´s. Moreover, broadband use in Africa is highly concentrated, with five countries accounting for 90% of all broadband subscriptions (Algeria, Egypt, Morocco, South Africa, and Tunisia). These economies are also among those that have achieved the greatest improvements since 2003 in broadband connectivity

There is furthermore a huge gap in broadband speed. The report says urgent attention is needed to address this situation and bring the continent more fully online. To make things worse, there is also a "broadband price divide": the cost of using fixed broadband tends to be the highest in low-income countries.

Of the 20 countries with the world´s most expensive broadband access fees, 14 are in sub-Saharan Africa. Even within Africa, the price divide is huge. While monthly access to broadband services cost on average more than $1,300 in Burkina Faso, the Central African Republic and Swaziland, subscribers need to pay less than $13 in Egypt and Tunisia.

Critical for connecting Africa with the global economy are international fibre-optic cables. Sub-Saharan Africa has been largely excluded from the mesh of such cables. A number of initiatives are finally coming to fruition, however. For example, SEACOM, a cable linking the east coast of Africa with Europe and India, became operational in July 2009, and the East African Marine System (TEAMS) cable, which will link Kenya with the United Arab Emirates, is slated for completion later in 2009.

No room for complacency

The Information Economy Report 2009 stresses that despite the positive trends in mobile telecommunications in Africa, there is no room for complacency. A long unfinished agenda must be addressed to create a truly inclusive information society for all. Measures targeting the rolling out of broadband to areas with low connectivity are required to help alleviate infrastructure bottlenecks. An important challenge is to explore new and innovative ways to finance new and more powerful fixed and mobile broadband networks. The report says that making significant progress in Africa will require contributions from national governments, the donor community, and the private sector.