Towards a digital revolution in Africa

[Business Action for Africa]

Gabriel Solomon
Senior Vice President, GSMA

Information and communications technologies (ICTs) play a vital, enabling role towards achieving the Millennium Development Goals (MDGs). Connecting isolated ICTs to form smart, interactive webs of intelligence that seamlessly cross physical and political boundaries exponentially increases their effectiveness and value: Metcalf’s law quantifies this, stating that the value increase is proportional to the square of the number of connections. To maximise their potential in Africa, ICTs require a broad blanket of connectivity, covering the continent and linking the continent to the global information economy.

When the MDGs were agreed in 2000, achieving a blanket of connectivity across Africa was a dream only a few people imagined could be realised. Since then, many African governments have liberalised their communications sectors catalysing some $50 billion of private investment to date with a further $40 billion pledged over the next 4 years. This level of investment has extended connectivity to more than two thirds of the population and the next wave of investment will increase this to over 90% and also start the roll out of mobile broadband. New world class African businesses, such as MTN, Vodacom and Celtel (now Zain), have been born.

Across Africa the mobile industry employs more than 3.5 million people today. It will generate $71 billion in tax revenues between 2000-2012. And it is a substantial generator of economic growth, responsible for around 6% of East Africa’s GDP in 2008. A 10% increase in mobile penetration boosts GDP by 1.2% in a typical emerging market.
This year Eastern Africa should finally be connected to undersea fibre optic cables that will provide the region with an umbilical cord to the global information economy, stimulating a new wave of ICT-led investment and growth on the continent. On the Western side there is hope that new cables will be laid to drive down the price of international bandwidth substantially. Regional cross border cables bring affordable bandwidth across Africa’s vast geography.
In terms of mobile-led ICT development, Africa has come so far in such a short period of time, but it is still in its infancy. It is incumbent upon governments to establish clear policies and incentives so that the great remaining potential is realised.

Mobile broadband, for example, requires the release of harmonised low frequency spectrum in large contiguous chunks, the so called “digital dividend”, that can lower network coverage costs substantially. Punitive sector specific taxation on handsets, equipment and air time should be lowered and removed. Doing so will not only increase affordability of services but also boost the total tax generated from the sector in the medium term. The trend to liberalise international gateways needs to continue; these artificial bottlenecks choke local businesses and stifle inward investment.

Government policy needs also to address how mobile can be leveraged by other sectors. Mobile payments and finance, for example, require new enabling financial regulations. Other infrastructure players, such as power companies, railways, water and roads should be asked to indentify common solutions to lower costs. Creating ducts when roads are constructed, for example, slashes the cost of rolling out fibre backbones by a factor of 10.
Smart industry and cross sector policies can accelerate the mobile revolution even during this period of economic uncertainty. Doing so will further underpin the ICT sectors’ contributions to MDGs.

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