Sub-Sahara Africa’s telecoms sector booms with investments, new technologies – World Bank
With the recent happenings in the telecommunications industry in sub-Sahara Africa in terms of investments, acquisitions and new technologies, the World Bank in its June 2011 Global Economic Prospects (GEP) report has described the sector as a “booming” one.
The World Bank says the telecommunications sector is one of the strongest recipients of foreign direct investment flows to the region and in 2011 there have been a number of announcements to that effect.
“MTN, the giant South African telecommunications company, has announced plans to invest $1 billion in Nigeria (sub-Saharan Africa’s biggest mobile phone market) and a further $150 million in Zambia”, the report said.
It added, “In March 2011, Etisalat, a United Arab Emirates telecommunications company, announced that it had sealed an agreement for a $680 million syndicated loan from eight Nigerian banks.
According to the Bank, Mozambique’s third biggest mobile phone operator, Movitel, also announced plans to invest $120 million to build new base stations.
India’s Bharti Airtel has also given indications that it will invest $1 billion in Africa this year while Vodafone Ghana has also secured a $115 million loan from the International Finance Corporation (IFC) to expand its network in the country.
Government policies are supporting these FDI inflows through improvements to regulatory regimes, including opening up the sector to further competition, the report said.
“In the last year, for example, operating licenses have been granted to new entrants to the telecommunications sector in Congo (Brazzaville), Ghana, Liberia, Malawi, Mozambique, and network charges by regulators have been reduced”, the report says.
These developments and the arrival of high speed undersea fiber optic broadband cables on the coast of Africa, the Bank says are a boon to the sector but also the broader economy as they generate significant productivity spillovers.
Nigeria’s Globacom recently launched its fibre optic known as “Glo-1” which according to Forbes Magazine received an investment of $1 billion.
The $600 million West African Cable System (WACS) submarine cable was also launched with MTN been the single largest investor with $90 million.
Charges on mobile phone services also dropped, according to the report.
It says in both East and Western Africa, “price war is ongoing between rival telecoms operators, and in some cases service charges have dropped by more-than 50% – lowering costs for business (and personal) customers.”
In Ghana, some telecoms operators have dropped their mobile phone calling rates to eight Ghana pesewas.
Innovation was not left out of the booming trend in the sector.
The report says innovations such as “Kenya’s pioneering mobile money scheme (M-PESA), Ethiopia’s Commodity Exchange, which uses mobile technology to provide real time information to farmers across the country, and Ghana’s mPedigree app, which allows patients to check the authenticity of medicines, are only a few examples of how investment in the telecoms sector is supporting innovation and growth in the region.”
Citing the International Telecommunications Union (ITU) 2010 report, the World Bank says that sub-Saharan Africa is the region with one of the fastest growing mobile phone markets partly because of the weak penetration of fixed-lines but also due to the pace of urbanization-the fastest compared to other regions.
An estimated 40 million new mobile cellular subscriptions were added in 2010, and as much of the population remains unserved, the potential for further growth remains strong, it added.
Meanwhile, a recent study by the World Bank has shown that increasing access to mobile telephone networks by 1% translates into a 0.5% increase in real GDP per capita
In Nigeria, for instance, though the telecommunications sector share in GDP was about one-quarter of that of the oil sector, its direct contribution to GDP growth was higher than the oil sector’s in 2010, the report said.
By Ekow Quandzie