13 November 2012
Sub-Saharan Africa is the fastest-growing mobile market in the world, and with transparent regulation and the necessary spectrum allocations, the mobile industry could fuel the growth of 14.9-million new jobs in the region between 2015 and 2020, according to a GSMA report.
The GSMA, which represents mobile operators worldwide, on Tuesday released its “Sub-Saharan Africa Mobile Observatory” report, based on research from Deloitte and offering a comprehensive evaluation of the region’s mobile industry and its socio-economic impact.
44 percent annual growth since 2000
According to the report, sub-Saharan Africa’s mobile market has enjoyed a prodigious average annual growth rate of 44 percent since 2000, which has seen mobile connections surging to 475-million, compared to just 12.3-million fixed line connections, representing the highest proportion of mobile versus fixed line connections in the world.
“The region has some of the highest levels of mobile internet usage globally,” the GSMA said in a statement on Tuesday. “In Zimbabwe and Nigeria, mobile accounts for over half of all web traffic at 58.1 percent and 57.9 percent respectively, compared to a 10 percent global average. 3G penetration levels are forecast to grow by 46 percent through 2016 as the use of mobile-specific services develops.”
Huge economic impact
This growth has delivered huge economic benefits, the report states, directly contributing US$32-billion, or 4.4 percent of gross domestic product (GDP), to the sub-Saharan African economy.
Approximately 3.5-million full-time jobs are attributed to the region’s mobile industry, which has also spurred a wave of technology and content innovation, according to the report.
“More than 50 ‘innovation hubs’, which develop local skills and content in the field of ICT services, have been created, including the Hive Colab in Uganda, the iHub in Kenya, and Limbe Labs in Cameroon.”
There are more than 80 mobile money operations for the “unbanked” across Africa, compared to 36 in Asia, the second most popular region for these services, the report notes, adding: “Safaricom’s M-PESA mobile money transfer service in Kenya has achieved greater scale than any other service in the world.”
‘Governments must enable the industry’
“Mobile has already revolutionised African society ,and yet demand still continues to grow by almost 50 percent a year,” Tom Phillips, the GSMA’s chief government and regulatory affairs officer, said in the statement.
“To create an environment that supports and encourages this immense growth, it is imperative that governments work in partnership with mobile operators to enable the industry to thrive throughout the region, ultimately providing affordable options to connect its citizens.”
Despite investments of US$16.5-billion over the past five years aimed mainly at expanding network capacity, sub-Saharan Africa faces a looming “capacity and coverage crunch” in terms of available mobile spectrum, the GSMA warns.
Spectrum ‘crunch’ threatens growth
The current amount of spectrum allocated to mobile services in sub-Saharan Africa is amongst the lowest worldwide, with some countries allocating as little as 80MHz, compared to developed markets where allocation for mobile exceeds 500MHz.
“With mobile internet traffic forecast to grow 25-fold over the next four years, there will be a considerable increase in network congestion unless governments across the region take urgent steps to release new spectrum, in line with the recommendations of the ITU’s World Radiocommunication Conference,” the GSMA said.
“This includes capacity in the ‘digital dividend’ (700-800 MHz) band and the 2.6 GHz band, and also liberalising existing licence agreements to allow the deployment of high-speed UMTS and LTE networks in the 900 and 1800MHz bands.”
The effect of such a spectrum release would be dramatic, the GSMA predicts, contributing to the creation of 14.9-million new jobs between 2015 and 2020 and adding up to $40-billion, or 0.54 percent, to the region’s GDP by 2016.
“In many sub-Saharan African countries, mobile broadband is the only possible route to deliver the internet to consumers,” said Deloitte telecommunications partner Chris Williams.
“However, to maximise the potential gains, governments need to continue to support the development of mobile broadband, notably through the provision of appropriate spectrum. The current spectrum allocations across the region lag behind those of developed countries and, unless increased, seem likely to raise costs of provision, challenge investment decisions and increase network congestion.”
High taxation, over-regulation
High levels of government taxation and new regulation also threaten to limit the growth of mobile services across the region, according to the report.
Africa has the highest taxation, as a proportion of the cost of mobile ownership, among developing regions worldwide, with taxes on handset and mobile devices much higher than elsewhere.
“There is also a worrying trend of new taxes being introduced on essential mobile services,” the GSMA said. “For instance, the Kenyan government recently announced a new 10 percent tax on money transfer services, threatening the economic viability of the service in the future.”
The report also identifies approvals for tower and fibre deployment as the single biggest obstacle to investment by the mobile community in sub-Saharan Africa.
New tower and fibre deployment is urgently needed to cope with the region’s traffic growth, the report argues, and could be aided by simplifying national and local regulations and approval processes, especially with regards to rights of way.
“Tackling stifling regulation, addressing high taxation and implementing a harmonised approach to future spectrum allocation will further boost the success story of mobile across the continent,” Phillips said.
“There is not only the potential to lift millions out of poverty, but also the opportunity to ensure that Africa benefits from global economies of scale in terms of both network technology and mobile devices.”