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Africa has always been perceived as a growth market with great potential. Its mobile phone industry is growing at nearly double the global rate; this, and a wave of consolidation and heated competition within the region, is attracting new investment. Yet, for all its growth potential, Africa has not received real, practical, attention proportional to the ongoing discussion of its potential. The global economic crisis has shifted from a half-hearted attitude towards investing in Africa to budgeted and well staffed business plans in support of various African markets.
As software and hardware vendors, system integrators, business consultancy groups and managed services providers struggle to find new opportunities in their comfort zone markets, they are forced to look at Africa more closely. The trouble comes from trying to push existing products and services designed for different markets into Africa as vendors struggle to make up revenue lost elsewhere. The region needs products and services geared to its own necessities and preferences rather than become a complimentary market for excess capacity. For example, rural areas in Africa need remote data collection on healthcare, education, agriculture, business, banking, finance and government. There is a need to bridge this gap, enabling wider access to mobile communications in Africa.
To achieve this, vendors must establish tangible relationships in Africa. This is required not just at the sales and marketing level, but at all levels of the vendor organization. Support engineers, deployment engineers must be trained in doing business in Africa both remotely and locally just the same way as they are experienced in other world markets. Remote offices or partners in Africa from where local staff travels to headquarters appears to be a nice solution but actually may not be sufficient. To really service the needs of their African customers, vendors must expose their headquarters staff to Africa. It is only that way that a vendor will make the necessary transition be becoming a trusted name and partner in Africa. Anything short of that, Africa will continue appearing within the EMEA sales figures as a subtotal with managers questioning as to whether their operations in Africa are worthwhile.
Once vendors truly commit to Africa, they will end up learning how to develop products for Africa and how to service customers in Africa. Rather than bring products from other markets to Africa, they will develop products for Africa and may consider doing the reverse and selling them in other markets, where applicable.
Take mobility and untethered communication as an example. Virtually all operators drive revenue from basic voice and text messaging services. Of course, telecommunications in Africa is dominated by wireless communications due to insufficient landline infrastructure. And consider further that the African mobile market is the fastest growing in the world with the mobile penetration rate as low as 35%, and average revenue per user (ARPU), which is extremely low and allows room for high growth in the future. In this context, operator revenues can still grow tremendously simply by increasing call completion among existing subscribers and adding new subscribers to the base.
A next wave of growth certainly will follow patterns seen in more developed markets, e.g. India where socio economic diversity, vast purchasing power spectrum and education levels are similar. We would anticipate greater use of data services where SMS is not so dominant, enhanced services such as location based or video driven services, and personalization services.
We thus conclude that growth in basic services in Africa still remains unsatisfied and that growth in more enhanced services is largely untapped. So, going back to how the vendors should approach Africa, it appears reasonable to address first things first and support basic services even better. In a user community where prepaid callers are abundant, and credits for outgoing calls not to be taken for granted, developing services to increase call completion does just that. This can be done primarily in two ways: Assistance with outbound calls through services such as collect mobile calls and assistance with inbound calls through intelligent call routing so that a call placed has the greatest chance for completion.
Such basic services may not stir much excitement on first glance but may be precisely what the African operator needs to drive greater revenue now with existing infrastructure without waiting on social and economic trends to materialize for new revenue sources.
Another factor in the African mobile market is the restricted capability set of handsets. Africa and Middle East region is expected to account for the largest annual shipment volume by 2014, with 166 million low cost handsets predicted to be sold, representing 24 per cent of all sales that year and up by 54 per cent since 2009. With this in mind, the interaction of subscribers with their service providers should avoid live operator assistance for the same globally valid reasons. Services such as balance checks on prepaid accounts, balance refills or balance transfers should be done easily by the subscriber even through a restricted handset without the involvement of a live agent. This calls for the greater use of service channels such as Unstructured Supplementary Service Data (USSD) and the back end operator support for it through USSD browsers. This service channel may be used for other push-pull applications such as content purchasing, special day greetings to friends and family, televoting, call me back, etc.
Once the immediate needs are addressed, it is extremely critical for Africa’s overall development to quickly follow with high bandwidth data services. Indeed, there is not a need to follow sequence here and, subject to operator appetite, 3G services can be pushed concurrently. The reason high bandwidth mobile data access is so critical for Africa is that it is the access method with the greatest chance of connecting the masses in Africa with the World Wide Web. PC-penetration rates remain low and the initial costs are high. These factors define the mobile phone as Africa’s optimum tool to access the internet. In that sense, 3G mobile broadband technology is in a way equivalent with the Internet when it comes to Africa due to again the insufficient fixed line infrastructure. For that reason, over the long term, Africa stands to benefit from 3G-based services on social and economic indicators arguably more than any other region.
In search for new revenue streams, operators will need to move quickly to adopt networks and services that converge from basic voice to value-added content and data services. The use of picture messaging, ring-tones, ring-back tones, video clips, location-based services and wide array of data offering will spread across the continent. Increasing complexities and time-to-market delays in delivering new value-added services will create the need for a common service delivery approach. This common service delivery approach implemented with Service Delivery Platforms (SDP) allows operators to offer variety of services to different subscriber segments easily and cost-effectively by eliminating long development cycles, cutting integration and operational costs, and providing rapid service launch capabilities.
The next area for vendors to look at – again under the viewpoint of doing things designed for Africa – is business consultancy. This requires ongoing presence in Africa by the vendor. This is preferably via local offices but local offices will be effective only if they receive frequent and on-the-ground support from headquarters staff to truly understand the unique aspects of the African operator. It takes experience for having completed projects in Africa with direct exposure rather than through integrators before a vendor can claim to be a reliable name. Indeed, greater experience in Africa will educate vendors in understanding that the African markets vary among themselves. References to Africa as a single market are misleading and usually stem from a lack of granular understanding of the markets in the continent.
Comparisons with the Middle East will be weak in general. The Middle East markets certainly have segments that are similar with African markets but also contain other sizable segments that are not. Handsets and popular services in the Middle East cover a large range of capabilities rendering the Middle East markets hybrid and complex in a different way. Business practices in the Middle East and Africa are also different in their own ways.
In conclusion, the recognized growth potential of Africa is finally pursued by vendors with tangible business plans. However, vendors need to treat Africa not as an extension of other markets they are active in but as a market with unique needs. This requires on-the-ground presence in Africa primarily from headquarters staff for the vendor to develop an understanding of the African market at all levels of the organization. Products and services should not fail to address growth in legacy voice services but the big benefit for Africa, economically and socially, will come from high bandwidth data services where mobile networks may function as the best access to the World Wide Web for African users. Industry analyst expects Africa will reach around 324 million mobile subscribers in 2009, with the total rising 67.8% by 2013 to 543 million.
The article, and the copyrights thereto, are exclusively owned by Connect-World, London, UK.
It was first published in ConnectWorld: AME (Dec: 2009)
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