(Evidence of growing technology adoption, such as this mobile telephone sales booth in Swaziland, are increasingly ubiquitous in Africa)
The adoption of new forms of communication in Africa over the past decade – both mobile telephone and internet – has been nothing short of revolutionary. The continent is estimated to have produced over 316 million new mobile phone users since 2000, passing 500 million total subscriptions late in 2010, and its total internet user population is now estimated at almost 120 million. Previously, communicating over long distances was fraught with difficulty and expense; that outlook has been transformed. The significance of these trends for African economic development, transparency and democratization is profound; the opportunity for technology companies and indeed for businesses across many other sectors capable of leveraging such channels for advertising and delivery is no less significant.
An unmitigated success story
The growth and profitability of mobile telephone networks in Africa is by now a widely related success story. In addition to the staggering uptake figures recorded (and company results posted), what is equally exciting is the innovation and knock-on benefits this trend has generated throughout the continent. These include access to innovative financial services products for mobile users (trailblazed by the much-studied M-Pesa scheme in Kenya), better agricultural product pricing information for farmers, and Celtel/Zain’s unprecedented low-cost international roaming capabilities within sixteen countries that are the envy of both travelling Europeans and companies importing goods physically across borders in Africa alike. New high-speed underwater fiber-optic cables encircling the continent’s coastline are meanwhile dramatically improving access speeds. Mobile broadband internet subscriptions in African countries are expected to reach a cumulative 265m by 2015.
The attraction of capturing the African digital market and exploiting its potential for new service offerings is bringing bigger and bigger names to the table. Earlier this month, Google announced it would be training 1,000 Kenyans to act as ambassadors for its products. Its move follows those of Asian companies LG Electronics and Huawei, both of which have already established local academies to train product experts and source locally-relevant innovations and adaptations to their product portfolio in the region. Korean electronics giant Samsung has announced a particularly ambitious growth strategy for the continent, aiming to generate $10 billion in annual revenue in Africa by 2015 (a fivefold increase on current sales which would put the market on an equal footing with China). Samsung reported 31% growth in revenue to US$1.23bn for its Africa operations in 2010.
New trends, new opportunities
Recent results announced by Chinese handset manufacturer Huawei on tremendous sales of its affordable IDEOS U8150 Android smart-phone in Kenya highlight the appetite and with it the opportunity for selling technology products in Africa despite comparatively low income levels. Figures revealed in June by mobile internet browser development firm Opera meanwhile showed Nigeria as the world’s fourth most active user market, followed by South Africa in seventh place. Belying its terribly outdated labeling as the ‘dark continent’, the hunger for connectivity, and openness to new technologies and service models, are clearly as strong – if not stronger – in Africa than anywhere else in the world.
Reflecting this rapid adoption of technology, e-commerce is an increasingly influential segment of African customer retail, enabling exponential increase in product access and equally dramatic reductions in the continent’s often forbidding costs of sale at through more traditional retail outlets. Recent media coverage highlights its rapid growth in South Africa, often a weathervane for the rest of the continent: the country’s population spent more than R2bn (US$275m) online in 2010 excluding air travel and accommodation outlays. This entailed a 40% increase on 2009’s figure, with 2011 expected to see a further 30% increase. The traditional perception that African consumers abide by the “I buy what I see” principle appears to be shifting, and forward-thinking businesses will seek to move ahead of that curve in their local online offerings.
In a similar vein e-learning and e-health solutions could also offer significant acceleration capacity to combating some of the continent’s serious social service provision deficiencies. Cloud computing, virtualization and hosted services are all constitute growth segments for further expansion. As the past decade has shown, in this respect the African sky really is the only limit.
Interested in learning how your company can leverage new technology channels to sell to and grow in Africa? Contact africa@frontierstrategygroup.com to learn how we can help
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James, thank you for the up-to-the-point updates on the research, analysis, and summaries related to the technological advancements taking place in Africa. These inspiring investments are a much needed boost to the continent as they continue to spur economic growth and create opportunities not only for the continent’s poor, but also the rest of the world economy due to the spiral effects.
Africa indeed could be the answer to solving some of the problems that have led to the sluggish global economy as more people from other corners of the world move beyond mere interest/curiosity and become active participants by investing in technology, human capital, real estate, financial institutions, infrastructure, etc on the continent. Private investors are complementing the long-time efforts of foreign aid and there is increased scrutiny and demand for accountability for resource management especially with the increase in personal and corporate social responsibility.