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The Challenge & Opportunity for Mobile Services in Africa

Roz Roseboro
3/19/2018
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The challenge and opportunity for mobile services in Africa With mature mobile markets well beyond saturation, and an increasing portion of emerging markets approaching it, Africa is considered by some to be the last frontier. There, population and economies are growing -- and with it, a growing middle class. The challenges of delivering mobile services in Africa have been well documented by numerous NGOs and country governments, but with more than 1 billion people, Africa represents an opportunity too large to ignore.

The demographic and infrastructure-related challenges in Africa can be daunting. Literacy rates are around 60% for adults, which limits the applicability of most online content. Even for those who are literate, content in local languages is often not available, and many applications may not be relevant to people living in rural areas. Sixty percent of the population in Africa resides in rural areas, where incomes are extremely low, making affordability of handsets and mobile service an enormous inhibitor. Electrical grids are often poorly maintained, and rural areas may lack electricity altogether. The uncertain electricity situation impacts not just how and where infrastructure can be deployed, but also how to power devices themselves.

Despite some recent turmoil, the long term demographic and economic trends in Africa are positive. The World Economic Forum expects both population and GDP for Africa to grow 3% over the next decade. Africa on the whole has very few fixed broadband connections, so efforts to increase access to the Internet will come from mobile services, especially in rural areas. According to Ovum Forecaster, mobile subscriber penetration in Africa was 81% at the end of 2017 and is expected to grow to 94% by the end of 2022. Most infrastructure to date has been focused on the urban areas of Africa, where the populations could more easily afford service and operators could see a decent return on investment. The business case is more challenging for rural areas, which is why so many countries, including South Africa, Nigeria, Kenya and Malawi, have enacted National Broadband Plans, often as part of a larger vision for ICT investment. Governments realize they must close the digital divide between urban and rural areas, and between Africa and the rest of the world. Indeed, the Africa Union Agenda 2063 cites ICT as one of the main pillars of transformation. In addition, lower cost smartphones are becoming more widely available, lowering the barriers to entry to a richer online experience for more price-sensitive subscribers. Operators can now leverage more advanced analytics to better understand their customers, lower acquisition costs, and offer more targeted services. Some are using partnerships with content owners to make limited access to select Web sites free to users. This helps to increase awareness, and get consumers accustomed to using phones for content and entertainment and not just for voice and SMS.

No one is blind to the challenges in delivering mobile services in Africa. However, the situation continues to improve, and there is optimism that there will be a multiplier effect as ICT becomes more accessible to greater numbers of people. Technology advancements are helping operators and their supplier make mobile service more affordable and ubiquitous in Africa, to the benefit of subscribers and the economy.

– Roz Roseboro, Senior Analyst, Heavy Reading

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