Africa becomes a major force in mobile use

Few places have embraced mobile telecommunications with the enthusiasm of Africa, where the lack of fixed telephony and continent-wide poverty meant phones were once only for the rich.

In the mid-1990s this began to change as mobile companies discovered the need for cheap communication coupled with a growing middle class meant demand for their services was insatiable. Mobile towers are easier to construct than a dedicated copper line network, and soon enough mobile chatter was possible from the Cape Town to Cairo.

Between 1994 and 2014, mobile phone subscribers across Africa rose to 329 million – about the same as the United States – and could reach as high as half a billion by the end of this decade, according to KPMG. Revenue from voice, message and data crossed the US$75 billion mark in 2013 and now contributes 5.4 per cent of sub-Saharan Africa’s GDP.

Growth in communications is aided by a fast-growing middle class, which rose to 130 million between 2000 and 2010, according to the African Development Bank. Another 100 million are expected to join their ranks within this decade.

So important has Africa become that the emerging mobile handset producer, China’s Huawei, used Nigeria as a test ground to roll out its early generation handsets, before introducing them to the international market a few years ago.

Banking and online commerce is another area where Africa has excelled; users in even the remotest of villages in east Africa can pay bills, transfer funds and obtain loans on cheap handsets that predate the smartphone era.

By 2020 African mobile banking will be worth US$1.4bn according to a study by Frost and Sullivan ICT.

Some innovations have been more welcome than others. Mobile carriers have begun to grumble over the increasing use of over-the-top (OTT) content, whereby users bypass voice and sms communications and make use of services such as WhatsApp instead. Apps such as this allow cheap communication using mobile data only, eating into operators’ sms and voice revenue.

Barely a week before MTN’s Nigeria trouble hit the news, the company’s South Africa chief executive Mteto Nyati upset South African subscribers by suggesting the carrier was planning to move against OTT

“You have these players which are getting huge benefit out of an industry without making any investment. How do we level the playing fields?” Mr Nyati said. “What have these over the top players invested in South Africa? Zero.”

The ensuing public outrage – nearly 80 per cent of South African subscribers are regular OTT users, according to WhatsApp – made the company drop the subject quickly.

In any event, it is likely that platforms such as this will continue to grow and expand across a continent, where mobile phones are continually being used in new ways not originally envisaged by the telecommunications industry.

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Gavin du Venage

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