This article was first published in the April 2012 International edition of Accounting and Business magazine
Looking back just 10 years, it is astonishing to observe the growth in mobile phone uptake and usage. In 2002, on the world’s poorest continent, fewer than 50 million mobile phones were active, shooting up to 620 million by September 2011 and predicted to reach more than 735 million by the end of 2012, according to GSM Association.
This is 50% of the population, which is incredible enough, but the implications of such connectivity go beyond the figures, with each mobile phone in Africa often serving more than one person. This means that in just 10 years Africa has gone from being a place where people could only use telecommunications after travelling great distances or spending a lot on a landline or radio-call to one where everyone is able to connect instantly and cheaply.
The implications of this are enormous and affect all areas of African life, from the individual to national level, encompassing everything from personal relationships, work and education to justice, national security and development.
It’s not just the proliferation of mobile phone uptake that’s changing Africa. Consider that there are already more than 100 million internet users scattered across the continent, connected to the rest of the world and each other (www.internetworldstats.com). Interestingly, almost half of the total are in Nigeria (45m), followed by Egypt (21.7m), Morocco (15.7m) and South Africa (6.8m).
The internet is revolutionising Africa’s business communities, politics and societies thanks to the rapid expansion of cheap, crystal-clear connectivity through three undersea fibre-optic cables that are circling the continent and replacing radio waves. Already the price per megabyte of data in East Africa has dropped to less than 10% of what it was just a few years ago.
That is why in 2010, according to Blackberry manufacturer RIM, more than 15 million smartphones were sold in Sub-Saharan Africa. With internet cost and mobility combination positively first world in these countries, this is creating all kinds of new opportunities. For example, this is now the most developer-friendly place in the world to create smartphone applications and test them on the market. Conversely, in the US and UK it is just too expensive to test applications properly because the cost to the internet user on the mobile network is too prohibitive.
For the accountancy profession, telecommunications advances mean that the information feedback loop between accountants and clients is tighter and faster. This means that management will have new opportunities to use more accurate and timely information to capture more income as well as save costs, enabling more growth and wealth creation for the companies that embrace the technology.
Improved connectivity offers time and cost savings in real-time financial data capture, processing and reporting, key processes such as sales, field and worker monitoring, new ways of working in remote office management, centralised but accessible accounting systems and real-time stock control, to name a few.
Every mobile phone carrier feels safer in Africa because the quick connection offers a way to get help if it is needed. This is a very real kind of empowerment that African people did not have not too long ago.
I used to joke that if you saw someone at London’s Heathrow airport picking up the payphone and putting his ear on the headset before dialling, he was probably from Kenya where people still listened for a dialling tone before making a call. Sometimes you had to wait for over 15 minutes; if you missed it or the line was busy you had to start again. Today with a mobile phone there is no need. Stories of people waiting months for their telephone lines to be connected were common all over Africa less than a decade ago. The cost of a landline in today’s terms was almost US$500. Today, in almost every shopping centre you can buy a mobile phone and be talking in less than five minutes, and it will cost you as little as US$20.
All this means that Africans are now much more tightly connected to each other and to the rest of the world, and the result of this is a shift in power relations. Unconnected people are vulnerable and easily divided, but those who are connected are a force to be reckoned with. North Africa’s Arab Spring is a prime example of this, with protestors in Egypt, Libya and Tunisia better able to organise themselves.
Growing reliance on new technology brings problems, too. During the political upheaval in Egypt the internet went down for weeks due to government interference. This affected the business process outsourcing (BPO) sector, with companies having to work hard to catch up and convince clients that the political issues would not affect connectivity in future. While this is not the only challenge in maintaining connectivity, it is the most difficult factor to control. Other challenges in keeping the network up 24 hours a day, seven days a week throughout the year include power fluctuations, shortages in technical skilled staff, terrain challenges, weather and cultural challenges.
Nevertheless, despite these challenges, simply having high-speed connectivity at cheap prices creates the need to have more.
When the network in Egypt was down people used landlines and a traditional modem as well as satellite technology to transmit images of military attacks on civilians. This precipitated the tipping point for the rest of the world who added their moral weight to the Egyptian people’s cause. The network in Egypt was reinstated hours after the unrest ended because the people demanded it back.
Connectivity is crucial
Some people have, however, been slow to embrace the new connectivity, preferring the romantic isolation that Old Africa was famous for. Some friends of mine resisted for years but then finally had to join the network. They realised that the danger of not getting on the bandwagon was becoming more serious and immediate. For example, in the tourism industry, as more hotel bookings are made online, travel agents who relied on their wide physical network are finding themselves quickly losing out to operators who maintain only a strong web presence (which is cheaper by design and due to better pricing and higher capacity).
The trouble is that a phone or internet connection is no good if you are the only person who has it. It derives its value from connectivity and achieves this by using its viral nature to encourage, even demand, new connections, providing more value to each connected person whenever more connections join the network. It therefore cannot operate as an exclusive club – instead, the unconnected become the exclusive club, isolated from the rest.
A new African?
What seems to be emerging is a new kind of African person who can be traditional and modern at the same time with no issues. The contradictions are everywhere and no longer abnormal. Priests use their laptops and smartphones to compose sermons and administer the activities of the church, while traditionally dressed Masai warriors routinely interrupt their long walks across the savannah to answer their cellphones.
I’ve seen octogenarians using tablet computers to proudly show their friends and family photos of their grandchildren, as well as playing them recordings of old cultural songs. As they swipe their fingers across the screen to ‘oohs’ and ‘aahs’, I wonder what African society will be like in the next decade.
With all its energy and resources and the presence of high technology, Africa could completely leapfrog the industrial revolution and go straight to the information revolution. The continent manufactures precious little, importing the vast majority of finished goods consumed by its people while it exports its crude oil, minerals and agricultural produce. With the power of telecommunications, the middlemen who used the lack of information to profit will find it harder to operate. Already, corruption is being exposed faster because evidence is being digitised and transmitted and can no longer be hidden easily.
Perhaps all Africa will do is manage its exports of raw materials better using technology, forget about adding value and creating industrial machinery completely and, instead, buy from the Chinese using technology to maximise their purchase value by getting the best price and quality combination.
Ultimately, the expansion of mobile phone and internet usage across the continent could serve as a tool to enable Africans to regain control of their resources. In this resource-challenged global environment, perhaps this will enable Africa to secure its future.
The growth of the IT sector in Africa
‘Africa is a strong growth market in the information technology [IT] sector and this is expected to be so over the next five years,’ says Samuel Ndungu, CFO at WIOCC. ‘Industry analysts are predicting a more than 10% growth year on year in IT over the next three to five years across Africa.’ There has been significant growth in telecommunications as a result of the explosion of mobile technology and heavy investment in submarine fibre-optic networks around Africa, as well as major investments in the terrestrial fibre optic networks. Fibre-optic and high-speed wireless networks have continued to replace satellite and microwave throughout the continent.
The mobile phone users have increased from less than 50 million users in 2002 to more than 700 million users by September 2011, with mobile phone penetration growing from under 10% to over 55% over the same period. Another interesting aspect is the growth in the number of internet users. It is estimated that by the end of 2011, there were more than 120 million internet users in Africa (13.5% penetration) up from less than 1.2% less than 10 years ago. More than 15 million smart phones were sold in Africa in 2010 alone. It is estimated that more than 50% of the internet users in Africa accessed the internet for the first time using a mobile phone.
Internet usage has also grown tremendously as a result of increase in data usage. The amount of bandwidth consumed per user has also increased as we continue to use more and more data-hungry applications and as social media platforms such as Facebook (see box) proliferate. The increase in internet usage has also been aided by the increasing number of personal computers.
The growth in internet usage in Africa has surpassed anyone’s expectations. It is shocking to see how the projections of 2007 for the bandwidth usage in 2011 were exceeded tenfold in actual levels in many African countries, says Ndungu.
As can be seen from the statistics above, Africa is still a growth market and a lot needs to be done to catch up with the rest of the world. At 13.5%, the internet penetration rate is still low. The heavy investment in infrastructure by existing operators, interest shown by major international telecoms investors and continued funding by development banks in the IT sector will see the sector growing significantly over the next two to 10 years. It is expected that bandwidth usage in Africa will grow over 20 times in 10 years.
Alnoor Amlani FCCA is an independent financial management consultant in East Africa, who writes regularly on social and business issues