Directrice d'études, IDATE DigiWorld
What will the Internet look like in Africa and the Middle East?
The IDATE DigiWorld teams of experts have published the second edition of the special report exploring the ins and outs of the digital economy in Africa and the Middle East
By and large, Africa and the Middle East are experiencing the same market shifts that telecom services in the West have undergone over the past two decades, albeit in their own particular way: slowing growth rates due to a relative saturation of the mobile telephony market, which is the sector’s chief driving force, combined with often stiff competition that weighs on margins. And a body of users that still remains to be conquered who have more modest purchasing power than operators’ existing customers.
Sub-Saharan Africa: the world’s fastest growing Internet access market
Forecast average annual growth rates
Under these circumstances, the transition to mobile data services, thanks to expanding 3G coverage and the deployment of 4G, marks a natural and promising progression. We expect to see the strongest increase in Internet access of anywhere in the world, particularly in sub-Saharan Africa, both because these countries lag so far behind and because of growing demand amongst the local population. The availability of smartphones that are affordable for a large percentage of the population, combined with initiatives such as Zero rating for basic service bundles, are helping things along. As a result, high-speed mobile density could climb from 20% in 2015 to 44% in 2019. However, it is not yet certain that this growing Internet market will allow the region’s telecom services industry to maintain the roughly 5% annual growth rate that it did from 2010 to 2014. We must also factor in demographics and steady economic growth – which, although still not strong enough, is nonetheless substantial compared to what we are experiencing in Europe – along with other elements that should enable Africa, on the whole, to avoid the long slump that telcos in Europe have suffered.
In addition to outfitting cities with Internet access infrastructure, attention needs to be paid to – and original solutions devised for – rural areas that must not be overlooked, so that the pace of the population explosion in cities can be reined in.
There is no shortage of proof that Africa and the Middle East are capable of real innovation in multiple digital economy sectors
Faced with these imperatives, the ability to finance massive investments in 3G and 4G cellular network rollouts, in national and regional backbones, and in the equipment needed for businesses (optical and satellite connections in business parks and districts, cloud solutions) require operations to be optimised so that margins can improve. Outsourcing and sharing tower infrastructures, consolidation in markets with too many players with a tiny market share, initial and ongoing training of personnel, and the search for synergies with electricity supply programmes are among the core paths to advancement that businesses and public policies will likely focus on. As in other markets, the importance of stable and balanced regulation that establishes a strong interplay of competition policies and support for investment and innovation cannot be underestimated.
Evolution of fixed and mobile usage and density
Lastly, telecommunications policies do not exist independently of the social, economic and regulatory issues surrounding usage and the development of innovative online services. We already have proof that Africa and the Middle East are capable of innovation in a number of digital market sectors. Mobile payment and money transfer solutions, in a region where banking structures are often lacking, are among the most oft cited examples, along with applications devoted to development, education, sustainable farming, managing utilities (water, electricity), health and tourism.
But we also need to add e-commerce and entertainment to the list, thanks to the first video game hubs in South Africa in particular, and those that have ties to well established film and TV production conglomerates. The countries are not all progressing at the same pace, and not all enjoy the same political stability, but our optimism forces us to see positive signs in the clusters emerging in certain markets, in the first incubators, the trading and collaboration networks being forged at the regional level, in some instances with the support of Internet heavyweights from the West now staking a claim.
Mobile density in Africa & the Middle East