Africa is on the cusp of a significant telecom-led transformation. International telecom and technology companies are leveraging increased investments in the continent to be a part of the coming growth.
To build improved technology and telecommunication services in Sub-Saharan Africa, South Africa-based Solis Investments Group recently announced its strategic partnership with Globe Teleservices.
Backed by a $500 million investment from a US-based development finance corporation, Kenya-based Safaricom is building a new mobile network in Ethiopia.
From 2021, the African Telecom sector is recording significant revenues. Major players like Vodacom, MTN, and Safaricom have reported revenues of up to $6 billion. To facilitate digital payments and transactions, the Central Bank of Nigeria has recently launched its digital currency, eNaira.
Coming back to the technology sector, Liquid Telecom, Africa’s largest Internet and cloud computing company, recently closed a $620 million bond sale. This deal will provide cost-effective broadband fibre connection to over 2.7 million people in the Democratic Republic of Congo.
Buoyed by the growth of telecom, let us look at the five most influential industry sectors in Africa.
5 Industry Sectors Influenced by Telecom-Led Transformation
Africa is economically the fastest-growing continent after Asia. The growth of the middle-class community has been a prime driver of economic growth in the region. Adding to that is the sheer dynamism of the emerging technology and startup ecosystem that is pushing the boundaries of innovation. The telecommunication sector stands at the centre of this blooming ecosystem by enabling better mobile phone connectivity across the region.
As compared to a global average of 3%, the mobile phone market in Sub-Saharan Africa is projected to grow by 4.6% by 2025.
Along those lines, here are five industry sectors in Africa that are influenced the most by the Telecom revolution:
1. Banking & Finance
The telecom revolution in Africa is enabling the digitalization of cash and payments and banking across the region’s largely unbanked (or underbanked) population. Mobile Money solutions are exploding and adoption is surging. So much so, that these players are being seen at the forefront of worldwide innovation in the space. Traditional financial services and banking are also changing.
ChiedzaMadzima of Fitch Solutions emphasizes that international investments into resources like bonds and loans in Africa will have a “positive impact” in the long-term future. The invested capital is being utilized towards physical infrastructure, thus improving the bankability of such projects.
U.S-based Africell has secured a $105 million loan facility from Gemcorp. The company will invest a significant part of the acquired capital into building a mobile network in Angola, which is looking to boost its fintech industry sector.
Education is another industry sector that communication technology can impact by reducing overall illiteracy rates in Africa. A recent UNESCO report highlighted Sub-Saharan Africa as the region with the highest rate of education exclusion. Over one-fifth of the children between the ages of 6-11 are out of the formal school system.
As more schools closed worldwide (including in Africa) during the pandemic, technology boosted online learning for students in their homes.
Education ministries are now working with telecom operators to avoid charging any data tariffs for online learning websites. For example, South Africa had already implemented a “Zero rating” to provide free access to online learning material.
For inclusive education, the UNESCO report highlighted the following 3-step process:
- Identify technology innovations for educational systems with maximum potential.
- Test the best innovations with a specific context.
- Adapt and scale them for the best results.
3. Mobile Payments
Nearly 60% of online traffic in the African continent comes from mobile phones. Mobile phones are used more for data-based applications like online chats, video content, and online banking than for voice. As mobile usage continues to increase, Africa is witnessing a shift towards mobile-based payments.
A Citi Group research found that three African countries, namely Ghana, Tanzania, and Uganda, are among the ten countries to adopt mobile payments. Egypt and Nigeria, at that time, were two more countries developing their mobile money solutions.
The global pandemic has largely contributed to the emergence of mobile payments in this region. Leading mobile operators are also racing to launch their mobile payment platforms. For instance, Airtel Nigeria CEO Segun Ogunsanya talked about his company’s plans to venture into the mobile money market.
Read More: Why It’s Time for Telecom Companies to Modernize their Tech Strategy.
4. Technology Startups
Thanks to its young workforce, Africa is now the host to many startup companies in the technology space. Technology startup financing is expected to reach a value of $90 billion by 2030. The tech revolution is Africa’s response to mounting challenges like inequalities, climate change, food production, education, and healthcare.
However, tech entrepreneurs & investors continue to face structural reform barriers within Africa. This includes a fragmented market of over 54 countries, complex government regulations, and a lack of digital skills. But industry leaders need a simplified regulatory framework to ensure compliance, which can boost the startup environment. As a result, to boost its digital transformation, African governments must work together to connect their economies.
In addition to mobile payments and startups, Africa’s younger population is driving the growth of digital currencies or cryptocurrencies. As compared to other developing economies, cryptocurrency is still at a nascent stage in Africa. However, a Foresight Africa report states that Africa is the third-fastest growing market for cryptocurrencies.
Similarly, the 2021 Geography of Cryptocurrency report states that cryptocurrency asset volume grew by $105.6 billion in Africa between July 2020 to June 2021. That represents a percentage increase of 1200%.
Going ahead, cryptocurrencies can play a pivotal role in foreign remittances and banking services. Remittance inflows represent the “lifeline” for many poor African families. However, remittance fees are among the highest in Africa. Cryptocurrencies can potentially benefit Africans by eliminating any intermediaries.
According to a UN prediction, over 50% of the global population growth by 2050 will happen in Africa. As a result, the development of the telecom sector will assuredly boost foreign investments and enable the continent to achieve digital transformation.
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