15 Nov 2012

Africa has joined the party - in a big way

Written by Chuck Green, CEO of Helios Towers Africa

The story of Africa today tells us that sometimes it is better to be a late starter that to be a pioneer.  Pioneers, as they used to say in the era of cowboys and indians, get all the arrows. 

A generation ago people in the old world would still patronisingly refer to Africa as the “dark continent”.  Now, as the developed economies struggle, Africa is likely to have seven out of the top ten fastest growing economies over the next five years, according to the Economist Intelligence Unit.  Africa’s “lion economies” are growing more strongly than Asia’s “tiger economies”.  Africa’s collective GDP is forecast to hit 2.6 trillion dollars by 2020.  Africa has stepped out of the darkness into the spotlight.

In one industry after another capitalism is alive and well in Africa.  Home grown African entrepreneurs are investing, trading and creating new jobs by the million.  The World Bank reckons that by 2015 100 million Africans will have an income of 3,000 dollars or more.  As a result, the spending power of the African consumer is growing while hard pressed European and American consumers continue grimly to deleverage their debts.

All across the world information and communications technology has been a driving force for transforming both the economic growth of nations and the lifestyle of individuals and families.  But, as with any relatively new innovation, some of the earliest versions quickly became clunky and outdated and sometimes caused legacy problems that impeded the development of the next generation of products.

By arriving at bit late at the party Africa has been free to go directly to the best products and the most efficient and user-friendly infrastructure.  Africa has become home to a disproportionate share of the estimated two billion people who have a mobile phone but no bank account.  Entrepreneurial investment right across the continent has facilitated the rapid integration of mobile technology and financial products. 

This is creating a nonstop stream of new opportunities to serve the consumer, the neighbourhood and the small business directly – frequently cutting costs by eliminating the bureaucratic middle man. 

Telecom tower sharing is a classic illustration.  Its arrival proved to be a landmark in Africa’s telecoms sector, acting as an enabler for the increased use of telephones in rural as well as urban areas.  Much of its attraction is that tower sharing brings benefits to operators and customers alike. Instead of having three or four base stations in a village, all running generators simultaneously, tower sharing allows for a single wireless network and for the management of power and site maintenance in a much cheaper and more environmentally friendly way.  Telecom operators can focus on serving their customers rather than looking after their infrastructure.  Customers gain a better service for less money. The carbon footprint is reduced.  Everybody wins.

This sort of communications development would benefit any part of the globe.  But for Africa, with its notoriously dreadful roads, the telco and towerco revolution is making a transformative impact. 

And not just in mobile banking.  For example, telephonic agro-information is making possible the emergence of “e-farming” – programmes which bridge the rural divide between the farmer and the remote expert via programmes that disseminate and share agronomic information and advice through mobile phones.

Trends like this mean that investment continues to accelerate, cross-border trade flourishes, businesses diversify and achieve economies of scale.  Millions are being propelled out of poverty and into the shops.  Africa is far from trouble free, but the evidence from more and more industries indicate that its greatest days lie ahead.