The mobile phone industry in Africa has boomed over the past five years with a growth rate of 550% recorded for this period.⁽²⁾ The African market does not merely offer hope in the form of investment opportunities, but has indeed transformed the way in which mobile phones have traditionally been used. The story emanating from Africa shows that this industry has allowed for significant gains in socio-economic development, on a continent where development indicators are painfully low – a predicament that a litany of actors have long been trying to address. For many, the mobile revolution in Africa constitutes a far-reaching remedy, which, if exploited correctly, can continue to improve the quality of life of some of the world’s poorest people by providing a platform for innovative solutions to local problems.

The state of mobile phone penetration and growth in Africa

Despite the exponential growth that has been witnessed in the mobile telephony sector, Africa still has the lowest mobile penetration rate in the world. According to a report on global mobile statistics for 2011⁽³⁾, mobile penetration in Africa is at 41%, compared to the overall international rate of 76%. However, due to greater accessibility, there are in fact far more mobile phones in Africa than fixed lines – in 2007 this figure stood at eight to one.⁽⁴⁾ This illustrates why Africa is the fastest growing mobile market in the world,⁽⁵⁾ suggesting that there are massive opportunities in the key growth markets, as well as elsewhere on the continent.

Mobile penetration rates do, however, vary largely. Nigeria is one of Africa’s fastest growing markets, having provided 68% of the MTN network’s new subscribers across the continent in 2010;⁽⁶⁾ thereby making it a “major global player… because of its size and spending power.”⁽⁷⁾ Kenya, which boasts relatively high mobile penetration rates of well over 50% ⁽⁸⁾, has been at the forefront of accessing economic development through mobile phones. Other countries, such as Eritrea, have far lower penetration. Nonetheless, people in these countries have managed to overcome this with the community payphone model, and phone-sharing schemes, which make mobile phones far more accessible so that the opportunities that they offer may be exploited.

Continental opportunities

Mobile phones have allowed African communities to transcend the problems of terribly poor and often non-existent infrastructure as well as the problem of isolation; to promote entrepreneurship, development, and ultimately bring a better life for people who have long lost sight of any hope. The emergence of mobile phones in Africa has promoted economic development in a number of ways. This includes: reducing costs and improving markets; allowing for greater efficiency in business; creating jobs in order to address demand; increasing the availability of information and thereby allowing for a response to shocks through engagement on social networks; and facilitating the delivery of public goods through mobile-based solutions in the areas of finance, agriculture, education and health.⁽⁹⁾

“A growing body of evidence suggests that access to communications boosts incomes and makes local economies far more efficient.”⁽¹⁰⁾ In fact, studies show that a typical developing country can have its GDP growth boosted by 0.6% by increasing mobile penetration by a mere ten additional mobile phones per 100 people.⁽¹¹⁾

This assertion has certainly been evidenced in practice. There have been numerous very successful mobile phone-based initiatives across the continent, with the M-Pesa campaign in Kenya perhaps standing out best in this regard.

M-Pesa is a financial service that has been offered by Safaricom since March 2007, and allows people to transfer money between M-Pesa agents, which can then be claimed by using a code sent by SMS that is revealed to the receiver’s agent. “With characteristic ingenuity and resourcefulness… mobile phones… are becoming a way to extend financial services to the billions of poor people who have never seen the inside of a bank.” Migrant workers, for example, make use of the service as an inexpensive way to send to their families money for food. The service is also useful for people traveling long distances who don’t want to carry cash with them. They can give their money to an M-Pesa agent and use the code to again obtain the money once they have arrived at their destination. ⁽¹²⁾

Local businessmen have also been able to maximise their earnings by using their mobile phones. Fishermen and farmers can now use their phones to obtain information about daily sales and demand at various markets, thereby determining which would be the best market to ensure a good return on their produce.⁽¹³⁾ This allows them to save money by avoiding costly trips to the market and back, and to make money by being able to select the most profitable market for their businesses. Even international organisations such as the United Nations have been able to feed into this, with the body’s International Trade Centre in Geneva now providing price information for fruit and vegetable exports on a daily basis in Burkino Faso and Mali.⁽¹⁴⁾

Moreover, phone-based tools have offered benefits to a variety of sectors including agriculture, education and health. Vets in East Africa are using simple tools to keep track of disease outbreaks, treatment and vaccinations.⁽¹⁵⁾ In education, such tools are also implemented to help school-going children to expand their learning through educational games and other resources. With regards to healthcare, in some countries now operate systems that allow people to call hospitals in order to obtain certain health information that may not be available in rural regions. With ongoing innovation in this area, these kinds of initiatives can serve to improve development indicators dramatically, by giving access to information to the many people who live in isolated rural areas that have poor infrastructure.

The transmission of information by mobile phone has assisted the media industry too, making mobile phones the main source of news aside from the radio.⁽¹⁶⁾ What’s more, in areas where radio frequencies are weak, radio stations may actually be accessed through mobiles. This widens the access to information in the public interest widely, and also creates jobs by way of an increasing demand for this need to be met within the industry.

Further from this, the wide usage of mobile phones in Africa has allowed for greater public interaction and engagement through social media platforms. Due also to Africa having populations that are overwhelmingly young, a major portion of the mobile phone user demographic on the continent are youth. This demographic is often keen to engage more frequently on such platforms,⁽¹⁷⁾ as evidenced by Facebook being one of the most visited websites in many African countries.

In the wake of the North African protests and revolutions that took place on the back of mobilisation via social networking sites, the socio-political implications of the use of these platforms in Sub-Saharan African countries to lend voice to their concerns cannot be discounted. Mobile phones allow populations to overcome the challenges imposed by blocked radio waves and websites, allowing them to express themselves and communicate via mobile phones.

Despite the range of developmental benefits that mobile telephony is bestowing on Africa, there are some pitfalls as well. Complex regulatory frameworks, high taxes and the burden of infrastructure-building have made mobile phone tariffs prohibitively expensive in comparison to prices in the developed world.⁽¹⁸⁾ Nonetheless, Africans have adapted and shown themselves to be resilient. A number of ways of getting around high costs are at play across the continent. The phone sharing schemes as mentioned before is one measure. Besides this, people tend to make only short calls, rely more heavily on text messaging, and make missed calls that communicate predetermined messages such as “I’m here” or “Call me.” Governments and mobile operators have also responded with bids to reduce taxes, and by providing cheap mobile phones that can be purchased new at a minimal cost but that can grant access to some of the initiatives that have been discussed.

Concluding remarks

Overall, the benefits to African economies and communities have far outweighed the costs. It is certainly refreshing to see developments in Africa that are so beneficial to all stakeholders. Most mobile operators doing business in Africa are home-grown, coming from within the region, and the benefits are visibly seeping into local economies, by assisting enterprises in functioning better, aiding development goals and offering numerous business opportunities across the economic spectrum. With growth in the sector set to continue on an upward trajectory, more positive outcomes in this regard can be expected.

NOTES:

(1) Contact Lisa Otto through Consultancy Africa Intelligence’s Industry and Business Unit (industry.business@consultancyafrica.com).
(2) David Smith, ‘Africa calling: mobile phone usage sees record rise after huge investment’, The Guardian, 22 October 2009, http://www.guardian.co.uk.
(3) ‘Global mobile statistics 2011’, MobiThinking, November 2011, http://mobithinking.com.
(4) David Smith, ibid.
(5) Entrepreneurial Programming and Research on Mobiles, ‘Why Africa?’, MIT.
(6) Dr. Madanmohan Rao, ‘Mobile Africa Report 2011: Regional Hubs of Excellence and Innovation’, March 2011, MobileMonday.
(7) ‘Mobile phones help kill poverty’, Awoko Business News Desk, 31 October 2011, http://www.awoko.org.
(8) ‘Mobile penetration rates in Sub-Saharan Africa’, 30 June 2011, http://mybroadband.co.za.
(9) ‘Mobile Phones and Economic Development in Africa’, Journal of Economic Perspectives, Vol. 24 (3), 2010.
(10) Jack Ewing, ‘Upwardly Mobile in Africa’, BusinessWeek, 24 September 2007, http://www.businessweek.com.
(11) Entrepreneurial Programming and Research on Mobiles, idem.
(12) Jack Ewing, ibid.
(13) ‘Are mobile phones Africa’s silver bullet?’, The Guardian, 14 January 2010, http://www.guardian.co.uk.
(14) ‘Buy, cell, hold’, The Economist, 25 January 2007, http://www.economist.com.
(15) ‘Making the most of mobile phones in Africa’, Africa Good News, 13 September 2011, http://www.africagoodnews.com.
(16) ‘In mobile phone journalism, Africa is ahead of the west’, The Guardian, 17 December 2009, http://www.guardian.co.uk.
(17) ‘Mobile penetration rates in Sub-Saharan Africa’, idem.
(18) Jack Ewing, ibid.

Written by Lisa Otto ⁽¹⁾