Sub-Saharan Africa: The $50bn investment

The GSM Association announced that the mobile industry plans to invest more than $50bn in sub-Saharan Africa over the next five years to provide more than 90 per cent of the population with mobile coverage.

The investment will be used to extend the reach of GSM mobile networks, enhanced with GPRS, EDGE and HSPA technologies, to provide a rich suite of mobile multimedia services, including Internet access.

Since sub-Saharan governments began liberalising their telecommunication sectors at the turn of the millennium, the GSMA estimates that the mobile industry has invested $35bn, providing more than 500 million people (67 per cent of the population) in sub-Saharan Africa with mobile coverage.

“Our members are increasing the pace of their investment by an average annualised rate of 330 per cent.The surge in investment by the mobile industry will continue to change the lives of millions of Africans, catalysing economic development and strengthening social ties” said Gabriel Solomon, senior vice president of the GSMA, who was part of a panel discussing regulatory trends in Africa and the regulator’s role in facilitating growth in mobile.

“African governments should take note: the private sector will deliver the public sector’s goals if an enabling investment environment is maintained,” Solomon added, “the Government of Ghana, Kenya, Tanzania, Uganda and Zambia that levy a regressive luxury tax on mobile consumers, show remove these immediately. Doing so would actually increase government tax receipts as more people would connect and use mobile services, boosting value added tax receipts and stimulating wider economic activity.

MTN, Orange, Vodacom and Zain subsidiary Celtel are among the mobile operators planning to invest heavily in the expansion and enhancement of their networks. Speaking separately MTN Group President and CEO Phuthuma Nhleko said: “We have the passion and dedication to provide Africa with a world class infrastructure,” while Saad Al Barrak, CEO of the Zain Group, added: “We are proud to be a leading investor in Africa, bringing world-class services to our customers on the continent through our Celtel subsidiary.” Alan Knott-Craig, CEO of Vodacom Group, said: “We are proud of our investment in Africa, and we will continue to focus on our customers and the development of products and services that benefit them.”

There are more than 150 million mobile subscribers in sub-Saharan Africa today. However, a further 350 million people have mobile coverage and are not yet directly connected. As well as extending coverage, the mobile industry is focused on using its economies of scale to connect these people. As the number of users grows, so too will economic prosperity. The GSMA estimates that an increase of 10 percentage points in mobile penetration can increase the annual growth rate of GDP by up to 1.2 percentage points.

In order to create the conditions that will maximise the benefit of this new investment, the GSMA calls on governments across sub-Saharan Africa to follow the President of Rwanda, His Excellency Paul Kagame’s advice: “The barriers that governments put in the path of entrepreneurs need to be urgently removed. Individuals and companies create wealth, not governments. This is not to say that the state should become invisible. But governments should see their roles as enablers of business, and not gatekeepers that control and hamper it.”

In particular, African governments need to ensure that sufficient spectrum is available to enable the hundreds of millions of Africans, who live beyond the reach of today’s fixed networks, to gain access to cost-effective broadband services. The GSMA encouraged the World Radiocommunication Conference, which recently met in Geneva, to reserve the 750MHz to 862MHz spectrum band for mobile broadband services in Europe, Middle East and Africa. In this spectrum band, radio waves can travel significant distances and provide better in-building signals, helping operators to achieve more extensive and cost-effective mobile broadband coverage, particularly in rural areas.

“The world’s governments have an opportunity to narrow the digital divide between those who enjoy high-speed access to multimedia services today and the many people who can’t yet be economically served by broadband networks,” said Tom Phillips, Chief Government & Regulatory Affairs Officer of the GSMA. “It is important that the world’s governments set aside this spectrum in a harmonised way, enabling handset makers to achieve economies of scale, thereby reducing the cost of access devices for consumers.”