Africa Beats World in Mobile Boom

Africa Beats World in Mobile Boom
VMK’s Elikia smartphone

AFRICANGLOBE – Africa’s mobile industry has been the fastest growing region in the world for mobile users in the past five years, according to a report published on Monday by the GSMA, the body representing mobile operators worldwide.

The region’s mobile subscriber base has grown by 18% a year over the past five years to 253-million unique users and 502-million connections. GSMA forecasts in their report, “Africa Mobile Economy 2013“, that mobile users in the region will be closer to 346-million within the next five years.

Despite the high figures, there is still ample room for growth. “With unique subscriber penetration rates still less than 33%, this opens up a major opportunities for growth in the next five years,” the GSMA said.

At 65.7%, South Africa has the highest penetration rate, while Niger represents the lower end at 20%.

Economic Effect

The mobile industry currently contributes more than 6% of Africa’s gross domestic product (GDP) – higher than any other comparable region globally, according to the report. This contribution is expected to rise from $60-billion in 2012 to $119-billion, or more than 8% of GDP, by 2020.

Last year, the mobile ecosystem directly supported 3.3-million jobs and contributed $21-billion to public funding in the region, including licence fees, the study shows.

By 2020, mobile is set to double its economic effect, employing 6.6-million people in the region and contributing $42-billion to public funding.

Fixed-line penetration rates in many countries in the region are less than 5%. “Mobile has emerged as the main medium for accessing the internet across Africa. While 2G connections still dominate, 3G and 4G networks are gaining scale and smartphone ownership is on the rise,” the GSMA said.

“Despite the significant impact of the mobile industry in Africa in recent years, even greater opportunities are ahead,” said Tom Phillips, GSMA’s chief regulatory officer. “Beyond further growth for voice services, the region is starting to see an explosion in the uptake of mobile data.”

However, Phillips said, a short-term focus by some countries on generating high spectrum fees and maximising tax revenue risks “constrains the potential of the mobile internet”.

Mobile Policy Reform

The GSMA has called on countries to develop a more “transparent and enabling policy environment” to help realise the mobile sector’s potential.

“Operators and investors need clarity to fund the substantial investment needed to extend coverage to remote areas and meet the growing demand for higher speed connectivity.”

The report highlights three key areas that it believes most affect the growth of the mobile industry:

Managing spectrum allocation in a way that balances socioeconomic benefits with the costs needed to deploy advanced networks. The association urged regulators to use transparent and predictable processes for granting and renewing spectrum licences, which would allow operators to better plan their investments.

The importance of spectrum harmonisation in the region, including the need to accelerate the analogue to digital television switchover, which would free up spectrum for mobile and help boost economic growth.

“Broader economic analysis predicts that mobile broadband adoption would generate up to $197-billion in additional GDP in Africa between 2015 and 2020 and help fuel the creation of 16-million new jobs across a variety of sectors,” the report said.

Taxation, including customs duties on handsets, is very high, retarding the take-up of new mobile services.

“Lowering taxation levels on the mobile sector would benefit consumers, businesses and government by lowering the cost of ownership, encouraging the take-up of new mobile services, improving productivity and boosting GDP and overall tax revenues in the longer term,” the GSMA said.

Transformative Effects

Mobile solutions are used to address a range of socio-economic challenges in Africa. According to the GSMA, there are almost 250 mobile health services in operation across the region. These support patients who may not have access to local healthcare services.

Many people who never had a bank account are now able to be financially active. According to the study, there are more than 100 active mobile money initiatives and 56.9-million registered mobile money users in the region.

Mobile solutions are also playing an increasingly important role in improving agricultural output, which generates around a third of the region’s GDP and employs nearly two-thirds of the labour force.

“The mobile industry has already had a transformative effect on the social and economic life of Africa, but there is scope for far greater growth and innovation, if the right conditions are established,” said Phillips.

“In addressing key regulatory concerns, policy makers throughout the region have a major opportunity to unlock the potential of a dynamic and interconnected Africa.”