16 December 2022
The mobile industry has advanced in leaps and bounds across the African continent. By adoption mobile technology later than much of the world, Africa has been able to leapfrog some challenges, and learn from our mistakes. So, what can the rest of the world learn from Africa? Waheed Adam, chairperson, iTouch, reports
Mobile industry insights company Global System for Mobile Communications (GSMA) predicts that Africa will have 120 million new mobile subscribers by 2025, taking the total number of subscribers to 615 million, some 50% of the region’s population. While the continent as a whole has been behind the technology adoption curve, the advent of cheap mobile devices has allowed Africans to transition straight into a mobile-first economy.
Despite Africa’s lack of formal infrastructure - in fact, because of it - the power of mobile internet has inspired amazing innovations that could help empower both the continent and the world at large.
So, with all this rapid change, what can the mobile industry learn from Africa?
Free your thinking when considering infrastructure
Mobile infrastructure is far easier to set up than the traditional infrastructure of wired landlines and fibre optic broadband. With a basic smartphone and a 3G signal, these resources then become the technological infrastructure.
In Kenya, for example, ATMs are a rare sight. They require wired networking, restocking, and security. But with mobile wallets and internet banking, someone selling fruit at the side of the road can now get paid electronically, without the need for either buyer or seller to visit an ATM, allowing them to sell more and in greater quantities.
These fruit sellers now have the electronic money required to pay suppliers electronically, and so on, creating a rolling digital infrastructure through a simple smartphone and 3G connection.
So, rather than seeing the rollout of mobile connectivity as a cost, we should view it as an investment. Mobile connectivity creates digital infrastructure. Africa provides a fantastic model of how a mobile-first economy creates low-cost, rapidly scalable digital infrastructure that can be replicated across the world.
Growth can suffer if the cost of data is misjudged
Despite 75% of all e-commerce now being done via mobile, only 58% of Africans can now access 4G internet. The majority of those connected to 4G are in urban centres, with 47% of urban dwellers connected compared to just 26% of rural dwellers.
These mobile owners spend large chunks of their salaries on mobile connectivity. Just one gigabyte of data could cost as much as a third of someone’s salary. This is around 50% more than in Europe and prohibits growth.
By focusing on reducing the costs of data while increasing penetration (including reducing the cost of handsets), more people can connect to the global digital infrastructure. This will create numerous global benefits, such as information sharing, innovation and economic growth.
Search for and nurture local innovation
An increasing number of successful African businesses have been established to solve challenges specific to Africa. And while many solutions created in Africa may be designed to solve African problems, there are plenty of innovations that will also benefit other regions.
Take pre-paid mobile credit, for example. As many Africans lack access to formal banking, they are unable to complete the credit checks required for pay-monthly mobile contracts. So, prepaid mobile credit was invented as a way of enabling people to get connected without the need for credit checks – an innovation that has benefited people across Europe and the rest of the world.
Large foreign multinationals, such as Google, as well as global VCs, are starting to recognise the potential of African innovation and are setting up regional innovation hubs. Through mobile internet, these innovations can be rapidly shared and improved upon.
As such, the mobile industry should invest in innovation hubs, especially in regions historically affected by adversity. People in these regions have had to innovate to solve regional challenges, making them quiet innovation powerhouses.
Speak to what is useful
In Africa, informal business is huge. For example, in South Africa, informal taxis generate around 50 billion rand a year, local fast food around 90 billion rand, and traditional medicine is estimated to generate 18 billion rand.
Local informal convenience stores, known as spaza shops, generated an estimated 150 billion rand a year, selling more potatoes, for example, in 2020 than large chain stores.
However, the needs of these informal businesses aren’t going to be the same as large chain stores. Someone selling produce from a shipping container doesn’t need the latest and greatest in Rich Communication Services (RCS) – they need fast and reliable mobile wallets, access to global pricing indexes, and the ability to quickly and easily order more stock.
Rather than assuming every business has the same needs, we need to understand and speak to the needs of each specific sector of the market. They are doing huge amounts of business and provide a key service to the community, yet we tend to speak primarily to the needs of large, complex global businesses, following the same pattern we take in Europe. Africa is an opportunity to learn, and recognise the benefits of speaking to smaller, more nimble businesses.
An unspoken reality of the African environment is the fact that there are so many ‘informal’ businesses that are excluded from the data we see reported when looking at the GDP of an African country. Hence most reports on potential opportunities on the continent do not reflect what is the true reality on the ground. And while these informal businesses may not be recorded, they still contribute to the fiscal as they pay VAT on their purchases but do not claim VAT, as the usual process in the formal sector.
So, what is the real opportunity? These informal businesses are the future economy, and which are solving real-life problems at grass root level. As we already know, technology and in particular, a mobile first environment plays a major role in solving these problems. We have seen that in Kenya where mobile money solutions have empowered this informal community of businesses that now contributes immensely to their GDP. South Africa is no different - more potatoes are sold to the informal sector than mainstream retail. So, when considering Africa as a destination to expand your business, factor in this so called ‘informal’ business community and consider how you may be able to serve their needs.
Global standardisation is critical
One major challenge to mobile growth in Africa is the plethora of local regulations and cultural expectations. Africa contains 54 different countries, each with its own regulations.
Industry bodies representing the private sector, such as MEF, have an opportunity to encourage businesses to grow from foreign investment by taking on a strategy to shift policy and align trade departments, both in Africa and globally. Africa shows us that standardisation is key, and as the global mobile industry expands, it needs to work together to ensure standardisation across markets.
Through events like trade investment conferences, industry bodies can help create collaborative environments to make it easier for businesses and people to connect and trade across borders.
By applying the lessons learned from Africa to other regions and businesses, the mobile industry can provide sustainable and scalable economic opportunities to every part of the world.
The potential is massive and, as an industry sector, mobile has a huge part to play. Above all, Africa demonstrates that a mobile-first economy can thrive without expensive formal infrastructure. Mobile infrastructure is relatively cheap and easy to set up, can facilitate information sharing and innovation, and benefit every business from fruit sellers to Google.