Broadband opportunities for Africa

In a global economy increasingly characterised by information, broadband networks are the essential pathways along which the information content, services and applications travel. Broadband network infrastructure has transformed economic activity in much the same way as the development of rail, road and electricity infrastructure did in previous eras. These infrastructure developments all resulted in economic efficiencies and new economic opportunities for individuals, companies and governments, boosting economic growth. As much as broadband has resulted from economic development, it is now increasingly driving it.

This has enormous implications for business in Africa, including SMMEs, which play such a vital role in economic invigoration. Without technology, Africa’s economy cannot advance, leading to stagnation, growing inequality and reduced competitiveness.

Broadband provides a business platform, as well as access to finance and efficient trade through
e-commerce, and many SMMEs are taking advantage of a technology-enabled shared economy.

According to World Economic Forum (WEF) research into a “Fourth Industrial Revolution”, technology platforms – which are increasingly easy to access and use owing to high smartphone penetration – bring together people, assets and data, and create new ways of consuming goods and services.

Technological advancements have lowered the barriers for businesses and individuals to create wealth, and have changed the personal and professional environments for workers. The WEF found that new-platform businesses are rapidly multiplying into many new services, ranging from laundry to shopping, from chores to parking, from massages to travel.

Among the many benefits to SMMEs, efficient and accessible broadband infrastructure in Africa provides the ability to easily enter the knowledge economy via access to the latest research, news and information, and apply online for projects and tenders. In seeking new business, SMMEs can create online profiles, leading to promotion via search engines and social media platforms. Connectivity results in the ability to connect to international business and consumer markets, apply for and manage finance online, develop the business via e-commerce and connect to global trade.

In the past decade, sub-Saharan Africa has managed to leapfrog telephony trends and, through mobile, has brought voice services to more than three-quarters of the population. According to data from international telecommunications union ITU, the annual growth rate of subscribers reached 66% in 2005 and 44% in 2006. This was dramatically higher than the growth figures in many advanced countries – for example, Germany, where the growth was 12% and 8%, respectively. Africa now has more than 980 million subscribers, of which 730 million are in sub-Saharan Africa.

However, the divide on internet access is widening – much of the region is falling behind the rest of the world in terms of broadband connectivity. According to the Commonwealth Telecommunications Organisation, by June 2012, 341 million people in sub-Saharan Africa lived beyond a 50km range of a terrestrial fibreoptic network, more than the population of the US. The data showed that decreasing the range to 25km increased the number of people living beyond the reach of an operational fibreoptic network to 518 million – more than the entire population of the EU. The lack of access is attributed mainly to limited supply and prohibitively high prices.

A lack of connectivity translates into a lack of progress. The Organisation for Economic Cooperation and Development has documented that for every 10% increase in broadband penetration, there is a 0.9% to 1.5% increase in the growth of GDP. This kind of growth would have a profound effect on Africa’s standing, its economic activity and the standard of living for its people.

Nowhere is connectivity for businesses as well as individuals more important than in rural areas, where socioeconomic inclusion remains the dominant reality.

At this stage of Africa’s development, we have the ability to once again leapfrog the development stages other nations have been through. With the advancement of technology, Africa’s population of more than 1.2 billion people could connect to one another and to the world. This connection can lead to improvements in education, health, communication, trade, business and industry. But it also has a much bigger effect. It will empower Africa to compete on a global scale, and advance its economies to create jobs and alleviate poverty.

An important trend is the expansion of mobile broadband and the uptake of smartphones. GSMA forecasts estimate that by 2020, Africa is expected to have about a billion subscribers, more than half of them with a smartphone. About two-thirds of these will be connected to 3G or higher network technologies. This is a vitally important development.

Any business operating in Africa knows that infrastructure investment is vital. Investment into broadband could deliver the biggest return in the history of the continent. SMEs need to exploit the benefits that broadband and the digital economy can offer to create a buoyant and vibrant commercial sector.

Dlamini is chairman of Massmart and Aspen Pharmacare Holdings, and was recently invited by The Telegraph to the Future of African Broadband Summit in London

How will better and faster mobile internet access benefit you?

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