BY EMEKA AGINAM, in Cape Town, South Africa

While mobile industry contributes 5.4 percent to the African Gross Domestic Product, GDP, a new GSMA report released yesterday at the ongoing Mobile 360-Africa event holding in Cape Town, South Africa has projected that the number of unique mobile subscribers in Sub-Saharan Africa would pass the half billion mark in 2020 as mobile services become increasingly affordable and accessible to millions of currently unconnected citizens across the region.

This is even as the latest report  by the GSMA  further pointed out that digital inclusion in Sub-Saharan Africa may be derailed  unless many barriers  including network work infrastructure and  government  policy , taxation,  locally relevant content, IT illiteracy  among others were resolved.

According to the new  report, Sub-Sahara Africa  is expected  to see the highest growth on any region in terms of smartphone connections with  525 million smartphone connections in the region by 2020, accounting for more than half of the total connection base at that date.

The report also highlighted  how the taxation of mobile services significantly added  to affordability barriers for consumers, giving  examples in  Ghana, Kenya and Chad  which have mobile taxes of over 25% of revenue.

Spanning more than 220 countries, the GSMA  which represents the interests of mobile operators worldwide unites nearly 800 of the world’s mobile operators with 250 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and Internet companies, as well as organisations in industry sectors such as financial services, healthcare, media, transport and utilities .

The Sub-Saharan Africa region includes 46 countries in total. The six largest markets, in order of size, are Nigeria, South Africa, Ethiopia, Kenya, Democratic Republic of Congo and Tanzania, which together account for over half of the region’s unique mobile subscriber base.

Powering the African Economies

The mobile industry is a valuable and growing contributor to the regional economies of Sub-Saharan Africa. In 2013, the mobile industry contributed 5.4 per cent to overall gross domestic product (GDP) in the region, equivalent to US$75 billion; this included a direct contribution by mobile operators of US$27 billion or 1.9 per cent of GDP.  It is estimated that by 2020 the mobile industry will contribute US$104 billion to the region’s economy, representing at that point 6.2 per cent of the region’s projected GDP.

The industry is also a significant source of employment and job creation in the region. In 2013, the mobile ecosystem directly employed nearly 2.4 million people and indirectly supported a further 3.7 million jobs. The industry also makes a large contribution to public funding in the form of general taxation (US$13 billion in 2013), and through further contributions via licence and regulatory fees and spectrum auctions.

Operators in the region invested more than US$45 billion over the last six years (2008 to 2013) to expand coverage and increase network capacity. Capital expenditure over the next seven years (2014 to 2020) is forecast to total around US$97 billion as operators accelerate investments in order to meet rising demand for mobile data services.

Connecting the unconnected
Despite strong subscriber growth in recent years, Sub-Saharan Africa is still the world’s least penetrated mobile region and local operators face several challenges in their efforts to expand network coverage on a cost-effective basis to unconnected populations. According to the report, the implementation of commercially agreed network sharing deals and ensuring the timely release of Digital Dividend spectrum will be important factors in achieving this goal.

Due to the lack of fixed-line infrastructure in the region, mobile is established as the primary means of accessing the internet. At the end of 2013, there were almost 150 million individuals using mobile devices to access the internet across the region, over 60 per cent of which were doing so via 2G devices. The mobile internet penetration rate in Sub-Saharan Africa is expected to increase to 37 per cent by 2020, with an additional 240 million people across the region becoming mobile internet users over the period.

Meanwhile, according to the report,  there  were 329 million unique mobile subscribers in Sub-Saharan Africa at the end of June 2014, equivalent to 38 per cent of the region’s total population. This unique subscriber base, according to GSMA report  is projected  to grow by 7 per cent per year (CAGR) to 2020 to reach just over half a billion and account for 49 per cent of the population.

With the development,  Sub-Saharan Africa would  have overtaken Europe to become the world’s second-largest mobile market after Asia Pacific, despite market challenges.
According to ‘Mobile Economy 2014: Sub-Saharan Africa’, the new GSMA report further disclosed that  the region has been the world’s fastest-growing mobile region over the last five years in terms of both unique mobile subscribers and mobile connections, and is forecast to continue to lead global growth through 2020.

Accordingly, unique mobile subscriber penetration as a percentage of the region’s population, the report indicated would rise to 49 per cent by this point.
Speaking to a capacity audience while announcing the new report at the GSMA 360 African forum, Anne Bouverot, Director General of the GSMA told the gathering that ,  “The mobile industry has transformed the lives of millions of people across Sub-Saharan Africa, providing not just connectivity but also an essential gateway to a wide range of healthcare, education and financial services.

According to her,  “As today’s report shows, millions of additional citizens in the region will become mobile subscribers over the next six years, with many being able to access the internet for the first time via low-cost smartphones and mobile broadband networks. Operators and other ecosystem players, as well as governments and regulators, all have a rol
Regulatory framework needed

To fully realise the transformative potential of mobile in Sub-Saharan Africa, the  mobile industry, she said  requires a supportive regulatory framework that provides long-term stability and encourages investment.

“This includes the need for clear and transparent spectrum management processes, as well as tackling high levels of taxation in some markets. Addressing these issues will allow mobile to power a fresh wave of growth and innovation in this fast-developing region.”, she explained.
Africa, world’s fastest-growing mobile Region

“The number of mobile connections in the region stood at 608 million in June 2014, forecast to rise to 975 million by 2020. The region is seeing a rapid migration to mobile broadband networks; 3G accounted for only 17 per cent of total connections in June 2014, but is forecast to account for more than half of the total by 2020 as local operators deploy new mobile broadband networks and smartphones become more affordable. 4G adoption is at an early stage in the region today, but is expected to account for 4 per cent of total connections by 2020” , the new report indicated.

Smart phone connections:

Sub-Saharan Africa, according to the reported is also expected to see the strongest growth of any global region in the number of smartphone connections over the next six years, reaching 525 million by 2020.

The growing adoption of smartphones along with other data-capable devices such as tablets and dongles, the new GSAM report said  is contributing to a significant increase in mobile data traffic.

Also speaking during the forum, the Group Chief Executive Officer of MTN Group, Sifiso Dabengwa said that to further remove barriers to digital inclusion, there was need for affordable 3G enabled phones across the region for financial inclusion.

According to him,  device manufacturers in the region should come up with at least smart devices that would could about twenty dollars to enable low income earners in the region be part of digital and financial inclusion.

Meanwhile, the report quoted Ericsson as saying that   mobile data traffic in Sub-Saharan Africa would grow 20-fold between 2013 to 2019, rising from 37,500 terabytes per month in 2013 to 764,000 terabytes per month by 2019. This growth rate is twice the global growth rate over the same period, the report said .