Tuesday February 23 2010

Africa´s offer to the crazy mobile world

GROWING TREND: The number of mobile phone

GROWING TREND: The number of mobile phone subscribers is expected to grow by 512 million by 2012. FILE PHOTO  

By Fredrick M. Masiga

Barcelona
On Monday last week, Nokia made what it deemed a grand announcement – that in another 90 days or so, it would start a mobile money transfer service using its Nokia mobile gadgets.

Nokia money, as it is called has already been under a pilot project in Pune, one of India´s largest cities of more than six million inhabitants. The ´success´ of the pilot project is nudging Nokia on further afield where, according to Nokia´s estimates, 1.1 billion people using its handsets will offer a vast possibility of customers most of who are in the lesser versatile markets like Africa, Asia and Latin America.

The catch for Nokia – so they believe – is that the global banking industry is still a ´virgin´ field in which mobile technology would offer a trendier and hands-on solution to millions of people who do not have bank accounts but prefer the woolly warmth of their mattresses to the steely cold of banking vaults to keep their savings. In Africa, only one in five people have a ´live´ bank account.

Africa, according to Blycroft Publishing, has been one of the fastest growing mobile markets in the world for the past 2-3 years.

Anticipated growth
Though inhibited by factors such as widespread poverty, illiteracy, corruption and excessive taxation, mobile penetration rates continue to rise throughout Africa reaching an estimated 512 million subscribers by 2012. These are very attractive conditions to any futuristic investor and Nokia is in the league.

“The Nokia Money initiative, based on Obopay’s platform, is initially targeted at growth markets and designed to work in partnership with multiple network operators and banks, involving distributors and merchants in a dynamic open ecosystem to seamlessly provide the new services,” Mr Teppo Paavola, VP and general manager of Mobile Financial Services at Nokia, said.

Mobile money transfer
Consumers will be able to transfer money to another person just by using the person’s mobile phone number, pay utility bills as well as recharge their prepaid SIM cards using the service.

That news, announced during the Mobile World Congress in Spain, Barcelona may not shake the sleep out of many an African operators who already offer money transfer services like Zain´s Zap, Safaricom´s Mpesa or even MTN´s mobile money. Actually, on that front, Nokia should be prepared to take lectures from these African operators who discovered that niche long time ago. With thousands of Africans in the Diaspora, the market demanded the service almost without the operators´ need for feasibility studies.

At the congress, except for South Africa and Kenya, most presenters were less inclined to mention Africa in particular as a major growth region for mobile technology. Egypt was clumped together with the Middle East while Nigeria – Africa´s most populous country - received anecdotal mentions.

The Kenyan government received the GSMA government leadership award for progressive mobile broadband strategy. The recognition was in part because of Kenya´s example in extending the benefits of mobile technology to more consumers by cutting tax on mobile phones and information communication technology (ICT) equipment and promoting the early roll-out of mobile broadband.

More effort
Last year, Kenya eliminated both import duty and sales taxes on mobile phones and other ICT equipment, making access for consumers more affordable. The government also demonstrated its commitment to modernising the telecom sector when it facilitated the landing of two fibre optic cables, TEAMs and Seacom, heralding a new era of abundant broadband capacity for Kenya and the East African region.
The GSMA, which represents the interests of the worldwide mobile communications industry, also said the Kenyan government had been instrumental in the development of a vibrant mobile broadband market by licensing a new spectrum and by launching a number of ICT/mobile projects aimed at promoting education and health in rural communities which ultimately will boost the Kenyan economy and improve the well-being and future prosperity of its citizens.

Africa´s Achilles heel in adopting the fast advancing telecom technology is to be found on the continent other than outside of it. Kenya´s recognitions highlight two important issues that could hold the key to opening up the continent to telecom growth.

The first, which was shared by Nikolas Savander, the executive vice president Nokia services, is how governments’ policy is shaped to enable that growth. Mr Savander, for example, was less categorical on when the Nokia Mobile Money would move to Africa.

“We are aware of the Safaricom Mpesa but government policies on licensing is the major factor, ¨ he said on the sidelines of the Congress.

Just like in Pune, Nokia has only been able to start the pilot through a third party. In partnership with Yes Bank, Nokia has introduced the service to the Indian market.

Workable options
Banking is not its core business so Nokia has to find somebody with that core competence to manage the banking side of that business. In Africa as an alternative, Nokia could partner with mobile phone operators like Zain, MTN or Safaricom, which inevitably raises the flipside question; would these operators be willing to close their own shops for the sake of Nokia? It´s no brainer. It´s is a tall order for Nokia especially trying to reach out into a market that is already ahead of it on the mobile money track.

The innovation by Safaricom on mobile money has not gone unnoticed just like a few years ago when Zain introduced the One Network, it caught the telecom world by surprise.

African operators have learnt how to make penetrative footprints of their own by tailoring services and products to the needs of their vicinity.

Fibre optics
Not much has been done by way of operationalising the arrival of Seacon and Team to Uganda but Kenya has made inroads and already some Ugandan companies are being serviced directly from hosts in Nairobi.

The last story the media carried about the state of the national backbone cables was a scandal of financial misappropriation on the project and insider squabbles that are costing the project more losses by the day.

The inevitability of competition in the telecom sector is undeniable, African governments can only leverage by laying strategic policies that ensure cost benefits to providers and fair prices to final consumers.

Tax system
The other issue, and closely related to the first, is the tax system. The telecommunication and banking sectors have been the best performing drivers of most African economies lately and inevitably governments have tended to cash on them by way of taxation. How much these governments are willing to milk out of these cash cows also determines how healthy and profitable the sectors will remain. Unfortunately, the tax burden imposed has defined the African mobile market as the most expensive.

By recognising Kenya, GSMA is asking of African governments to rethink their fiscal policy on mobiles.

That the elimination of short term taxation on mobile phones to increase affordability and driving medium terms gains on GDP and the total tax contribution by the sector would be a key driver for more investments and more jobs.

Mobile growth
The growth of mobile subscribers worldwide over the past decade has been phenomenal, now estimated at more than four billion users, with two-thirds of that number located in developing nations.

This means that the impact of modern mobile computer technology on society is reaching beyond the richest countries of the world where mobile telephony was first introduced, to the poorest countries where its potential impact is much greater. Once African governments recognize these ´facts´, the rest will be history because currently the continent still has the smallest consuming class but the largest potential of aspiring and climbing consumers only waiting to be brought into the fold.

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