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West Africa: An ICT Hub In The Making

West Africa: An ICT Hub In The Making


West Africa is fast becoming an ICT hub, a development triggered by the current growth in virtually all facets of the economy.

At a brainstorming session with CEOs in Lagos, Nigeria’s commercial capital, the director-general of the Nigerian Stock Exchange (NSE), Oscar Onyema, painted a bright picture of the bourse, saying the exchange is on a steady growth trajectory after a lull caused by the global financial crisis of 2008 and projects that the NSE will hit the $1 trillion mark in market capitalisation in the next few years if the current trend is sustained. He believes that the Nigerian stock market will receive a fillip if a telecommunications giant such as MTN Nigeria Communications, currently one of the most profitable companies in the country, lists on the exchange.

MTN Nigeria subscribers, he explained, will also benefit from the listing because it will enable them to own shares in the lucrative company and reap the dividends. The company has the highest number of subscribers in the country on its network, accounting for 40.5m out of an estimated 90m mobile phone owners. Onyema added that his administration will soon embark on a campaign to woo MTN Nigeria and the other big companies that are shying away from listing on the NSE.

The NSE director-general is not the only one thinking along these lines. A growing number of analysts and leading investors in the exchange also want MTN Nigeria, in particular, to list on the NSE to deepen the market. But the MTN Group, one of the biggest listed companies on the Johannesburg Stock Exchange (JSE), is not in a hurry to list its profitable Nigerian subsidiary on the NSE, as the immediate past CEO of the MTN Group, Phuthuma Nhleko, hinted: “Under no circumstances will we entertain an arrangement whereby MTN International is either separated from, or not controlled by, the MTN Group. That, for us, is just not negotiable.”

Indeed, MTN Nigeria, which turned 10 in August 2011, has been the jewel in the crown of the MTN Group, raking in substantial profits for the multinational. For instance, in 2010, MTN Nigeria made total revenues of N749bn ($5bn), representing 29% of the Group’s total revenues of N2.57 trillion ($17bn).

GSM rewards

The gamble MTN Nigeria’s South Africa-based parent company took on the Nigerian market when it paid $285m for a Global System for Mobile communications (GSM) licence following the liberalisation of the telecoms sector in 2001, has no doubt yielded dividends.

The other GSM operators, such as Airtel, Glo and Etisalat, are also reaping the rewards of their multibillion-dollar investments in the Nigerian telecommunications industry, which reportedly has the fastest rate of growth in the world. According to reports, the industry has recorded about $18bn in direct local and foreign investment since 2001, when GSM service was launched in Nigeria.

Nigeria has clearly become one of Africa’s important telecom hubs, having overtaken South Africa to become the continent’s largest mobile market. The advent of GSM revolutionised communication in the country, giving the masses the opportunity, for the first time, to own mobile phones. It is not uncommon to find Nigerians clutching two or three mobile phones. Nigeria is not the only country that is experiencing this sweeping revolution, as current reports indicate that over 40% of the population in sub-Saharan Africa now has access to a mobile phone.

In Nigeria, the GSM companies have a dominant market share (about 90%) in the telecoms industry, leaving the CDMA (Code Division Multiple Access) operators, such as Starcomms, Visafone, Multi-Links Telkom and ZoomMobile, with the remaining 10%. However, M-Tel, the GSM network of government-owned Nigerian Telecommunications (NITEL), is virtually moribund, following a botched privatisation programme designed to enhance its efficiency.

Internet revolution  

The GSM companies have also brought innovation to the industry introducing among others, internet service. The internet industry is upbeat in Nigeria following the landing of two international submarine fibre-optic cables last year, Main One Cable Company by Main Street Technologies and the West African Cable System (WACS) by MTN. This is expected to drive down the cost of internet traffic, increase connection to the global superhighway and enhance the development of e-commerce. Currently, about 10m Nigerians have access to the internet. This number is expected to rise as the GSM companies compete in a frenzy to crash the cost of acquiring internet modems.

Only recently, Main One Cable Company unveiled two new Internet Protocol services aimed at meeting the broadband capacity needs of its customers. The landing of the $800m Glo submarine cable in Lagos last year is also designed to reduce internet prices and enhance more availability of bandwidth.

Despite these, there are still challenges ahead and they are mainly regulatory. But the Nigerian Communications Commission (NCC), the regulatory body in the country’s telecoms industry, has tried to keep operators on their toes. The NCC concluded a nationwide Subscriber Identity Module (SIM) card registration exercise on 28th September as part of an exercise to discourage the theft of mobile phones in the country and to improve security. It is also championing tariff reduction for consumers consequent on the recent reduction in the interconnect rate. The executive vice-chairman (EVC) of the Commission, Dr Eugene Juwah, has expressed his determination to give subscribers value for their money.

ICT boom

Apart from telecoms, Nigeria and West Africa in general are also experiencing rapid growth in the Information and Communications Technology (ICT) sector. A World Bank report noted that operators and governments in sub-Saharan Africa are investing about $5bn a year in ICT.

In Nigeria a number of indigenous companies are driving ICT on the continent through local content development. Omatek Computers is the first African company to assemble computer cases, speakers, keyboards and mouse, other than computer systems and notebooks, locally. Individuals, corporate organisations and states in the country now use Omatek Computers.

Zinox Technologies is another leading player in the industry, set up in 2001 to manufacture Zinox Computers, Nigeria’s first internationally certified branded computers. The Computer Warehouse Group (CWG), whose vision is to become the number-one IT utility provider in Africa by 2015, is also working hard to realise this objective, as it plans to have a physical presence in 10 African countries by then.

Its group CEO, Austin Okere, who was in Ghana recently to market CWG, says the company plans to list CWG Ghana on the Ghana Stock Exchange market soon, to give Ghanaians the opportunity to have shares in the rapidly growing organisation. He said: “We are really planning to do this in the next three to five years as part of our broad strategy to serve the African continent.”

ICT has also become a driving force in the Nigerian banking industry, which is witnessing a silent revolution spearheaded by the incumbent governor, Central Bank of Nigeria (CBN), Mallam Lamido Sanusi. The cashless economy, which the CBN governor is currently pushing for, will be largely propelled by a robust ICT platform, which the banks in the country have put in place.  

Banking revolution

The trend is similar in other West African countries, particularly Ghana, which is now an oil-producing country. It is expected that ICT will enhance further development of the oil and gas sector.  
The number of internet users in Ghana, amongst the first countries in Africa to achieve internet connection, is also on the rise. But this is far fewer than the number of Ghanaians who own mobile phones. Ghana blazed the trail in telecommunications liberalisation when it launched the first cellular mobile network in sub-Saharan Africa in 1992, a feat that Nigeria achieved nine years later. MTN is the market leader in Ghana, just like Nigeria. (Glo Mobile, a Nigerian telecom firm, also has operations in Ghana). Ghana has since emerged as one of Africa’s most successful GSM markets and the centre of ICT excellence in West Africa.

Ghana has also made substantial investments in ICT training, attracting students from neighbouring African countries. This has made the country one of the key ICT centres in West Africa. Even the Economic Community of West African States (ECOWAS) has hinged the development of the sub-region on ICT. Its stable political environment and well-developed infrastructure continue to attract investors both from within the sub-region and outside.

The concept of e-governance, driven by ICT, is also fast gaining ground in West Africa, where it is impacting on the socio-political landscape. A study by the United Nations Development Programme (UNDP), in partnership with the PANOS Institute of West Africa (IPAO/PIWA), on the impact of ICT on governance, using Ghana, Nigeria and Senegal as models, found that the e-governance strategy is becoming popular because it offers speed and ensures wider reach of the intended audience. The study predicted that e-governance, which encourages e-participation, will shape the political future.

This prediction appears to have become reality as the Nigerian President Goodluck Jonathan is one of the few African heads of state active on Facebook, a social networking platform that enables him to interact with the citizenry and feel their pulse on burning national issues. 

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Written by African Business Magazine

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