DIGITAL GROWTH IN AFRICA - THINGS GOVTS CAN DO FOR FREE OR NEARLY FREE

24 November 2000

Top Story

The digital divide is almost an unhelpful term. The divide in this area simply reflects the social and economic divides that already exist throughout societies, especially in Africa. The new technologies have the capacity to transform economic and social processes. But do those who are promoting these transforming effects through things like the G8 Dot Force have the courage to say to African politicians that the magic will only work if they play their part? The transformation will only come about if they take a number of steps that will cost nothing or almost nothing. Without the courage to make this clear, Africa will remain one of the least favoured parts of the planet for digital investment. We asked 25 key individuals and organisations to identify the steps that need to be taken to encourage digital development..

The issue of the global digital divide is working its way through two key intergovernmental bodies: the G8 Dot Force and a Commonwealth Expert Group on Information Technology. Both are meeting in Cape Town at the beginning of March. The conclusions from their discussions should be of considerable interest to Africa. Both bodies are seeking to find ways of overcoming the digital divide. Understandably from Africa’s point of view much of the discussion focuses on the "big bits" like the need to invest in physical infrastructure.

However there are much less spectacular things that African governments can do for themselves to create the much talked about "enabling environment". What does this "consultant-speak" phrase actually mean? A country operates in such a way that key organisations involved in digital development - whether private sector companies or NGOs - are are actually helped by the government to "get things done". Achieving an "enabling environment" involves government carrying out small but decisive actions at little or no cost to themselves.

These actions by themselves will not bring about growth and investment but they will create the right conditions for it to happen. If African governments fail to take these arguably cheap or cost free steps they may rest easy with their "business as usual" approach but their people’s wealth-creating capacity will slide steadily backwards.

News Update asked 25 individuals and organisations drawn from development agencies, the private sector, NGOs and trusts involved in digital development in Africa to make suggestions about things that African governments (or others) could do for little or money to encourage digital development. There was almost a complete consensus on the kinds of things they felt ought to be done:

 

AFRICAN POLITICIANS AND CIVIL SERVANTS MAKING THEMSELVES MORE ICT-AWARE

Although there are now more ICT-aware African politicians, there is still a very high percentage who simply do not understand the issues facing them. As one economic development agency officer put it:"If more Heads of States were active computer and internet users it would enable most countries to make effective decisions and perhaps significant differences would follow.

An influential trust member funding digital divide initiatives globally noted:"You need to start working with an influential Government official so that he or she understands the need for and effect of these technologies and can advocate them with their peers. Most of the significant efforts with country-wide proliferation elsewhere - like Costa Rica and Estonia - started with key officials who stressed the need for government investment."

Many of those asked were sceptical of the seemingly endless process of drawing up paper strategies to address these issues:"It is unclear why many countries waste more time on strategies for policy development than on (implementing) the policy itself". In all too many countries Government ministries fight amongst themselves to lead the process, leading to yet further delay.

 

FAILURE TO INTRODUCE EFFECTIVE COMPETITION POLICIES

African governments are conducting a slow paced retreat towards liberalising the telecommunications framework in each country with too little thought devoted to the impact on their people and their economies. The three bidding shambles in Kenya, Nigeria and South Africa (see below) amply demonstrate all that is wrong. The regulators lack people with appropriate expertise or are not given enough scope to become powerfully independent of government.

One private sector company expressed it forcefully:"The biggest hindrance to (digital) growth is the failure to dregulate the communications arena. This is a purely government action without capital cost. Deregulation would allow all and sundry to into the business and growth would be explosive if investment conditions ever come right." As one academic closely involved in the telecomms policy debates put it:"The regulatory system needs to be clear, predictable and efficient."

 

REGULATIONS NOT HELPING "NOT-FOR-PROFIT" DEVELOPMENT ORGANISATIONS

Instead of encouraging development NGOs to use the new technologies that leapfrog landlines and are suitable in the rural context, governments actually place enormously time-consuming obstacles in their way. Many examples were given to us of schools, health research organisations and many others who had the greatest of difficulty licensing use of these technologies. And this was even when the state telco was unable to provide a landline alternative. Often NGOs are forced to operate outside the law just to make things happen. Agencies whose work has considerable impact on the well-being of countries they operate in were being charged (for example) tens of thousands of US dollars to licence a VSAT connection. How can it make any sense to be charging a premium to organisations who are directly contributing to the welfare of a country’s people?

 

THE COST OF LICENCES - FAILING TO UNDERSTAND THE BUSINESS OF BUSINESS

Far too many African politicians do not understand how business works. As one consultant involved in Africa rather cynically commented:"Too many of them tend to see business as a form of legal extortion, something they feel Government should have the monopoly on. They think that everything external investors do makes instant fast bucks."

The newly appointed PTA in Zimbabwe has just announced its licence fees (Statutory Instrument 16A of 2001) - Try Z$100,000 application fee and an annual licence fee of US$70,000 to operate a duplex VSAT Earthstation (yes the currencies are correct!). Many of the Banks, Insurance companies and other distributed organisations have deployed their own nationwide VSAT networks due to the absence of a national backbone. Seemingly, they will now have to licence these terminals at these rates. Previously there were no licence fees applicable.

And the new fees for Internet Access Providers - Z$100k application fee and US$2 or 4 million licence fee depending on whether you are a Class A or Class B (which incidentally has not been defined - so no one knows which Class their business falls into), PLUS a further annual fee of US100,000 or 2% of gross annual turnover, whichever is the greater. For comparison - the Zambian Licence fee to operate as an ISP is US$40,000 for 5 years.

Some basic facts on Zimbabwe’s ISP sector- the average subscription fee for a dial-in subscriber is about US$15 per month (one of the lowest in Africa outside South Africa). The total dial-in user base is estimated at under 19,000. Therefore, the entire ISP industry in Zimbabwe is generating revenues of approx. US$3.4 million from its dial-in base. A further US$2 million per annum is probably generated from servicing the Corporate sector and in related activities such as Web site development. There are 5 commercial ISPs servicing 90% of a market generating less than US$5.5 million per annum. With the slim or non-existent operating margins and the proposed licence fees at US$2 or 4 million and annual fees of US$100,000 or more, the writing is on the wall.

Unless this legislation is overturned or redefined, the digital divide in Zimbabwe will widen to a point where it is practically insurmountable. Which is unfortunate since it boasts one of the highest literacy rates in sub-Saharan Africa. This sort of practice runs contrary to the ATU’s primary objectives and will close down more ISPs than any other regulation or economic condition. As one African ISP put it:"Even the most cash-rich ISPs will start to question operating in these countries (and even this continent)".

The failure to understand business costs jobs as an economic development agency made clear: "Many countries have illegal shops or kiosks that provide communications services with relatively high costs. Senegal has turned these shops into opportunities for income generation for thousands of families by legalising telecentres providing access to fax, telephone and now the internet."

 

ABOLISHING IMPORT TAXES ON COMPUTERS AND CUSTOMS DELAYS

Cameroonian President Paul Biya has said that his government will announce a cut in duty on computer equipment brought into the country. The same has happened in Benin. Three cheers for these initiatives. How can it make any sense to place a tax on the very tools that will help a country harness the opportunities of the future?

Again even NGOs find themselves taxed when bringing in computers for educational purposes:"Governments need to allow not-for-profits to take advantage of (computer) donations without taxing them as you would commercial products when they come into the country. You’d be surprised what we had to do to get exemptions. Having an uncorrupt customs service is clearly important."

Not only are these vital economic tools taxed on entry but they are often delayed in customs for considerable periods of time. One organisation in Ethiopia had to wait over a year to get its equipment out of customs. How can governments keep up in the digital race when the very channels of supply are moving at a snail’s pace?

 

CORRUPTION - A PERVASIVE INDIVIDUAL TAX ON WEALTH-CREATION

Africa contains a disproportionately high number of countries that are in the first division for corruption. As one private sector executive told us:"I think it would be fair to say that there is no successful country anywhere in the world where corruption is the order of the commercial day as it is throughout this continent." In some cases this is not simply corruption around contracts and bidding but systemic corruption throughout the society. This is a sensitive subject and when raised with African politicians often meets with the rejoinder:"Ah...but you have corruption in your country." We enter "two wrongs don’t make a right" territory. Any private sector company that makes a bribe must share responsibility for the disabling effects of corruption on the effectiveness of the societies these customs or habits have taken root in.

Greater transparency and effectiveness in bidding processes would clearly make some levels of corruption harder to achieve.

 

GOVERNMENTS AS EXAMPLES OF BEST PRACTICE

Government itself is often the obstacle. As one West African NGO officer so graphically described:"Government is spoiling everything, from education to health, from oil to telephones, from policy to goods exportation. At any place, you have to fill in a ton of forms, produce the same amount of paper, request more and more authorisations. I think the more we reduce government actions in our daily lives, the more we create the conditions to encourage growth in Africa’s ‘new economy’".

The same heartfelt frustration was echoed by several respondees who commented on how slow governments were to respond to requests or to see themselves as part of a supportive framework. Africa is not alone in this field. Many developed nations’ governments struggle to behave in a responsive way. African countries need to understand that governments can either make themselves part of the problem or part of the solution.

Goverments have to lead by example. One respondent told us:"If governments answered their e-mails, this would be a much better reason to use the technologies. First get an internet terminal in the President’s office then (so rarely she) will get enthused and actually understand what this is all about."

Government controls policy for key learning institutions and many of these lag behind in their thinking:"African universities continue to defend the status quo. The current setting is ‘talk and chalk’ with outdated materials, limited or no access to course materials and students leaving universities without creating personal home pages. Computer and information science teaching and research remains far behind the type of skills needed at local and global level. It is possible to turn around universities at a relatively low cost."

Governments need to find ways of harnessing the skills of its citizens who have left. Rather than simply bemoaning the brain drain they need to mobilise the "digital diaspora". As one person said:"It is perhaps the easiest resource to tap without much cost. It is not only a source of income but could be a source of free advice in complex issues such as regulation. Most of those in the diaspora are ready to help their home countries, often for free."

In fairness, there was one respondent - the head of a key development agency in this area - who dissented from the basic proposition:"There are few viable strategies that would require little or no expenditure in cash and at the same time provide sustainable impetus for growth of ICT infrastructure and services. I tend to think in terms of incentives to be given in order to make investors redirect their investment destination towards African markets."

News Update is a free e-letter produced by Balancing Act that covers African internet content and infrastructure developments, It goes out to government, the private sector, education and NGOs. To subscribe, send a message saying "I want to subscribe" to info@balancingact-africa.com