Imagining the future: Africa looking forward five years from now
The start of the year always sees many predictions for the coming year and a certain amount of gloating from those who feel they guessed right last time around. Some predictions are easy. They are just about pointing to something that is about to take off. The start of Africa's broadband markets would be a typical example. Other predictions are less easy to make. However, making predictions in Africa is so much harder because so much depends on the often unpredictable mix of Government action and commercial strategy. It always seems to be a case of "if this happens, then that can happen". So this week we try to look forward to what the future might hold in three to five year's time.
These are not predictions but are an attempt to identify a number of key things that need to change in Africa in order for the Internet and telecoms sectors to continue growing and for them to play a significant central role in the economic growth of the continent. All of them require everyone involved to be able to make the leap of imagination that will enable a different tomorrow.
So let's try and imagine a future in which:
* The cost of international bandwidth falls to near European levels: Those involved in the EASSy consortium are already talking about a wholesale price of just over US$1000 per mbps. It could be perfectly possible for the consortium to accept external donor financing and bring the price down to the US$500-1000 range. By itself, cheap international bandwidth will not make a change but unless the continent can get below the US$1800-2000 per mbps 'floor price' that can be achieved on satellite, it will continue to pay more than its competitor developing countries. In a continent with widely dispersed rural populations, satellite must continue to have a role to play but it is not the answer to getting more competitive, high-volume bandwidth.
* The cost of domestic calls goes down to US0.5 cents a minute: It's happened elsewhere and if the mobile companies are to continue getting business growth for the foreseeable future, they will need to continue to produce lower prices in order to widen their markets. Sadly the worst of the mobile companies are still just "harvesting" the abnormally high rates of return that their high prices have bought with them and have forgotten that as "new incumbents" they might need to make real innovations as the market changes. The mobile companies are now nearing completion with network investment. It's relatively cheap to connect a mobile subscriber whereas rates are still high. For a fixed line operator, it's relatively expensive to connect a subscriber but the rates are relatively cheap.When the vast majority of people make a cell phone their main form of voice communication why does it command a premium in terms of rates? Convergence will put this strange paradox under close scrutiny. How can it make sense to offer a mobile service where the phone is locked to the local cell? The history of the rise of Reliance in India gives a clue as to how this situation will begin to break down.
* Cost of calling friends, family and international business contacts abroad comes down to 5 cents a minute: At present, this kind of call in all too many African countries costs US$1 a minute using the incumbent telco. Truly competitive prices in the "grey market" show that this can easily go down to US$7-10 cents. If the interests of Africa's consumers (whether as individuals or in organisations) gets put first, then both regulators and operators would be really seeking to lower these prices. Low-cost broadband enabling voice offers can deliver this promise.
* VoIP is legalised across the continent: Using VoIP will allow the possibility that incumbent telcos could work with the ISP sector to create an IP-based network that allowed locally-owned service businesses to flourish and to contribute to economic growth. The steady roll-out of fibre networks across the continent - with alternative infrastructure providers (like power companies) and carriers' carriers - will allow IP-carried calls to be made between African countries at a far lower cost than switching them via satellite to Europe or North America. The prices just have to come down below those currently offered on satellite.
* The cost of reasonably-specified laptop comes down to between US$100-200: Nicolas Negroponte's "supply-led" dream is unlikely to succeed but someone will make the breakthrough before too long. A Chinese company has taken over IBM and it's likely that before too long its business strategists will turn their minds to how they can create new business in emerging markets. No-one is arguing that cheaper computing devices will overcome illiteracy levels but there is still such a large, unsatisfied market out there amongst those that are literate.
* All government offices are connected and have access to both VoIP calling and Internet: So much of the development of connectivity elsewhere relied upon the creation of a "critical mass". Government (and not always national governments) have a key role to play in creating that critical mass. It's small wonder that the considerable number of "pilot projects" have found it hard to flourish if there is no-one to connect to at the other end of the e-mail or the phone call. A small seaside municipality in South Africa - Knysna with only 50,000 inhabitants - gives some idea of how things can be done. Working with the private sector, it has connected up all government offices and local inhabitants can make free calls for enquiries to the municipality. If local authorities, why not groups of hospitals or health clinics? Schools?
* Every university student has low-cost access to the Internet: The fuel for change is transforming people's sense of what can be done through ideas. The growth of cyber-cafes has already demonstrated that the younger generation of Africans is thirsty for knowledge. Buying bandwidth in bulk can provide this and the pioneering University bandwidth consortium in East Africa may yet blaze the trail. Imagine the next generation of Africa's elite understanding computers and using the Internet as if this was as natural as going back to visit their parents in their home village. Imagine Africa's political elite skipping a generation so that the current generation of pensioners can enjoy their twilight years entertaining their grandchildren rather than resisting retirement.
* Transferring money electronically becomes easier than carrying large amounts of cash: It is now easy to buy mobile minutes and transfer them to your mother in an up-country village. These minutes are a transfer of money for money is simply something that people accept has value (gold, paper, coins etc). A mobile company has the capacity to store and facilitate the transfer of cash. If they want to innovate (perhaps in partnership with the continent's deeply uncompetive banks), then instead of talking about accounts for the "unbanked", those at the bottom of the pyramid could "bank" money as minutes. And before you know where you are, they've established a "financial history" and...well you can write the rest of the story.
* Investment is encouraged in the low-cost, rural voice challenge: Africa's regulators have become so used to taking money off operators for licenses that they are perhaps unprepared for the next phase where they will have to provide incentives to find business models that work commercially in areas where a market is barely functional. Thus far they have mostly given this task through Universal Access funds to mobile operators or incumbents. Neither could be said to have focused on lowering their cost base to enter these markets. The low-cost voice challenge will probably be met through using emerging mobile VoIP technologies. The innovators could be small-scale local innovators who interconnect with the larger operators.
* All of Africa's incumbents are either privatised or behave in a commercial manner: It is impossible to have markets that operate in favour of the consumer if the incumbent remains a protected area. Employing several thousand staff too many involves paying money that could be spent positively in other ways. Without a commercial imperative, the incumbents will not grasp the potential they have with any speed. Some of the monopoly SAT3 consortium members have failed to sell much of their share of the fibre bandwidth despite having the markets in which to do so and no real competition.
All of the above would produce a competive continent that might bid for outsourcing and call centre work and develop its global markets for other products and services. Without it, there is little chance of large parts of the continent participating in the global economy. If you can imagine even some of these things happening....then maybe, just maybe Africa will be a different place in five years. And we're not going to make a prediction because only you have the power to bring it about.