Calling Africa: The emergence of mobiles in Africa

Africa might have been slow to catch on to the media and telecom communications wave – after all, it was only a decade ago that budget TVs imported from China started to flood the African market. As a result, broadcasting is now enjoyed by a greater proportion of Africans, even those living outside the main technological hubs. The media environment has hugely developed and today a large chunk of programmes shown are produced in Africa, while imports dominated the offer only five years ago.

Aside from the broadcasting development, the biggest growth market on the continent is mobile communications. Allowing this business segment to flourish, three submerged cables arrived in Africa over the past few years, which have seen data speed quadrupling and prices plummet by as much as 90 percent. One of the reasons why mobile phones have become the communication tool of choice among Africans is that mobile-phone coverage easily surpasses the quality and availability of fixed telephone lines.

Coupled with the arrival of high-speed cables, many additional factors can be attributed to the boom, the liberalisation and privatisation of the sector being just one of them. These changes have been implemented in several countries including Uganda, Tanzania, Nigeria, Sudan, South Africa and Kenya, and the nations have greatly benefited from the improvements and their telecommunication infrastructure has drastically progressed. The extension of services has been further spurred by the rise in multinational conglomerates. Moreover, the fierce competition between brands trying to break into the booming market help to spur on the telecom movement even further, while at the same time keeping prices competitive. »

Capitalising on the boom
Today there are more than 82 million mobile users across the continent. The Nigerian market is experiencing a particular boom and has grown by over 100 percent per year in the past few years.

The surge in the telecom sector that has taken place in the last few years is hugely significant for the continent. But the market, unlike that of many developed countries, is far from saturated. In the region that covers Kenya, Uganda, Tanzania, Mozambique, Angola and Zambia, poverty is widespread with the annual income hovering around $800. While the mobile telecom sector has expanded greatly across these countries, there is still only a 35 percent mobile penetration, which means that as much as 65 percent of the population do not use mobile phones. This can be attributed not only to lack of finance to buy and keep a mobile phone, but also to the fact that many people live in rural areas well outside reception reach. Recognising the amazing business opportunities the African market presents, global telecom companies haven’t been slow to catch on.

Follow the leader  
Having capitalised like no other company on the African spurt in the telecom sector, Nokia is the continent’s ultimate market leader. Allegedly, the Finnish mobile stalwart boasts a market share of 58 percent in Africa, and it is one of the most recognised brands on the continent, ranking as highly as Coca∞Cola in the brand fame stakes.

Despite the worldwide rise in smartphones, about 85 percent of all mobiles sold on the continent are still of the ‘basic’ kind, while smartphone varieties cover a mere 15 percent market share. Since Nokia is the go-to name for fuss-free mobile models, it’s easy to see why the company has proved such a hit in Africa. The most popular Nokia model among cash-strapped African consumers is the Nokia 1100 handset that is priced at a modest $30. No less than 50m of these devices are currently said to be in use throughout the whole of Africa.

The company’s latest contribution to the basic model line-up especially targeted to the African market are two models, the Nokia 101 and Nokia 100. What makes these devices so suited to consumer in Africa?

“The price point is an obvious answer, but there are cheap phones from our competitors. So that’s not the real importance. The first reason why people come to Nokia in Africa is the robustness of the devices. I remember going to one group of customers and asking them why they buy Nokia. One man held up his phone and dropped it straight onto the hard concrete floor. The back flew off and the battery came out. But then he calmly picked up the pieces and put them back together again – his phone was fine. ‘There,’ he said. ‘That is why I buy Nokia.’,” explained Kenneth Oyolla, Nokia’s general manager for eastern and southern Africa, in a blog post recently posted on the company’s website.

Producing mobile phones with long-lasting battery life is another of Nokia’s strengths, and this crucial characteristic alone has seen Nokia sales soar massively. A powerful battery doesn’t merely come in handy in Africa, it is of outmost importance on the continent as many Africans live in homes outside the electric grid. A further key point of Nokia is the availability of local language options such as Swahili, which is something that is not commonly offered among Nokia’s competitors.

The Nokia mobile may seem as it was specifically tailor-made to the African market, but the Finish company is well aware that complacency is simply not an option in such a crucial time for the company. Considering the changes in the mobile market, Nokia’s status as the top device provider probably won’t remain for much longer. While rival names are closing in on that coverted crown, the market itself is shifting to make way for the growing popularity of smartphones – and this is widly known to be one of Nokia’s weaker product groups. Indicative of the growing demand of the smartphone,  when a $90 variety produced by Chinese telecom giant Huawei (the IDEOS) hit the market at the start of the year, it sold out in a number of African countries within a month. »

Smart rivals
As a result of the growing popularity of the hugely sophisticated mobile market, smartphone operators such as Samsung, Huawei and the BlackBerry manufacturer RIM, are threatening to push Nokia off its perch. Quick to capitalise on the African market, BlackBerry has started producing more affordable consumer devices. The company’s reputation may have been tarnished a little following last summer’s extensive network meltdown, and although the African market was one of the affected regions, it’s unlikely that the mishap will put a dent in the company’s future growth within Africa.

Taking the lead in entertainment based devices, Samsung’s Tab is the preferred option among Africans, even though it doesn’t come cheap at $500. This indicates that attitudes relating to price are starting to change among African consumers who do hold enough funds to part with for a more sophisticated device. So far Apple hasn’t jumped on the African telecom bandwagon, but it might be just a matter of time before it does. 

The competition is certainly rife, and Nokia has to up its game in order not to fall by the wayside entirely. Attempting to keep up, a more sophisticated version of the 1100 is soon to be launched. It promises to offer a better screen and internet connectivity that will allow users to access social-networking sites like Facebook and Twitter, without breaking the bank.

Aside from launching new devices, Nokia is trying to keep ahead of the game via other means. Displaying a philanthropic side is one such method. “Nokia has made donations to UNICEF Somalia and Kenya Red Cross Society to support their relief efforts in particularly poor areas. Nokia’s approach to supporting disaster recovery is to focus first on immediate disaster relief, and then collaborate with local and state governments, civil societies and NGOs to offer mobile technology for development, assistance and to help rebuilding efforts. We have operated this way in a number of tragic natural disasters over the last few years,” read a company blog posted in autumn 2011. 

Spurring growth 
The spurt in mobile communications in Africa has presented international telecom companies with a goldmine and endless opportunities. But it has also had a positive effect on economic growth, particularly in developing African nations. The impact the telecom boom is estimated to have in these particular regions is believed to be twice of that, then in already developed countries.

Significantly, the humble mobile phone is not merely used as a tool to make calls within Africa – it has also come to double up as a mini computer. Again, poverty is behind this trend as few Africans can afford to purchase a computer. Among the 82 million mobiles in use, more and more feature rudimentary internet connectivity, and the mobile is held as the undisputed star in the African media sphere, used as much for making calls and sending emails as it is surfing the web or accessing social media sites.

The telecom boom hasn’t just enabled African people to get connected and access the internet. It can potentially transform the lives of many people living on the continent. African farmers, in particular, will be greatly assisted by the movement, as new mobile data services spanning weather forecasts, commodity market information and mobile banking will bring new business opportunities for farmers operating on a marginal scale and are prone to suffer failures and shaky commodity price movements.

In October 2011, a report called ‘Connected Agriculture’ was launched by Vodafone and Accenture. It highlighted some startling figures, namely that the income of farmers in the developing world may be boosted by as much as $138bn by 2020 – largely due to the rise in mobile communications. The report estimates that 80 percent of the potential upswing in farmers’ incomes will be generated from the growth of the telecom market.

Oxfam is an avid supporter of the report. Dame Barbara Stocking, Oxfam’s chief executive officer, said: “With more than 1.5 billion people worldwide dependent on smallholder agriculture – a group that includes half the world’s undernourished people – mobile telephony could have significant potential to help the poorest farmers towards food and income security.”

The benefits won’t benefit Africa exclusively – the rest of the globe will reap the rewards as well. Since the global population is expected to surpass the 9bn mark by 2050, food production will have to increase by 70 percent above 2006 levels in less than 40 years. Hopes are high that African farmers, along with other growing economies, will help to produce much of the extra food needed. Vodafone Group chief executive officer, Vittorio Colao said: “Smallholding farmers in emerging markets are both vulnerable and vital: without a steep increase in their productivity, it is hard to see how future generations will avoid global food shortages. Mobile is already transforming hundreds of millions of people’s lives in ways unimaginable only a decade ago. This report now provides vivid evidence of how mobile can make a material difference in tackling the global food gap.”