Mobile telecommunication networks have been regarded as the first complete infrastructure the continent has ever witnessed. To bolster this statement – Africa has 800 million cellphones which has positioned the continent as the world’s leader in mobile banking and payment technology platforms and smartphone users are expected to rise from 7.2 million in 2013 to 525 million by 2020.
The year 2015 was a year of continued growth in the global mobile technology space with more than 7.6 billion mobile devices connected, representing a 4.7 billion unique subscribers and operator revenues of more than $1 trillion. The acceleration of 4G was the major highlight of 2015 and the global 4G connection base passed the 1 billion mark in late 2015 and is now available in 151 countries across the world.
70% of world population connected via mobile in 2020
The global subscriber penetration rate now stands at 63% with regional penetration rates ranging from 43% in Sub-Saharan Africa (SSA) to 85% in Europe. Based on this – overall subscriber growth rates continue to slow down due to the saturation in developed markets and the difficulties of connecting low-income populations in developing markets. The global subscriber base will reach 5.6 billion by the end of the decade – which would translate to over 70% of the world’s population having a mobile subscription.
Mobile technology growth is expected to be primarily focused on the developing world with expectations set at more than 90% of the incremental 1 billion new mobile subscribers forecast by 2020 which will derive from the developing markets. Smartphones connections globally will increase by 2.6 billion by 2020 and 90% of that growth will come from developing regions. China is the largest smartphone market with India being the growth propeller – which is set to add almost 500 million new connections over the next five years (2016- 2021).
Investments
A total of $880 million is the amount invested by operators between 2011 and 2015, with mobile broadband and Long Term Evolution (LTE) network deployment taking priority as key drivers. Investment level rose sharply over this period and peaked in 2014 with a global total of $195 billion. In 2015, the mobile ecosystem generated 42% of global Gross Domestic Product (GDP), a contribution that amounts to more than $3.1 trillion of economic value added and provided employment to nearly 17 million people across the globe and indirectly supported an additional 15 million jobs in other sectors of the world’s economy; general taxation saw a contribution of $430 billion and a further $90 billion through spectrum auctions.
Continued growth expected
Between 2016 and 2020, the global economic footprint of the mobile sector will continue to grow, reaching a total economic value of $3.7 trillion by 2020. General taxation of the mobile ecosystem is expected to raise $480 billion by 2020 with additional 3 million new jobs created – bringing a total number of jobs in the mobile ecosystem to more than 20 million by 2020.
Mobile technology plays a central role in addressing a wide range of socio-economic developmental issues and challenges across the developing world with respect to digital and financial inclusion. This will drive economic and infrastructure development, increasing productivity and employment across the developing markets economies – as well as improving access to vital services such as education and healthcare.
Mobile money
The mobile money industry is now widely established bringing financial inclusion to a growing number of previously un-banked and under banked populations across the developing world. Mobile money services are now available to 1.9 billion people globally. At the end of 2015 – 2.5 billion people across the developing world were accessing the internet through mobile devices, this trend is set to increase by more than 1.3 billion by 2020. However, more than 40% of the population in the developing world will still lack internet access by the end of the decade.
A global market view for the period 2015 to 2020 reveals interesting facts regarding the state of mobile technology in partaking in Africa’s economic development.
- Unique Subscribers Numbers:
- 2015 was 4.7 billion with a penetration rate of 63%.
- 2020 would be 5.5 billion with a penetration rate of 72%.
- Compound Annual Growth Rate (CAGR) up to 3.9% (2015 to 2020)
- Global Connections:
- 2015 was 7.3 billion with 99% penetration rate.
- 2020 would be 8.9 billion with 114% penetration rate.
- CAGR up by 3.9%.
- Mobile Operator Revenues (data growth driving revenues and operator investments)
- 2015 was at $1.1 trillion
- 2020 would be $1.2 trillion
- CAGR up by 1.9%
- Operator Capital Expenditure (CAPEX)of up to %900 billion for the period 2016 – 2020.
- Mobile broadband connections to increase from 47% of total in 2015 to 71% by 2020.
- By 2020 – there will be 5.8 billion smartphones, a growth of 2.6 billion from 2015 end.
- Data traffic to grow by a CAGR of 49% over the next 5 years.
- Mobile industry contributed to GDP in 2015, $3.1 trillion and expected to grow to $3.7 trillion by 2020 – equaling to 42% GDP growth.
Voice
Mobile technology has given a voice and access to the African population – a platform to do a variety of things from self-expression to civic participation having an impact on elections, governance and accountability. Mobile phones are continuously transforming the lives of Africans in most exciting and revolutionary ways.
Mobile penetrations are continuing re-creating existing economies and Africa is no longer the commodities driven continent as mobile technology is now helping the continent narrow the digital divide and help the youth especially to take the lead in adopting mobile technology solutions. As smartphones lower information barriers across Africa, young people are empowering themselves by organizing into influential youth online communities and demanding better leadership. A lot has been said about the mobile phones revolutionizing financial services in Africa with the likes of M-Pesa in Kenya and the recent failure of the services in South Africa – where Vodacom announced that it is pulling the plug on this service, by end of June 2016.
Key enabler in Africa’s growth
Before the mobile telephony era, Sub-Saharan Africa had limited access to telecommunication services. In the past decade, investment by operators, governments and other players has enabled mobile network coverage to be offered to large swathes of the African population.
Sub-Saharan Africa’s economic potential remains strong, with low internet penetration, a rapid rise in consumer spend and a significant unbanked population. Players in the mobile eco-system in the region aim to support socio-economic empowerment and inclusion. At the core of this is enabling mobile broadband access to the unconnected population through increased 3G and 4G network deployment.
This will drive uptake of services such as m-commerce and infotainment, enabling service providers to differentiate their revenue streams and at the same time offer higher value services to their customers. With more consumers gaining access to connectivity, and consumer behaviour subsequently changing, mobile technology will have a far reaching impact. While the past decades of technology progress have shown significant promise, it has only laid the foundation for what is set to come in Africa, according to the 2015 Ericsson Mobility Report.
Millennials lead the way
The millennial generation are at the forefront of the mobile economy and are partly responsible for the current boom in mobile services and reinventing the way businesses engage with their internal and external stakeholders. More than 80% of market leading organisations globally already recognize that mobile has/is fundamentally changing the way they do business. Africa’s telcos can improve customer service, decrease costs of sales in acquiring new customers and can generate sizable efficiency dividend to their customer retention and employee productivity.
The mobile ecosystem is poised to create new economies and Africa has not escaped this change pattern. The dynamics of mobile growth on the continent will continue to provide good study material for savants of global telecoms – looking at how mobile has helped many GDP and personal economies of citizens at the bottom of the pyramid. The telcos industry can reap amazing benefits from embracing the mobile economy and its rapid growth. In the African markets where 80% of consumers have no bank accounts, for example, telcos have already disrupted the financial services providers with mobile money services.
The region has seen encouraging progress in raising economic growth rates over recent years, though significantly more needs to be done given the relatively low starting point. The economic and social situation in the region still remains fragile and vulnerable to internal and external shocks. The Internet of Things (IoT) has the potential to offer a range of innovative new services and solutions to individuals across the region, and in doing so to begin to address some of these challenges. Mobile networks have become the predominant infrastructure across SSA with more people now covered by mobile networks than have access to energy and water. The broader mobile ecosystem is also an important source of innovation across SSA, with mobile playing a role as a crucial enabling platform for companies to reach new customers and to monetise new products and services. Whilst many of these services are still at a relatively early stage of development, with the right policy environment and with increasing collaboration between all players in the ecosystem, the industry has the potential to make a more significant contribution going forward.
Access to information
In conclusion, mobile technologies have been around for decades, but the sheer ubiquity of mobile devices today has revolutionized customers’ ability to obtain information. Access to information has, in turn, transformed how customers perceive value and the type of relationships they want to have with companies. But companies that want to exploit the power of mobile technologies to engage customers face tough choices about how, and how fast, to move to mobile channels and how to integrate those with more traditional channels.
Data analytics, meanwhile, has transformed the ability of companies to access, analyse and circulate information about their customers, and use that information to create the type of relationships that their customers want. Indeed, there’s evidence that companies that can most effectively use analytics to inform demand-side decisions about business processes outperform those that can’t. Investment in information and communications technology in Sub-Saharan Africa remains strong, with the total spending by telecom operators, service providers, utilities and other players on equipment and services expected to grow faster than the regional economy. A large population that is still unconnected, increased consumer spending and a favourable regulatory environment are key drivers for the sustained investment in this sector.
Written by Dipolelo Moime, Chief Executive Officer of Legato Consultancy Pty Ltd. Legato Consultancy Pty Ltd is a dynamic risk advisory and specialized management consulting firm.
Picture at the top by Samuel Okocha.