Africa's booming ICT sector

February 1, 2010 (ADDIS ABABA) — African leaders meeting at a summit in Ethiopia are devoting much of their time to discussing how they can boost information communication technology (ICT) on the world's poorest continent.

Here are a few questions and answers about the sector:

WHAT'S THE STATE OF ICT IN AFRICA?

Levels of access to modern telecommunications, network capabilities and coverage, as well as investments in the sector, are as diverse as the 53 member states of the African Union.

Mobile penetration in the continent stands at 42 percent, compared with less than 8 percent just 10 years ago. The continent posted the highest growth of new mobile subscriptions in the world over the last five years.

Connections to the internet stand at 8 percent of Africa's 1 billion people, and less than 3 percent have access to broadband. Egypt, Tunisia and Rwanda are among the countries praised for creating policies geared towards pushing their economies into the digital information age.

WHY THE INTEREST NOW?

"It is a profit-making business. We don't need charity for this. We don't need help, we don't need assistance ... we are comfortable in the ICT sector," said Hamadoun Toure, head of the U.N.'s International Telecommunications Union.

Experts say there is enormous potential for growth, and firms have been racing to provide internet connections to the 92 percent of Africans who are not yet covered.

They are also eyeing other data market segments which have changed business and posted astonishing growth rates.

M-pesa, a mobile phone-based money transfer service, pioneered by Kenyan operator Safaricom in 2007, has seen its users rise to 8 million.

International organisations that have long fretted about corruption in Africa have also received a helping hand.

"In Kenya, ICT slashed the number of days it took to register a vehicle from 30 to one, as well as cutting off avenues for greedy hands," said World Bank President Robert Zoellick.

WHO ARE THE MAJOR PLAYERS?

Safaricom is east Africa's largest company by market value and profit. South Africa's MTN, which last year attracted a failed tie-up bid from India's Bharti Airtel, is a big player in several African countries.

Active foreign firms include Britain's Vodacom, France Telecom, Kuwait's Zain and India's Essar. Zain has assets in countries ranging Zambia to Ghana.

A consortium led by a Mauritius-based private equity firm owns the $700 million SEACOM, a cable which links several countries with India, Europe and Asia. Government-fronted undersea cables include TEAMS and EASSY.

WHAT ARE THE RISKS?

Faced with emerging challenges from an emerging sector, governments have reacted in different ways. Kenyan authorities faced stiff opposition from media owners last year when they amended laws to take cover relatively new offences like sending abusive SMS text messages and online fraud. Critics accused the government of trying to gag the media.

Operators on the continent also routinely complain of unfair government levies, while the issuing of too many operator licenses in a single market can also put off investors.