African digital connectivity: an industry with prospects and challenges

By Elias Mhegera – Despite many challenges of internet connectivity, Africa still stands as one of the areas with potentials for investors in this area, according to the experience that was adduced from the Capacity Africa 2015 conference in Dar es Salaam recently.

Ipads have become one of the best teaching-learning medium

Ipads have become one of the best teaching-learning medium

The two days conference incident on September 8th and 9th at the Hyatt Regency, well known in Tanzania by its traditional name The Kilimanjaro Hotel, was a mixed grill of investors in the telecom industry, experts and other well informed key stakeholders.

One of such experts is Ms. Nataliya Kotova, Head of Marketing, Newtelco, carrier-neutral solution provider specialised on the telecommunication industry, and offering a broad array of value-added managed services worldwide.

She believes that her company which is operating in Africa region will perform wonders given the fact that she has now visited Tanzania thrice in order to understand better the operation of the digital world in this country.

 “Today, NewTelco has its own state-of-the-art data centres in Kiev (Ukraine), Tbilisi (Georgia) and Johannesburg (South Africa).

…NewTelco has rapidly become a key player in the carrier business not only thanks to unique and flexible service portfolio, but also – understanding of specific market demand and ability to foresee the trends in the African market” she commented when she was visited by Shout-Africa at her pavilion.

Newtelco data-centre in Frankfurt

Newtelco data-centre in Frankfurt

She boasted that NewTelco’s own carrier-neutral facilities, due to unique locations, offer exceptional connectivity options with virtual and physical cross-connect capabilities – allowing customers to get connected to network-rich environment fast and reliably.

She admittedly said that in South Africa her company has played a significant role in data provision and many people even out of Africa can now rely on it.

Ms. Kotova says that the telecommunication services are crucial for development of the African continent as a whole, particularly in connecting it to the external world. “We know how Africa has been a reliable market for European goods and many others from elsewhere,” she commented.

However commenting on the challenges she says her company which is in operation for more than ten years now, is facing certain challenges like sluggishness of the African market and lack of technical staff in this area.

A telecommunication investment by Newtelco

A telecommunication investment by Newtelco

While she sees all these prospects, but investors in telecom industry are resisting pressure by the African governments to construct internet infrastructure in rural Africa saying it does not make business sense to invest since the clientele is insufficient.

Some 65 companies from across the world who convened in Dar es Salaam expressed similar concerns over high costs of investment in hiring foreign experts and training locals to suit the technological demand in the industry.

Think Wananchi Telecom, Sparkle, Newtelco, Telefonica, Turk Telekom International, SimBerry, Switch Plus, Bongo Live, Real African and Kinu and Core2Africa were among telcos convened by Liquid Telecom.

Experts expressed wary over demand by African governments to upload local contents into their portals to be accessible via mobile handsets and web pages.

Yusuf Nabeel, CEO Real African and Head of Communication at Kageso Media said it is too expensive to upload television signals in mobile handsets.  In order to get local contents directly and the industry players resort to use YouTube instead, as it is much cheaper.

Talha Jiwanji, CEO and co-founder Bongo Live & Kinu, on his part said they resort to partner with bloggers to upload video clips rather producing materials of their own.

Speaking on behalf of the government, Permanent Secretary Ministry of Science, Technology and Communications, John Mngodo said that the Tanzanian government appreciates the contribution of the private sector in the dissemination of information, but he hints that due to being overburdened by other demands the investors should go a step further.

In this case, he said, investors should invest in the infrastructure, but also they should assist in the preparation of the local content rather than merely localising the international stuff.

Mr Mngodo said the Government is overburdened by service provision such as water, health and education and it is the duty of investors to construct enabling infrastructure in order to be able to reach out their clients.

The Small-Scale Experimental Machine (SSEM), the world's first stored-program computer, at the Museum of Science and Industry in Manchester, England

The Small-Scale Experimental Machine (SSEM), the world’s first stored-program computer, at the Museum of Science and Industry in Manchester, England

 “We have invited the private sector to play its vital roles in this area knowing that these are well equipped investors to support the government in its development initiatives. With the completion of the National ICT Broadband Backbone (NICTBB) the number of internet user in Tanzania has increased to over 9 million in comparison to 2.7 million in 2007,” he remarked.

He attributed this dramatic increase due to the rapid technological advancement. He however admitted that the emergence of such technologies was accompanied by its challenges; for instance, some locations have poor access than others, while cyber interactivity has even caused a challenge of criminal manipulations.

He noted that to curb the challenge there has been an establishment of the Tanzania Computer Incident Response Team, and the recently signed Cyber Crime Act, 2015. He invited more investment to Tanzania in this area, but coupled with incapacitating locals in knowledge, and research capacity.

The Director General of the Tanzania Communications Regulatory Agency (TCRA), Dr. Ally Simba, shared this vision and said that Tanzania has digitalised its electronic communications well before many other countries.

However, he admits that there is a challenge of internet access in the rural settings. But he encourages investors in this area to join forces in order to construct infrastructure while the Government for its part will facilitate for an enabling business environment, including tax reliefs.

But for his part Erick Van Der Dussen, Associate Director Delloitte Africa sees the future of telecommunications in Africa very promising despite the challenges of capital demands. “The fact that we are here today representing more than 65 countries signifies that there are ‘good stories’ in Africa, however there are serious challenges as well,” he said.

The Nairobi-based expert said that the new internet scramble for Africa is just an extension of the previous one, with just a different approach. He reminded that the developments from 1915 up to now are significant in terms of interactions with the outside world, no wonder that China is now even exporting laborers to Africa rather than capital.

He added that at this stage Africa is vital for Europe and other developed countries and therefore telecommunications becomes of significant importance mainly in the following areas: tourism, farmlands, and mineral resources, other issues being trade, oil and gas, and labour force.

Sam Nkusi the Liquid Telecom, Group Executive East Africa, defends the stance that investors should construct the communication infrastructure rather than depend on governments.

“I have worked myself in a senior government position, I understand that African governments have severe challenges when it comes into setting priorities,” he stated.

However he suggested that governments should now be fair in issues of taxation in order to allow them flourish, at the same time to allow growth of investment.

But Tony Wood said that the main challenge is that many operators are easily discouraged when they meet some challenges not knowing that any business demands time before it can get stability.

He also admitted that he being a resident of Kenya has been hearing his fellow investors airing disappointments in many areas including the high rate of taxation in the telecommunication industry.

“We must find ways of addressing the issues of local content rather than localize the international content, we must find ways of producing local content that is demanded locally,” he commented.

Another expert in this area Russell Southwood, CEO Balancing Act, commenting on the issue of content he suggests that the main task is first to build strong networks in order to have a guarantee of reliable customers.