Mobile services in Africa predicted to grow strongly

9 Dec 2010

The mobile value-added services market in Africa over the next five years is estimated to grow at a strong compound annual rate of about 20% and generate revenue of more than US$11,5 billion by 2014, according to the latest study by research firm Informa Telecoms & Media.

Value-added services include mobile banking, internet and entertainment, games and music.

According to the latest report on providing access to information and communications technology to rural areas in Africa, much of this growth will come from rural communities as these customers are becoming a larger component of operators' subscriber bases.

Factors that will grow the value-added services in rural areas include mobile banking and payment services, which will continue to become popular in Africa.

Low-cost mobile handsets are becoming cheaper, with mobile internet and multimedia-capable handsets now available for less than 50.

"The availability of such devices alongside very limited fixed-line penetration will drive an increasingly strong adoption and usage of mobile value-added services in these markets," the report says.

Rural consumers are already taking advantage of mobile applications like banking and money transfers.

Connecting rural communities was still a challenge, Informa said. The two most pressing strategic objectives for operators were increasing profitability and revenue.

These represent a challenge for operators as providing greater access to rural areas will not help profitability, but in order to increase revenue, reaching out to rural areas where the market remains underpenetrated will be of key strategic importance.

Infrastructure across the region, especially in sub-Saharan Africa, remains sub-standard and SIM card penetration remains under 20% in some parts of the continent while the penetration rates in rural areas are in most cases below 10%.

The report says that governments and regulators have a role to play in encouraging a greater takeup of services.

These include using the money contributed by the operators to increase services and access in rural areas, as the report reveals that some authorities getting these funds are not using them.

"In some cases, there are such levels of cynicism that operators merely see universal funds as another cost of doing business in Africa," the report states.

Source: Business Day

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