Mobile Africa signals its potential

  • Written by 
  • 09/04/2014

The scale and pace of mobile phone adoption across Africa is inspiring a wave of business innovation that is grabbing global attention. From m-banking to m-agriculture, we look at the forces shaping the world’s only ‘mobile-first’ continent, where landlines are becoming a novelty and the PC era never really happened.

Africa's economic hotspots 3 of 4

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Across Africa’s one billion people, the mobile phone has become a lightning rod for change – economic, social and political. With subscriber numbers soaring past 700m and home PC penetration never likely to rise above 5 %, mobile devices are now the starting point for almost all digital communication in Africa. They are also the basis for literally thousands of innovative applications and services specifically targeting the needs of Africans – and grabbing the attention of the rest of the world in the process.

Such services are blazing a new trail in areas such as money transfers and e-savings, remote healthcare and disaster response, education and agriculture. What might surprise many outsiders, more accustomed to smartphone apps, is that the economics of Africa today are such that the vast majority of these mobile services are SMS-based, designed to run on feature phones. They are also focused on delivering highly valuable, practical solutions:

  • In Kenya, around 11,000 small-scale dairy farmers are signed up to iCow, an SMS information and animal welfare tracking service, that helps them maximise milk yields, manage birth-cycles within their herds and keep their livestock healthier – reducing the need to call a vet.
  • In Ghana and Malawi, the Esoko service is providing another group of smallholder farmers with SMS-based information on local market prices for their produce and matching bids and offers, while also serving up weather alerts and farming tips. The upshot: many report a 10% to 30% rise in income.
  • Healthcare workers in Kenya are overseeing AIDS patients by providing a weekly text message service that checks antiretroviral drugs are being taken appropriately, with both a dramatic increase in active use of medication and big savings in travel and treatment costs.
  • Kopo Kopo is enabling “unbanked” consumers in East Africa to make retail purchases using their mobile phones, while allowing businesses to manage these mobile transactions, analyse trends and send offers to customers.
31% of Kenya’s GDP passes through mobile phones in the form of money transfers.

Those may be relatively small-scale initiatives at this point but they follow in the footsteps of the huge commercial success of mobile payment and remittance services across Africa. Led by Kenya’s M-PESA system, these mobile money services enable many of the 70 % of adults who have no or only limited access to a bank account to send and receive money using their phones. In 2012, such services – from WIZZIT in South Africa to SONATEL in Senegal – accounted for $171bn in mobile transactions, a figure that is forecast to almost quadruple by 2016 to $607bn.

Launched in 2007 by Safaricom, Kenya's largest mobile operator, and now backed by global mobile operator Vodafone, M-PESA is used by a third of the Kenya population and is a conduit for 31% of the country's $34bn GDP. An average of 80 transactions passes through the system every second, according to a recent Financial Times report. M-PESA now also works within Tanzania, South Africa and a handful of other countries around the world.

But others from the world of finance want to take such services to an international level. An African-focused example of that is Barclays Pingit. The mobile transfer service from the London-headquartered bank targets the large number of Africans living abroad who maintain UK bank accounts. The smartphone application enables mobile users to send up to £750 per day from any UK bank account to friends, family or businesses in Kenya, Ghana, Botswana and Zambia, with further Africa countries to follow (see article, Money transfers go international).

Africa is a mobile-first continent. But it is really a mobile-only continent.

Mobile continent

The foundation for such services is, of course, the phenomenal rise of the mobile phone in Africa and the fact that the continent has, in all but a few regions, skipped both the era of the universal landline and the wide adoption of the PC that has been seen in developed economies.

Over the last decade, the number of fixed-line telephones in Africa has remained relatively static. World Bank figures show a rise from just 9.1m in 2000 to 12.1m in 2010. In Sub-Saharan Africa, that amounts to around 1.4 landlines per 100 people, according to the International Telecommunications Union.

At the same time, only 7% of households have a computer and 3.6 % have Internet access at home. Over that same decade, the number of mobile subscriptions went from 9.2m to 650m. And today that is estimated to have reached 735m, easily surpassing mobile numbers in both the United States and the European Union.

That means that for the vast majority of Africans, engagement with the Internet is and will be exclusively through mobile technology – albeit largely text-based for the time being. And that puts the continent in a unique and advantageous position in terms of the critical mass of its mobile market. As Gareth Knight, founder of Tech4Africa, observes: “Africa is a mobile-first continent. But it is really a mobile-only continent.”

Today, feature phones, which can cost as little as $10 in many Africa countries, may dominate but the picture is changing. The rise of a prosperous middle class and GDP growth rate that is running at over 7% in many economies is already spurring wider adoption of smartphones.

And while market penetration today remains modest (at around 10 % across the whole continent, with larger numbers in North African countries and in South Africa) the price of devices is expected to drop below the $50 mark, say market watchers, heralding a progressive migration. Indeed, Tech4Africa predicts that within two years there are likely to be as many as 125m smartphones in use in Africa and that next stage in mobile Africa’s evolution will inevitably spur further waves of innovation.