South Africa

Details

  • Service: Advisory
  • Type: Business and industry issue
  • Date: 2014/06/03

ICT companies looking to Africa for opportunities 

The ‘great Africa migration’ has been a popular topic of discussion in recent years, as organisations around the world awakened to the revenue potential lying in Africa. Now more than ever, Africa is proving that it is the obvious choice for forward-looking companies looking for growth and investment opportunities. And, while other mature markets have stalled in terms of growth, Africa has been growing.

In the ICT space, the rapid growth of Africa’s mobile market has been lauded as a notable success in the continent’s development in the technology space.

 

The South African market is quite saturated from a mobile point of view. Technology companies wanting to grow their market are looking at expanding into the rest of Africa. While mobile has quickly saturated markets such as South Africa, it is spreading just as fast in the rest of Africa. However, technology in general still lags behind. Technology such as digital market places and cloud are still not nearly close to maturity. The challenge lies in getting the infrastructure such as cabling into the inland; while the infrastructure around the coastal areas is there, the infrastructure that must enable internet connectivity inland is still lacking.

 

Technology companies have plenty of opportunities in Africa, as a result of customers demanding connectivity. As customers get better technology such as smartphones and tablets, etc., they want to get digitally connected and create websites, etc., thereby creating a demand for companies to put the infrastructure in place.

 

Market demand has given rise to technology hubs, where there is a concentration of people building technology-related businesses. Governments in the continent are starting to take leaps of faith and investing in supporting technology through hubs and other interventions. This has proven to be very beneficial for technology start-ups, which are driven by government funded Silicon Savannahs, thriving community of incubators, accelerators and crowd-funds and high mobile penetration.

 

Internet connectivity remains a barrier to the development of ICT hubs in Africa; landlocked countries are especially affected. Coastal African nations dominate the ICT scene in the continent; undersea cable connectivity has been a big factor in this. Landlocked countries need to look at multiple options to increase internet connectivity. Coastal nations, especially South Africa have dominated access to undersea cables. With the WASACE and BRICS undersea cables expected to be operational by end 2014, the internet capacity for Africa will triple.

 

Other countries, including Nigeria, Morocco and Kenya have also invested in undersea cable networks. On the other hand, landlocked nations with ICT potential, including Uganda, Rwanda and many others are now looking at alternate connectivity methods.

 

The growing mobile market in Africa acts as a key driver for the emerging technology start-ups in the continent. From a mobile perspective, the waves which have driven mobile penetration include, in the first place, voice, followed by SMS – both of which are now markets close to saturation. The next wave, which still has growth potential as connectivity improves, is data – though getting saturated in South Africa specifically. The next big thing is offering Value Added Services (VAS) via mobile devices.

 

Africa is in a unique position to establish itself as a global hub for Big Data and analytics. With increasing IT investments across Africa and the proliferation of smartphones, Big Data is on the radar of many businesses and telcos in the region. With its large, relatively young population with a thirst for knowledge and a strong base of mobile device data, Africa can become a world innovation leader in this space.

 

However, skills are key. IT is not a profession that is generally promoted enough by African governments, which is why initiatives like the various Silicon Savannas and other technology hubs in the continent are a good way of attracting young people into the profession.

 

Share this

Share this

Contact

Contact
Frank Rizzo
Technology sector leader at KPMG in South Africa
frank.rizzo@kpmg.co.za