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Telecommunications key to SSA's projected economic growth

By , ITWeb
Africa , 04 Oct 2018

Telecommunications key to SSA's projected economic growth

While market research by the World Bank suggests that growth will be slower than expected in Sub-Saharan African economies (estimated at 2.7% in 2018), a report by suggests the region's telecommunications industry offers strong revenue growth opportunities.

According to the report, Sub-Saharan Africa features 1 billion mobile connections with over US$46.6 billion in total service revenue forecast for 2022.

"The increased availability of low-cost smartphones and the improved coverage of 3G and 4G networks are driving the demand for data connectivity and the take-up of digital services. Investment in fixed - wireless and fibre technologies will also help to drive the adoption of fixed broadband," reads an introduction to the report.

At the same time market analysts and economists believe the region needs investment in non-resource sectors, jobs and efficient firms and workers.

"The region's economic recovery is in progress but at a slower pace than expected," said Albert Zeufack, World Bank Chief Economist for Africa. "To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt."

According to the World Bank, slow growth is partially a reflection of a less favourable external environment for the region.

"Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects. While oil prices are likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China. Financial market pressures intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar," the World Bank stated.

The organisation added that the slower pace of the recovery in Sub-Saharan Africa (0.4 percentage points lower than the April forecast) is explained by the sluggish expansion in the region's three largest economies, Nigeria, Angola, and South Africa.

"Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture. Growth in the region - excluding Angola, Nigeria and South Africa - was steady. Several oil exporters in Central Africa were helped by higher oil prices and an increase in oil production. Economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d'Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side," the statement continued.

Mobile ecosystem

Joe Mucheru, Cabinet Secretary in Kenya's Ministry of Information and Communications, is on record as stating: "Statistics show that Africa is the world's second largest mobile market by connections after Asia and the fastest growing mobile market globally. Currently, the mobile ecosystem in Africa generates approximately US$56 billion or 3.5% of the total GDP. At the same time, infrastructure connectivity has improved with new capacity increasingly being generated, especially for broadband. Investments that now exceed US$ 3.8 billion have generated new capacity of 24 Gigabits per second. The GSMA estimates that mobile connections will rise to an average penetration of 49% in the region by 2020, (which means) the mobile industry contributes US$ 166 billion to African economies. This is an equivalent to 8% of GDP in sub-Saharan Africa."

The advent of automation and AI in business, and the 4th industrial revolution, is expected to have an impact on Africa's workforce going forward.

According to Statistics South Africa, 6.0million people were without jobs in the three months to the end of March 2018, and the country's unemployment rate remained unchanged at 26.7% in Q1 2018.

Cathy Smith, Managing Director at SAP Africa, said that despite levels of STEM (Science, Technology, Engineering and Mathematics) "not where they should be" in the Sub-Saharan African region, there is a real opportunity to create a new generation of home-grown African digital creators, designers and makers.

"The World Economic Forum (WEF) predicts that 41% of all work activities in South Africa are susceptible to automation, compared to 44% in Ethiopia, 46% in Nigeria and 52% in Kenya. This doesn't mean millions of jobs on the continent will be automated overnight, but it's a clear indicator of the future direction we're taking. The good news is that we don't need to panic. What's important for us in South Africa, and the continent, is to realise that there is plenty of work that only humans can do. This is particularly relevant to the African context, as the working-age population rises to 600 million in 2030 from 370 million in 2010. We have a groundswell of young people who need jobs – and the digital age has the ability to provide them, if we start working now.

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