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Africa Calling
By: Victor W.A. Mbarika and Irene Mbarika
Burgeoning wireless networks connect Africans to the world and each other
PHOTO: ANTONY NJUGUNA/REUTERS/CORBIS

Eyes could kill me each time I walked about the streets with my handset," says Siri Nchise, a 29-year-old customer service representative for an Internet service provider in the African city of Douala, in the Littoral province of Cameroon. In the past five years, she's had three cellphones stolen. She keeps buying new ones, because they are the only practical way to connect to friends, family, and business associates.

On a continent where rolling blackouts, undrinkable water, and fetid mounds of refuse remain the stuff of everyday existence, wireless telecommunications services stand out as a rare, perhaps unique, technological success story. Tens of millions of ordinary Africans like Nchise carry cellphones today, something not even the richest of them could have possessed barely a decade ago. And every month, millions more dial in to the 21st century, with profound implications for African economies and societies.

It might come as a surprise that sub-Saharan Africa—with 34 of the 50 poorest countries on Earth, according to the United Nations—is now the world's fastest-growing wireless market. But there's no arguing with the statistics: the number of mobile subscribers in 30 sub-Saharan African countries, not including South Africa, rose from zero in 1994 to more than 82 million in late 2004, according to the latest figures from the International Telecommunication Union, in Geneva. The rate of growth for the entire continent has been more than 58 percent per year, compared with the almost 22 percent annual growth rate in the Americas; in Cameroon, Kenya, Senegal, and Tanzania, growth rates are running in excess of 300 percent. Nigeria, Africa's largest country, with 140 million inhabitants, has only about 500 000 landlines, or approximately 1 for every 280 people. In that country 19 million mobile phone subscribers have signed on since 2000, and the Nigerian Communications Commission projects the total number of subscribers to grow to 50 million by 2010.

Africa is going wireless for a very simple reason: its national telecommunications monopolies are poorly managed and corrupt, and they can't afford to lay new lines or maintain old ones. So in most sub-Saharan countries not even 1 percent of the population have landline-connected telephones. That compares with more than 10 lines per 100 people in Latin America and more than 64 per 100 in the United States. Indeed, Tokyo and New York City each have more fixed-line telephones than the whole of sub-Saharan Africa. These numbers are even more daunting when you consider that fixed lines tend to be concentrated in capital cities, leaving rural communities totally bereft. For instance, while the country of Senegal has about 140 000 lines, 65 percent, or 91 000, of those lines are in the capital city, Dakar.

More than just inadequate landline networks and institutions are fueling Africa's wireless boom. Growing political stability has helped to attract foreign investors to a region decimated by civil wars over the past 50 years. And the far simpler logistics of getting a wireless network up and running are also an enormous factor in sub-Saharan Africa, where even the seemingly straightforward can turn out to be anything but.

During our recent travels in Ethiopia, Kenya, Uganda, and our home country of Cameroon, we've seen why wireless networks have succeeded so spectacularly where landlines failed so miserably. Landlines can take years to install even after the right palms have been greased, while you have only to buy a handset and prepaid cellphone calling card to get a wireless line. In addition, companies can erect base stations that cover a radius of 35 kilometers for much less than it would cost to run copper cables from central exchanges to every customer's phone.

But that's only part of the story. The African cellphone revolution thrives on a combination of a novel business model introduced a decade ago in South Africa and some clever calling tactics that have made cellphone usage affordable for a large segment of the population. As a result, growing numbers of Africans at the top, middle, and even bottom rungs of the economic ladder depend on the wireless sector for their livelihoods. But can the region sustain the wireless sector's phenomenal growth rates and accompanying prosperity? And does the capital flowing in and out of these countries via transnational wireless corporations represent a sustainable infusion of desperately needed foreign investment, or neocolonialism dressed up as a free-market bonanza?

The sparks that ignited the African cellphone explosion occurred in South Africa in 1993, when the government granted national cellphone licenses to MTN South Africa Ltd., Johannesburg, and Vodacom Group (Pty.) Ltd., Sandton. These companies, each partially owned by the South African government, quickly built large customer bases in South Africa, and eventually other African nations, by offering prepaid cellphone cards. These cards draw customers who can't afford monthly phone bills, don't have postal addresses, or don't maintain checking accounts. People pay as they go, and only as much as they can afford.

These cards brought telecommunications to the masses. The East African country of Uganda is a prime example. Most Ugandans do not meet the financial criteria for subscription-based service. Nevertheless, in the three years following Kampala-based MTN Uganda's introduction of a prepaid option, Uganda's overall mobile telephone density quadrupled, rising from 0.41 subscribers per 100 people to 1.72. Today, more than 50 percent of the population has mobile cellular coverage. More than 98 percent of Uganda's mobile subscribers use prepaid cards. By the end of 2001, over half of Africa's countries—28 nations—had more mobile than landline subscribers, a higher percentage than on any other continent [see figure, " Mobile Subscriptions Skyrocket"].

As instrumental as these cellphone cards have been, they weren't the only factor that set the stage for Africa's wireless boom. Africa's national telecommunications monopolies created business opportunities for multinational carriers by not servicing their citizens with landlines. Telkom Kenya Ltd., in Nairobi, for example, which has only 313 000 landline subscribers in a country of 30 million people, won't invest in new lines. Instead, Telkom has met demand for phone service by partnering with foreign companies that are putting in new wireless infrastructure. In 1999, it formed Safaricom Ltd., Nairobi, which it owns in partnership with Newbury, England-based Vodafone Group PLC (which also owns part of South Africa's Vodacom). The next year, the Communications Commission of Kenya licensed KenCell Communications Ltd., now Celtel Kenya, Nairobi, to provide service based on the GSM 900 standard used throughout Africa.

These companies have succeeded far beyond their expectations. According to London-based TeleGeography Research, on launching its service in 1999, Safaricom expected to have 3 million subscribers by 2020. By the end of 2005, there were more than 4.6 million wireless subscribers in Kenya, split between the two carriers. Safaricom projects that it alone will have 5.5 million subscribers by the end of 2007 [see graph, "Mobile vs. Fixed Lines in Africa"].

Countries that liberalize their telecommunications markets often create feeding frenzies among multinational and local wireless companies alike. For example, though MTN was first to provide cellphone services in Nigeria, the company now finds itself in heated competition with South Africa\0x2013based Econet Wireless International and Nigeria-based Globacom, as well as about 10 smaller carriers. Wireless enterprises have been so successful that the Nigerian government is now trying to privatize its own hapless monopoly, Nigerian Telecommunications Ltd., based in the capital, Abuja, and its wireless division, Mtel. But with such a competitive wireless market, the Nigerian government has had a hard time finding a suitor for Nitel Ltd. TeleGeography reports that the monopoly, which currently has 10 000 employees, had not paid workers for more than two months as of March, and that it plans to slash 6000 jobs by the end of May.


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