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Telerupted: Africa, the Last Infotech Frontier

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Cell tower in Ghana
Cell tower in Ghana
A recent two-week visit to Ghana, Africa, offered up scenes that seemed frozen in time. Most of the buildings and infrastructure date back to the 1950s, before seven military coups over a period of 30 years made investment impossible. Open sewers remain the norm, modern paved roads, the exception. The use of English as the official language traces back to the colonial period, but an intricate system of village chiefs controlling local government and ownership of land had its genesis in the period before the arrival of European powers circa 1500. Yet Ghana, like a number of other countries in Africa, has one of the highest mobile phone growth rates on Earth.

The success of mobile phone companies in the country — Ghanaians have access to essentially the same devices, features and pricing as people in Europe or the U.S. — illustrates the opportunity a stable Africa presents for the larger infotech and communication industries. After all, the roughly 840 million people distributed across the continent’s 53 countries represent some 12 percent of the world’s population, and its cash economy leaves it relatively untouched by the credit market turmoil in the developed world. Moreover, Africa’s successful transition to a knowledge economy could make it a sustainable economic engine for the entire planet.

Some are already looking to capitalize on such an opportunity. Vodafone, for example, acquired the state-owned telco incumbent Ghana Telecom for $900 million back in August in a deal that includes the promise of $500 million worth of investments into Ghana’s fiber infrastructure.

Vodafone’s buy bring the number of mobile phone companies in Ghana to six. In the meantime, broadband penetration remains less than 2 percent, but competing fiber builds connecting the country’s cell towers mean cheap and ubiquitous wireless broadband is on its way.

Indeed, enterprising Ghanians already talk about the country’s potential to become Africa’s “Silicon Valley.” While any direct economic comparisons could only be made with the California from the mid-1800s, the rapid spread of mobile phone technologies suggests it won’t take 150 years for Ghana to catch up. And the rest of Africa may not be far behind.

Daniel Berninger is the CEO of Free World Dialup. To see more pictures from his trip to Ghana, go here.

9 Responses to “Telerupted: Africa, the Last Infotech Frontier”

  1. Daniel,

    I couldn’t agree more with what you’ve just said, your blog will probably reach lots of people & hopefully change the perception of Africa for some.

    The scary thing is that Africa’s investment profile is drawn up by people that don’t know better & still see Africa as an incredibly risky investment based on the negativity that makes it through the noise.

    We are seeing that now, our currency (exchange rate) is going through a bumpy ride at the moment because foreign investors are pulling out of investments seen as ‘risky’.

    I have full confidence though that we Africa will buck the trend & rebound stronger having gone through this phase. For us here it’s still work as usual while we ponder what other economies are being faced with. We do have warnings to knuckle down & tighten up on spending until the international storm has subsided but we are still doing ok.

    Our government did well to see this crisis coming a few years back & put in place strict policies to mitigate this. As a result, whenever a person would apply for a homeloan or credit, a detailed investigation would be conducted by the lending institution into the individuals financial affairs to ascertain affordability. In hindsight, it was a fantastic move because our banks were heading down the same reckless lending route as other banks that are now in hot water!

  2. Trevor,

    Thanks for the comment. The column arose from my surprise at the upside promise of Africa apparent from a brief visit to Ghana. Returning the to US, I still only see the negative stories make it through the noise, but I know better having made the trip. The column represented a first attempt to stimulate a more informed discussion. In practice, one needs to make a case by case assessment for each of the 53 countries in Africa. It does not suffice to talk about the positives or negatives of Africa as a continent.

  3. This article and some of the comments about the article really emphasize how little is known about Africa as a whole. It all really boils down to irresponsible journalistic coverage of Africa and the average person’s ineptness to launch Google and do a search on any specific topic regarding the advancement of Africa as a whole.

    Mr. Berninger, while I applaud your attempt to pop the lid on ignorance regarding Africa, what you would have seen in two weeks in Ghana would have just scratched the surface. Any business person or investor would be a fool not to identify the magnitude of possibilities that Africa holds.

    Global credit crisis? What Global credit crisis? Is Africa not part of the rest of the world? Have there been any banks or lending institutions in Africa that went belly up? A list was published recently rating the stability of banks worldwide & guess what? The South African banks are rated higher than the banks in America and the UK!

    Yes Africa has it’s problems but so does everyone else. The difference is that you only hear negativity surrounding Africa and you will get mostly positive stories being dished out by the press about other European Countries & the US. “Zimbabwe’s recent decline or South Africa and it’s intellectual ‘brain drain'”, if Africa is so 3rd world & “hell”, why are other ‘developed economies’ so keen to hire 3rd world people? What constitutes a developed economy anyway, in the light of the credit crisis? Zimbabwe, well, it’s not called the bread basket of Africa for no reason. Research that & you will see, from an investment point of view, the untapped potential there.

    I think Africa is teeing up for a boom. There are several reasons for this. It might be because of the cash driven economy, it might be because of the cellular boom (BTW, Googles see this & is investing heavily in Africa as a result & so are others like IBM), it might be because of the huge investment in broadband & fibre-optic infrastructure or (my view) it might be because of the ability of African’s to elevate ourselves out of ignorance & to question everthing that we are presented with.

    Do an acid test…Ask the average American if they know where Ghana is. Then ask the average African if we know where a certain American city is or what the current political climtate is in the US & gauge the results.

    It must be evident by now how strongly I feel about this…But it pains me how often Africa is stereotyped. I’ll leave it there for now & carry on with work as usual in 3rd world Johannesburg (South Africa) while viewing blogs on GigaOM using wireless technology & at the same time connecting through a European country to tweak servers in the US to ensure that they run optimally. All of this while keeping an eye on my EBay auctions that I’ll pay for using PayPal (which was incidently co-founded by a South African lad).

  4. RobL777,

    You correctly identify the key point in the column. It arises from a mere snap shot of observations over a two week period in one country. The assertion references something in the future, so we will have to wait to see how things turn out. The vast majority of observers share your pessimism about Africa’s prospects, but I came away with a very different and unexpected conclusion.

    The process of taking resources from Africa to support developed countries favors war and corruption. Creating a knowledge economy requires peace and rule of law. The leaders I met in Ghana seemed to explicitly have this in mind. Ghana represents a special case as the national borders created by invaders over the centuries happen to leave Ghana more homogenious with fewer of the ethic rivalries that cause suffering in other African counties. A knowledge economy can take hold in Ghana and spread to other countries on the continent. The column argues infotech companies should check out the investment opportunties.

    Mobile phones represent a dramatic example of how fast things “in hell” can change for the better.

  5. I wish Africa well in its technological improvements, but I think the article’s author must have had too much vodka before he penned this statement: “Moreover, Africa’s successful transition to a knowledge economy could make it a sustainable economic engine for the entire planet.”

    I have no idea what he could possibly mean by this, but it is pure nonsense as written. The problems which beset Africa are political ones of a serious nature. It has too many corrupt leaders who syphon off their countries’ natural resources by selling them to the developed world, then banking the profits for themselves. Everytime it looks like Africa as a whole, or a particular country in Africa is turning over a new leaf, or turning a corner on a brighter future, it all goes to hell in a matter of a few years. Look at Zimbabwe’s recent decline or South Africa and its intellectual ‘brain drain’ problems if you wonder what sort of things I am referring to. European colonialism wasn’t good for Africa, but neither have most of its leaders since those days. A few telephones and computers aren’t going to solve such endemic problems.

  6. tokenfinn

    Wireless in Africa and in other 3rd world countries has lot of exciting things happening. Mobile banking and peer-to-peer payments in South Africa, how Philippino operators allow their subs to resell/ divide their airtime and SMS bundles in most minute fractions, how access to real-time information can change lives for Indian fishermen, etc.

    What is needed is Ivory Valley for driving mobile innovation and entrepreneurship in Africa.