Africa's top banking and mobile phone executives assembled in Nairobi recently to listen to the counsel of one of the world's leading technology companies. "Software is the manufacturing of the future," IBM chief executive Ginni Rometty told them.Should this prove to be the case, it might mitigate one of the continent's chief economic conundrums � how to sustain growth and spread its benefits without the factories that have typically fuelled big leaps in other developing economies.
In most African countries the road, rail and port infrastructure is in need of heavy upgrading if their economies are to become more competitive. But the speed with which the continent has built telephony networks and embraced mobile has taught the rest of the world much about Africa's potential.
Mobile phone subscriptions have risen to 475 million from 90 million in sub-Saharan Africa within seven years. Their spread has changed not only the nature of communication but the state of banking, commerce and investment on the continent. The phone has become so essential that people skip meals so as to be able to afford scratch-card credit for it."Mobility is what operates the entire continent–you've skipped other generations," said Ms Rometty, referencing: "this willingness to leapfrog."
A decade ago, the spread of voice sped up some African economies and generated a cash windfall for the first generation of telephone investors � Celtel sold its Africa network for $3.4 billion in 2005. The Kuwaiti company Zain, which bought the network, sold it on to Bharti Airtel five years later for $9bn. Africa's top seven mobile operators now have more than 20 million customers apiece, and there are still another 400 million people to go.
"Africa is better positioned to adopt the next generation of technology than anybody else because it's not tied by a legacy system...the cost of moving forward is much cheaper," says James Mwangi, CEO of Kenya's Equity Bank, whose bank became the first in the world to offer a completely mobile bank account.
But the pace of expansion has nevertheless slowed and profits slimmed as competition has intensified. "No one will get rich buying the fourth licence in Chad and even dominant players are finding it tough," says one leading technology investor.
Reuters