| Ghana | May 03, 2016
Many are claiming that the magnitude of the role the internet is playing in economic transformation remains underappreciated. The internet accounted for 21% of the GDP growth in mature economies […]
Many are claiming that the magnitude of the role the internet is playing in economic transformation remains underappreciated. The internet accounted for 21% of the GDP growth in mature economies over the past five years, but in emerging markets, the greatest beneficiaries are the individual consumers and SMEs.
Ghana has one of the earliest histories of connectivity. Nii Narku Quaynor, a native of Ghana, established the first internet service in West Africa in 1993. Since then, there has been substantial investment in submarine cables that have brought a twenty fold increase in bandwidth to the continent.
Today, data-based services like voice over internet protocol (VoIP), apps, and instant messaging platforms are reshaping the communications landscape. Mobile data usage and revenue are growing significantly faster than voice revenue, and therefore telecoms firms, in an increasingly crowded market, are coming up with innovative ways to secure their share of the growing number of customers.
Lucy Quist, MD of Airtel, told TBY how internet access is no longer seen as a luxury for the tech savvy, but a necessity. Ghana’s data revolution is in full swing, and telecoms operators, old and new, are adopting different strategies to maintain and increase their data revenue. The competitive telecoms industry has culminated in mobile operators rolling out various promotional strategies to increase market share and edge out competitors.
Many telecoms firms are establishing partnerships with other service providers to add value to their services. Airtel has partnered with banks like Standard Chartered, GT Bank, and First Bank to serve its customers’ financial needs using Airtel Money.
Tigo is moving in a different direction, specifically targeting the global shift of music consumption through smartphone-based platforms. In recognition of the fact that music content is the second most popular phone feature in sub-Saharan Africa, Tigo has teamed up with Deezer, the international music streaming service, to provide customers with access to 35 million tracks
The market has been made even more competitive, as newcomers, with no history of providing voice services, are bypassing 2G and 3G networks and directly developing LTE networks in order to tap into the growth of data usage. One such example is Surfline Communications, which launched the country’s first LTE network in August 2014. After securing $30m in funding in 2015, its network will be expanding in partnership with Huawei Technologies for the rollout of the second phase of long-term evolution (LTE)/4G.
The desire to reach more and more customers and serving their needs is driving the development of Ghana’s terrestrial infrastructure. Tigo has partnered with Ericsson to improve service delivery and invested $3.2 million in overhead fibers in 2014 to reduce instances of fiber cuts by road contractors.
This activity is being mirrored by the public sector, keen to support private companies. The National Information Technology Agency announced the completion by Alcatel-Lucent of the Eastern Corridor Fiber Optic Backbone project, a 7,775km network linking Ghana’s north, south and submarine gateways to its eastern regions.
The data explosion is being fuelled largely by the increasing affordability of data-enabled devices. A survey was carried out by iHub in 2012 wherein 46% of respondents indicated that they did not own a data-enabled handset, with the majority (72%) citing costs as the primary reason why. Such problems have been quickly rectified by market forces, with companies such as Huawei and Techno offering cheap handsets.
Speaking to TBY, Russel Xu, CEO of Huawei Technologies Ghana, explained how their researchers had found the market was dumb-bell shaped, with two predominant markets for high-end smart phones and cheaper feature phones, and little middle ground between. Huawei, which ranks third in the world in terms of device sales, has adjusted the phones it offers for the Ghanaian market, launching models like the P8, but also focusing on cheaper, entry-level smart phones that sell for around $50.
The phone market is, however, still dominated by Samsung, which holds over 45% of the Ghanaian market. Electroland’s MD, Nour Seklaoui, explained to TBY how Samsung’s success is dependent on two factors. Samsung offers a vast range of models, from smart phones to feature phones and everything in between. It also launches new phones every three to four weeks, which helps not only with phone sales, but supports overall brand reinforcement.
Despite this rapid growth, much work still remains to be done. Users in Africa pay up to 30 or 40 times more for internet access than their peers in developed countries. Minister of Communication, Dr. Edward Kofi Omane Boamah, told TBY, “There is a need for the global community to continue to leverage the opportunities we have in IT and telecommunication. … In 2008, the fixed and mobile subscriptions was 11 million, meaning 22 million subscriptions in seven years. That is the robust nature and appetite of the Ghanaian economy for IT and IT-related services.“