The strong impact of broadband Internet on economic development in sub-Saharan Africa

 

Anat Bar-Gera, Chairperson at YooMee Africa discusses the importance and impact of broadband internet in sub-Saharan Africa

We found that Broadband Internet access has a strong impact on the economy. A world Bank statistics shows that in developing countries every 10% growth in broadband access results in 1.4% growth in GDP. Also, every 1000 new subscribers of broadband Internet result in the creation of 80 new jobs. We, YooMee Africa,  go to sub-Saharan Africa, build this Broadband access networks and provide the service to our clients. We can see these statistics actually happening in real life – immediate creation of employment opportunities, spill over effect of creating and expanding small medium enterprises (our suppliers – call centres, web designers, etc.), technology transfer and more. 

Internet is very effective in this respect, as it is new to sub-Saharan Africa. We are talking about small percentages of existing users of broadband, sometimes around 1%, compared with the rest of the world, where the usage of internet is accelerating. In the developed world the internet is a major part of our lives, changing the structure not only of our social lives, but also of our economy. Since we expect the Internet to impact our economies in the future even more, we must make sure that the digital divide between the developed world and Africa is not growing, but diminishing. 

So our responsibility is to make sure that it is going in the right direction in Africa as well. For example, one of YooMee Africa’s next projects is providing internet access to the University of Douala, which is a huge University with 60.000 students, lacking any real Broadband connection. Currently professors and students have to go to an Internet café outside of the campus, to get Internet access. This is incredible in today’s academic world. We are proud to promote the academic progress, while making sure that our financial model still stays profitable, as we are FOR profit company. 

Global Institutional Investors are coming to Africa for the Summit. What is their responsibility as part of the growth story? 

It is excellent that Institutional Investors come to Africa in the first place. The fact that institutional investors are coming to Africa in order to make profit out of it, is even better, because it is important to get away from the charity model. 

It is still not easy for start-up businesses and local small businesses in Africa to develop. Although an amazing amount of money is going to DFI’s, many of the small guys cannot get funding. It would be very interesting to see DFI’s and VC’s develop a model for private and new local projects. A lot of money goes to public private partnerships, and to very large infrastructure projects. However, it is important for the local economies that innovative local entrepreneurship will be established, encouraged and mainly financed, to create a strong movement in this direction. 

Africa needs to move up the value chain beyond over dependence on natural resources, and into the labour intensive service economies . The investments need to be in industries which are modern, technical and relevant to today’s world. This will help the population to move from their traditional ways of making money into new value added services and industries. In time, this will allow to reduce the unemployment. Africa has the youngest population, and  growing middle class, and therefore provides a good playground to such developments. 

Africa has had the highest growth in mobile use globally. How will it affect the economic development of the continent moving forward? What is the social impact of wireless Internet access across Africa? 

There is an important differentiation between mobile use and Internet use. There are amazing figures about Africa being the second continent with the largest mobile use. However, in the developed world we are moving one step ahead, as we are switching from the mobile onto the Internet, or from voice into data. Just look how our communication habits are quickly changing.  People spend time socially on-line, they chat, they blog and they tweet – everything is more and more on the Internet. The same thing goes for the way we are doing business. Companies success depends on their ability to leverage on the power of the net nowadays. One example is the consumer goods companies that conduct their market research using Facebook questionnaires. Other examples are companies which master online selling. Africa needs to get into the on-line world. 

With huge amount of youth, which is a blessing, in 2040 Africa will have the largest work force worldwide. Unless this work force gets trained properly, it will not be able to compete in today’s cloud world, and unemployment will just explode. Just to give you an example: A child that is born and raised in a developed country learns from his childhood how to play, check train schedules, sell and buy on eBay, or find information for educational purposes – all of it online. A child in Africa doesn’t acquire these skills. That needs to be addressed quickly. Bringing broadband Internet access to the continent accelerates this.The social impact of Broadband is huge, including developments in E-education, E-health and even E-government.

Do you think wireless Internet access is the only solution? 

In Africa, there is not enough copper in the ground to provide fix connection, and the wireless solution is the fastest and most effective one. We, YooMee Africa, managed to cover Douala with our base stations and provided Broadband Internet access in the whole city within 4 month. The Broadband connection is fixed and mobile, so today our customers in Douala can drive in the car or bus and be on the Internet at the same time.  The subscriber can have flawless YouTube and Skype experiences, and download lots of material in a speedy way . You can be online in no time, it is a plug-and-play. This is the beauty of the wireless access, using 4G technology. It is very effective in the sense that we cover the cities quickly and offer fast, stable and state of the art connection. In my opinion it is the most effective solution to bridge the digital divide. 

Internet technology in Africa is a great opportunity for investors. Could macro-economic conditions and access to finance in these markets influence the predicted growth? 

Absolutely. Access to finance is key in how fast this technology can be deployed. We see, however, that negative macro- economic outlook for the developed world tend to work both ways – on the one hand people are more reluctant to invest, on the other hand they realize that Internet in Africa is a sweet spot of growth. On top of this there is money coming from emerging markets which are keen on participating in the growth in Africa. 

Apart from macro-economic conditions and money, is there anything else that is required to close this gap in sub-Saharan Africa? 

Experience and know how are key. YooMee Africa has the advantage of “doing it before”. Our team is repeating now in sub-Saharan Africa what we had successfully done in other emerging markets. But like other players we are also faced with lots of challenges, including finding, training and keeping the human capital. Experienced management is not easily found, and once you hire people and train them, they get “snatched” by other companies, because there are very few professionals with the right training and experience in the market. 

There is also an environmental void. A company operating in Africa needs to create a lot around its core activity. There are not distribution channels, head hunters or call centres, as we know them in Europe or the U.S. So we end up creating all of these services ourselves. Our classical example is one of our previous companies, a European ISP, which reached 1.5 million subscribers in less than 2 years. We reached this growth by creating a joint venture with Media Markt, the largest retail electronics company in Europe.  When we started our business in Africa, we were looking to repeat this by teaming up with a very large electronics retailer, so that we distribute our product and services through them. But we did not find anything like this – no big retail electronic chains. We therefore had to be very creative to find solutions. For example one of the distribution channels we found are gas stations. Now they are also selling our prepaid Internet cards. 

In sub-Saharan Africa there is a major issue which is the GDP per capita. If we, as an Internet operator, can charge X amount in Switzerland for broadband Internet access, we cannot charge the same in Cameroon. We had to be very creative about it. For example our pre-paid cards in Cameroon have a large range of pricing, the cheapest one being 2 Euros. 

In the developed world the Internet content is very developed and that encourages people to use the Internet. When you are going somewhere you look at Google Maps to figure out how far it is, you look for the train schedule, you buy a train ticket, you can even buy a flight ticket, you can have it on your phone when you walk in the airport in order to do the check-in. You can buy and sell goods and services on-line and you can compare prices. None of this content exists in Africa. We are very interested in this, as the content creation will accelerate Internet usage, and Internet usage will accelerate content creation. So we are working on initiatives for incubators like the ones created in Israel. 

Is there a need for this Summit in Africa? 

Absolutely. Such Summit will hopefully encourage investing in Africa, and as a result building and expanding local companies, providing services and goods, and serving the growing middle class. 

Today the developed world is standing in front of the crisis, or in the midst of the crisis. When we look at Europe, it is disastrous; when we look at the US, it is very nervous; even in China there is the devaluation of the currency. So Africa is becoming even more attractive because of the GDP growth that is happening there. One of the aspects that people don’t see is the young demography. More than 50% of the continent is less than 18 years old. The new and upcoming middle class, and the fact that they are young and eager to buy, is a great opportunity for a lot of companies. However, there is still a huge misperception about Africa in the world. It is always associated with the problems we all know – the wars, the unrests. Even in the investment world there isn’t enough awareness about the fantastic opportunities that Africa offers. So it is great that this Summit is taking place.

 

Anat Bar-Gera

Chairperson, YooMee Africa 

Anat is an inspiring serial entrepreneur and the Co–founder of several telecommunications companies, with numerous successful exits. At present, she is the Co-founder and Chairperson of YooMee Africa. 

Anat is also a Member of the Entrepreneurship Advisory Council of INSEAD, a Member of UNICEF Swiss National Committee and a Board Member of the Swiss Technion Society. In 2011, she was a guest speaker at the TEDx Bay Area event, presenting on the Magical Effect of the Internet on Africa. Anat and her husband, Dov,  were chosen as one of the Leading Entrepreneurs of INSEAD. 

About YooMee Africa  

YooMee Africa offers fast, affordable and reliable mobile wireless broadband internet access in Sub-Saharan Africa. The Company is a game changer, and is committed to closing the digital divide. The company follows up on the access with value added and multi media services, and is the first partner of Microsoft Windows-Live in sub Saharan Africa.

YooMee Africa launched its services in Cameroon, under the Brand name YooMee www.yoomee.cm, and expands to additional countries in Sub-Saharan Africa.

YooMee Africa was founded by a team of telecom entrepreneurs who have been actively involved in emerging markets for the last decade.

 

View the original article on www.singularisadvisors.com

 

 

 
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