Telecommunications expected to drive Africa’s post-pandemic economy

Smartphone penetration along with low data tariffs and investments will supercharge Africa’s telecoms sector over the next five years

By Seth Onyango

Senior executives in Africa forecast the strongest growth in the telcos sector as internet connectivity improves, a new study by the network operator, World Mobile shows.

Those polled expect telecommunications to exert a strong influence on economic growth rates in Africa where pandemic-impacted digital markets are heating up.

Those interviewed include executives at firms with combined annual revenues of more than Sh800 billion, based in Nigeria, Angola, South Africa, Tanzania, Botswana, Cameroon, Ethiopia and Ghana.

According to them, telecommunications will register the strongest performance (75 per cent), healthcare (61 per cent) and tourism (44 per cent).

Other sectors expected to witness growth are financial services (36 percent), retail (36 percent), manufacturing (22 percent) and education (22 percent).

“The expansion of telecoms across the African continent is central to driving economic growth and senior business executives clearly agree as they rank it well ahead of other major sectors of the economy,” says Micky Watkins, CEO of World Mobile.

“To a great extent, growth in telecoms spurs growth in other sectors as societies become more digital and technology-focused and that applies very much to financial services, healthcare, retail, and education.”

World Mobile’s forecasts came after research by the International Finance (IFC)  showed that Africa’s internet economy could grow 56 per cent to Sh21 trillion in gross merchandise value by 2025.

This will be fuelled by paperless retail transactions on the continent, which are expected to continue to rise in the post-pandemic era.

Projected growth in Africa’s telecommunications sector and by extension internet economy could explain the startup funding “frenzy” through 2020, 2021 and the first half of 2022.

‘Africa: The Big Deal’ figures show start-ups in Africa have raised more than 3 billion US dollars in the first half of 2022 and recorded their strongest June, Q2 and H1, ever.

World Mobile’s report showed there will be around 120 million new mobile subscribers by 2025 on the continent, taking the total to Sh73 billion, up from Sh58 billion in 2020. 

Also fuelling the growth of Africa’s digital economy is the proliferation of entry-level internet-enabled handsets that cost Sh3,300 or less.

The growth of the internet economy also comes against the backdrop of rapid adoption of mobile money systems on the continent.

Approximately 144 mobile money providers operate in Africa, with companies such as M-Pesa, MoMo and Orange Money accounting for a significant share of the market.

M-Pesa, managed by Vodafone and Safaricom and operating in seven countries, has seen significant growth in recent years. 

The service attracted an additional 12 million users from 2017 to 2020, reaching 41.5 million users by 2020, according to Statista.

M-Pesa users made 12.2 billion transactions in 2020, generating 784 million US dollars in revenue for parent company Safaricom. MoMo – MTN Group’s mobile money offering – has enjoyed similar growth, reaching 35.1 million active customers in March 2020.”

International Monetary Fund (IMF) estimates show Africa has more digital financial services users than any other region in the world, accounting for nearly half of the 700 million individual users globally.

In 2011 the level of financial inclusion in Africa was just over 23 per cent and jumped to almost 43 per cent in 2017, buoyed by the growth of digital financial services. The figure is expected to be much higher today.

Last year, telco operator MTN, signed a partnership deal with Flutterwave to enable businesses in Cameroon, Côte d’Ivoire, Rwanda, Uganda and Zambia to make cash transfers via MTN Mobile Money (MoMo). 

This digital move is also primed to plug millions of unbanked people in those countries into mainstream financial services and prop up businesses especially those in remote areas.

Africa is expected to attract billions worth of investments into its data centre market on the back of the continent’s growing internet economy. 

New figures show Africa and the Middle Eastern data centre market recorded Sh776 billion in investments in 2021 and will attract an additional Sh1.4 trillion by 2027, half of which will be spent on the continent.  ( (Bird)