Indeed mobile services, led by Kenya's M-Pesa and South Africa's eWallet, have helped overcome their region's shortage of banking facilities. Vodaphone reported that in 2008, after just 18 months of offering M-pesa, four million people were using cell-phone based banking services, nearly equal to the number of people in the country with bank accounts.
World businesses are starting to flock to Africa to fulfill the telecommunications opportunity. A consortium of Nigerian financial institutions and South African investors recently completed a $250 million underseas fiber cable along Africa's West coast. That is resulting in slashed prices by Internet service providers who now have competing sources of bandwidth, according to the UN's ITU. The ITU expects far more bandwidth to become available in the next two years.
Another company that is showing its belief in the prospects for wireless in Africa is India's Bharti Airtel. Earlier this year Bharti spent $9 billion to buy most of Kuwait's Mobile Telecommunications Co.'s African assets. Bharti has grown explosively to handle more subscribers than any other company in India. Its success reflects a deep understanding of the opportunities presented by very poor customers whose economic fortunes are boosted by cellular connections. Bharti finds Africa attractive because the cellular penetration rate there is still only about 40%.
While broadband access is the long term goal everywhere, it's important not to underestimate the business potential of cellular connections. Fishermen in Ghana use cell phones to find wholesalers who will give them the best prices for fish they have caught rather than returning to the same dock every day. Esoko Ghana, a market information system, has created a commodity index with prices for many different crops that it sends by daily text message to farmers to help them price their produce.
The experience of India shows that in places where voice calls are expensive and Internet connections rare, entrepreneurs gravitate to text-based messaging. United Villages Networks Ltd., a company founded by recent MIT graduates started out to provide Internet service in villages, but it recast its business model to accept text-message orders from village stores. Now it has established grocery depots in dozens of small cities in India that ship supplies daily to storekeepers who used to have to travel in order to stock their shelves.
The technological revolution that is sweeping Africa demonstrates the entrepreneurial spirit that can spur the continent's economy. Leaders can leverage that spirit by committing to build a smart, public infrastructure that will promote further economic development and, ultimately, wealth creation for the people of this new and vibrant gateway to the future: Africa.
Bruno Di Leo is General Manager of IBM Growth Markets, a global organization based in Shanghai. He is responsible for driving IBM's business success in high-growth economies across Asia Pacific, India, Latin America, Central and Eastern Europe, the Middle East and Africa.
