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Slow Pace of Liberalisation Holds Back Internet Growth
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Balancing Act's press release announcing a new CD-ROM based report: African Internet Country Market Profiles.

July 30, 2004
The growth of the internet in West Africa is being held back by the slow pace of liberalisation in the market, according to the authors of a new report published by Balancing Act this month. For the first time ever, this report looks in detail at the state of the Internet in 22 West African countries.

Only seven of the 22 countries have more than 10,000 dial-up subscribers: Nigeria, Ghana, Cote D’Ivoire, Togo, Guinea, Cameroon and Senegal. The biggest is Nigeria, which is the third largest market on the continent after South Africa and Egypt.

According to one of the report’s author’s, Russell Southwood:” In most countries of the countries covered, the number of internet subscribers is growing very slowly or has hit a plateau and without significant changes in the state of the economy (coupled with deregulation) the number will stay the same. Nevertheless there are significant growth opportunities in some markets, particularly those coming out of civil war, the newly-oil rich and Nigeria.”

Only seven countries of the countries covered have ended the monopoly of the incumbent telephone company (Cote D’Ivoire, Ghana, Guinea-Bissau, Mali, Mauritania, Nigeria and Senegal) if those ending the monopoly in 2004 are all included. In only three cases (Ghana, Mali and Nigeria) are there second national operators but in the case of Ghana, the SNO is largely ineffective in providing competition to the incumbent.

Report author Southwood believes that growth has often been held back by the behaviour of the incumbent telephone companies. “Almost all incumbent telcos run their own ISPs and often have significant unfair competitive advantages. Burkina Faso’s Onatel only gives access to a local call number for internet subscribers to its own ISP. In the case of Senegal’s Sonatel it has achieved a market share that would almost certainly be the subject of anti-competition action elsewhere”. In Chad, Niger and Sao Tome and Principe, the incumbent telephone companies still have a monopoly over internet supply and will do so for several years to come.

The success story has been the growth of the number of cyber-cafes. With this explosion in numbers has come a fairly vigorous price war to the point where many businesses are uneconomic. However the prices offered in many countries are now extremely low and it is through these cyber-cafes that most Africans in the countries covered experience the internet.

Although estimating the numbers of internet users who are using a cyber-café or something other than a dial-up subscription is notoriously unreliable, it is clear that there are now hundreds of thousands of people using cyber-cafes in West Africa’s larger internet markets. In the largest market, Nigeria, there are probably somewhere between 0.5-1 million users and this figure continues to grow rapidly on a year-on-year basis as more cities are connected.

The majority of users tend to go to cyber-cafes to send or collect e-mails and this is borne out by a survey in Nigeria that shows Yahoo and Hotmail as the most popular sites used. However, there is not yet a large amount of local content and services in most markets and this pattern will change in the next five years.


The Report

Balancing Act’s African Internet Country Market Profiles is published in four parts. Part 1: West Africa has just been published and covers 22 countries. Part 2: East Africa will be published in early 2005. Part 3: Southern and Central Africa will be published in mid-2005. Part 4: North Africa will be published at the end of 2005. For further details: Balancing Act

Each report covers the following: Overview of internet in West Africa, Impact of VoIP legalisation, key statistics, country background data, number of ISPs, dial-up-subs, bandwidth and backbone, geographic coverage, cyber-cafes, local web content, current status of regulation, digital divide initiatives and landline and mobile data.

Balancing Act is an online publishing and consultancy business covering telecoms, internet and computing in Africa. It is one of the primary sources of information and expertise in this area. It publishes Balancing Act’s News Update, a weekly e-letter, which goes out to 7,200 subscribers across the continent and a monthly French-language edition.


The authors

Paul Hamilton, an independent consultant specialising in African telecommunication markets, is an associate of Balancing Act. Formerly the Telecoms Research Manager at World Markets Research Centre (WMRC), he has undertaken a range of research, analysis and consulting assignments for operators, vendors, NGOs and regulators.

Mike Jensen is a South African independent consultant with experience in over 35 countries in Africa assisting in the establishment of information and communications systems over the last 15 years. He provides advice to international development agencies, the private sector, NGOs and governments in the formulation, management and evaluation of their Internet projects.

Russell Southwood is the Chief Executive of Balancing Act and the Editor of its weekly e-letter on telecoms, internet and computing News Update. As a consultant, he has worked for a variety of clients looking at: the demand for fibre infrastructure in Africa over the next five years; the creation of a regional internet exchange point; the future for VoIP services in Africa; the development of local internet content and services; and policy development.




2004-08

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