Smartphone boom will drive African data explosion

spc marketplace africa mobile money b_00012322
spc marketplace africa mobile money b_00012322

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Story highlights

  • There are 370 million cellphone subscribers in Africa, 100 million of which are using smartphones
  • Most Africans will access the internet through mobile devices, as there are few fixed-line connections
  • Video and banking services are likely to expand hugely as more people come online

(CNN)Cheap smartphones could drive a data revolution in Africa, according to the CEO of one of Africa's biggest cellphone operators.

Vodacom chief executive Shameel Joosub says that the availability of low-cost handsets opens up huge markets for media and financial products on a continent that embraced the cellphone at an incredible rate. Several major technology companies have begun marketing devices for under $100, making them attractive to consumers in developing markets.
    "There is no fixed line alternative, most [people] are overly dependent on mobile phones, as people start to experience the internet... most people experience it on the cell phone."
    There are around 370 million mobile subscribers in Sub-Saharan Africa, according to the GSMA, a mobile telecoms industry trade body, around 100 million of which are smartphones. The organization forecasts that by 2020 the number of smartphones will rise to half a billion. Vodacom has 63 million subscribers across five African countries.
    "Our data traffic is growing by 146%. You are starting to see the traffic increase significantly, but you're also starting to see data revenues grow by 35% across the group," Joosub says.

    Video on demand

    Vodacom plans to offer video packages to subscribers, working with major television brands, including Naspers, the South African media conglomerate, to tap into a growing appetite for local and international media amongst African consumers.
    Joosub also sees a lot of potential in expanding its mobile financial services products. Mobile money, and in particular the M-pesa mobile money transfer system, has transformed the way that Africans send and store money. In Tanzania alone, Vodacom customers move around $1.5 billion a year through M-pesa.
    "The ecosystem is quite impressive," Joosub says. "You've got employers paying employees on the system and governments paying employees through M-pesa. The ecosystem includes paying for [pay-TV], electricity, water, tickets, et cetera."
    Vodacom hopes that it can move those users into other financial products, such as savings. Many Africans still do not have access to basic banking services, but the rise of mobile money has brought many into the formal financial system. According to the World Bank, 34% of adults in Sub-Saharan Africa have an account, up from 24% in 2011.
    "These days we're more interested in how to keep the money in M-pesa, as opposed to...person to person money transfers," Joosub says.