Tanzania Daily News (Dar es Salaam)

24 July 2014

Tanzania: Telecom Becomes Key Driver of Economic Growth

OVER the past few years, the levels of interest in Africa have grown exponentially. What was, only a short while ago, a trickle of inquiries from clients on opportunities for investment and doing business in Africa has grown into a flood. Telecommunications has been an important driver of Africa's economic growth in the last five years.

The market is increasingly competitive, and world-class local enterprises are emerging in voice and data services.

Telecom revenues have increased at a compound annual growth rate (CAGR) of 40 per cent, and the number of subscribers rapidly exceeded 400 million.

To meet the increased demand, investment in telecom infrastructure-- about 15 billion US Dollars a year--has also grown massively, with a 33 per cent CAGR from 2003 to 2008. According to the 2014 'The future of Telecoms in Africa' report, mobile subscriber growth is maturing and could well saturate in the medium term in some markets if rural coverage does not increase where on average, mobile subscription penetration has reached 72 per cent across Africa.

"Africa's total bandwidth usage grew at 85 per cent CAGR between 2007 and 2011, a rate of growth beaten globally only by the Middle East.

Mobile data now makes a noticeable contribution to operators' revenues," the report cited. Bearing this in mind, Tigo Tanzania is currently investing about 2 million US Dollars (about 3.2bn/-) a week to modernise and expand coverage of its network.

That translates to some 457m/- (about $285,625) every day and almost 167bn/- by year end. Tigo Tanzania Managing Director, Diego Gutierrez says the company will maintain this unprecedented level of investment for quite some time with a focus to opening up uncovered areas especially the remotest parts of the country with poor reach of mobile phone services.

"We intend to maintain this level of investment for years to come," notes Mr Gutierrez, who since taking the company leadership in 2012 has been working to ensure that Tigo remains a healthy business with a strong brand and an enormous potential for growth.

"In the period 2013-2014 we are rolling out more than 600 new sites in Tanzania, especially in areas where we're currently not that strong and in the rural areas. Our commitment to the country is big; we believe in this country and we think that there is a lot of room to keep on growing," says Mr Gutierrez.

Recently the Groupe Speciale Mobile Association (GSMA) recognised Tigo Tanzania as being the third most successful mobile financial services player in the world. Late last year, the company won the Highly Commended Award under the Best Network Improvement category, awarded by global mobile association.

The secret behind these achievements has been its focus on consolidating its competitive merits through innovation. Early this year, Tigo Tanzania partnered with Tigo Rwanda to launch the world's first ever cross border mobile wallet to wallet money transfer with currency conversion.

This landmark innovation has been tipped to take the two East African states' cross border trade to new levels as traders on either side enjoy the freedom to send and receive money on their handsets round the clock.

This was closely followed by another first in April when the company teamed up with the world's social media giant, Facebook, to give its customers unprecedented free access to Facebook and for the first time, making the service available in Kiswahili language.

This initiative means opening new social, economic and business opportunities to the 6.5 million Tigo subscribers who can now interact freely with over 1.2 billion Facebook users worldwide.

The latest innovation came in May this year when Tigo integrated its mobile financial services with two other mobile companies to allow wallet to wallet money transfer across the three networks. The first of its kind in Africa, the move is widely seen as a milestone development that could rapidly turn around Tanzania's financial inclusion which now stands at 48 per cent.

Tanzania has over 10 mobile financial services users out of whom 3.5 million are Tigopesa subscribers. The company has recently become the first mobile company in East Africa to pioneer a mobile application which smartphone users can download to enjoy more simplified mobile financial services transactions.

"I like to think that Tigo has democratised mobile telephony in this country. We made mobile telephony affordable and we have gained the heart of the people. I believe that this, together with a philosophy of good customer service and reliability, is giving us the growth that we need," he explained.

Through its corporate responsibility initiatives, Tigo in partnership with UNICEF is implementing a mobile birth registration programme in rural areas with a target to register one million by 2016. And to solve educational and learning challenges facing Tanzanian children, Tigo has been investing 75,000 US Dollars annually to operationalise brilliant ideas brought forward by Tanzanian social entrepreneurs in partnership with Reach for Change.

"We know that every person has a specific digital need; for some it may be being able to make a payment from their home instead of having to walk 10km to the nearest bank, for others it is being able to download their favourite music, and for others still it is being able to access the price of crops without having to go to the nearest market.

All those are digital solutions and all those are part of a digital lifestyle solutions that Tigo wants to offer," he explained. Strong growth in the telecommunications sector is being driven by increasing investment, rapid progress in technological and communications services and some deregulation across the African continent.

But for many reasons these achievements to date are only just the beginning as Africa's future potential dwarfs the growth seen so far. Although Africa is commonly characterised as a single marketplace, it is made up of 56 individual countries, and its markets can be considered in some ways more diverse than those of Europe.

Alongside their varying levels of maturity, what further distinguish African markets are their diverse regulatory structures. Regulation plays a vital role in the development of all communications markets, but especially ones changing and growing as rapidly as those in Africa.

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