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Ayoba! Africa’s cellphone gold rush

Richard Poplak

From Saturday's Globe and Mail

Several years ago, in the northern Namibian town of Rundu, I was introduced, by way of a man in a trench coat, to an African technological revolution. The signs had been obvious, but I had missed them. In the remote subtropical market city near the Angolan border, the man approached me with a sideways crab-like manoeuvre and whispered into my ear. I scrolled through my mental lexicon of insalubrious terms, but could find nothing that corresponded with his offer.

“Yo, I have airtime,” he repeated. At which point, he opened his coat and flashed me with an array of SIM cards.

Ronaldo was part of a burgeoning African entrepreneurial class related to the cellphone industry. He worked for a small-time local operator named Cleo, who owned a corrugated-iron booth in the market. They shilled in turn for an Indian family in Windhoek, Namibia's capital, who laboured for a cabal in Durban, South Africa.

Ronaldo's hustle was tough: Five or six rivals in the teeming market offered airtime in the same low growl; Rundu's population is poor, and they purchase airtime in increments. But purchase it they do. “Everyone in Namibia will soon have a mobile,” Ronaldo told me. “Then we can rest.”

That was three years ago. After the deliriously successful FIFA World South Africa, Ronaldo seems like a sage. South African telecom giant MTN Group, helmed by chief executive officer Phuthuma Nhleko, is surfing one of the most successful advertising campaigns in African history. MTN's marketing team, major local sponsors of the footie tournament, appropriated the local term “ayoba” – meaning, roughly, “cool!” or “wow!” – which CNN and ESPN commentators unwittingly helped to turn into a catchphrase by repeating it ad nauseam. In 2005, MTN had 14 million subscribers; now, it has 123,580,000, including three million in Afghanistan and about five million in Iran. All bets are off for its second-quarter report, which will include its World Cup bounty.

Indeed, cellular use in Namibia and its neighbours has blown past even the wildest estimations – there are almost 500 million SIM cards active in Africa, with a projected 800 million in five years. Ronaldo, himself a refugee of the Angolan war, would never speak to his family if it weren't for the cards lining his coat.

A bubble can't last forever. No one is sure whether profit and industry growth can be cajoled from the poorest people on Earth. So success here comes with a built-in existential challenge: If every African has a cellphone, how will cellphone companies survive? The answer, it seems, lies in keeping costs preternaturally low and innovating at a level that would make a Western mobile executive's head spin.

For instance, Bradley Voges, of Cape Town-based Blueworld Communities, has developed an application called Afridoctor, a mobile DIY app that can access a panel of doctors to remotely diagnose pictures of ailments, help find local clinics and send out distress calls. “There is a dire need for this type of content, yet such a lack of resources, especially in rural areas,” Mr. Voges tells me. He is one of thousands of African entrepreneurs to correctly gauge the new gold rush and its social implications.

It's all part of the cultural rejigging taking place in Africa, where awful terrestrial phone-line services left the door open for cellphone companies to sweep in, making land lines an anachronism. Mobiles fulfill a need to stay connected in countries that wrench their young from rural communities and dump them in towns and cities like Rundu. For isolated villagers, they can move beyond stuffing money under mattresses to cellphone banking, and from rural health cures to better medical care.

And “you must remember,” Ronaldo said, “that, once, almost everyone here was against mobiles.” There were church edicts and fatwas against their use across Africa. But congregations have been strengthened, and tithes and zakat (Muslim charity) are now a send button away. “Everything has changed,” Ronaldo continued.

“We're talking about a 40-per-cent penetration level in every African market, minimum, and in some markets we're at 100 per cent,” says Andre Wills, of Johannesburg-based Africa Analysis. “Africa has an immense appetite for this technology, and the waters move so fast that it's hard to keep up.”

But the industry's most revealing marker – average revenue per user, or ARPU – tells a different story. South Africans used, over the first quarter of 2010, about $22 of airtime, a 7-per-cent increase over the previous year. But Nigerians used only $11, and Ghanaians a paltry $7. As penetration deepens, the telecoms must figure out how to generate money from a customer base that has so little of it.

This is where the African cellular phone industry parts with its Western contemporaries. The social transformation that started with MTN's well-known collaboration with microfinance giant Grameen Foundation USA has rapidly led to innovations.

Most players are intent on making handsets the African Internet delivery system. PCs are costly; cable Internet is a pipe dream. The industry is investing heavily in 3G and 3G+ networks, and Africans are now using their phones to go online. They tweet and from their phones, and yes, those are verbs in everything from Swahili to Zulu. I recall Ronaldo heading back into the fray of the market, whispering his proposition into the ears of the good people of northern Namibia. He'll do just fine. After all, airtime has become as essential as, well, air.

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