<div class="gap6"><h1>African internet market poised for growth</h1></div>
<h6>
<p>Growth levels in double digits but penetration still low</p>
</h6>
<div class="articlebyline">Ian Williams, <a href="http://www.vnunet.com/">vnunet.com</a> 19 Oct 2007<br><br><a href="http://www.vnunet.com/articles/print/2201554">http://www.vnunet.com/articles/print/2201554</a><br></div>
<p>The market for internet access and services in Africa is growing fast, but a
number of hurdles still remain, according to research from
<a href="http://www.frost.com/" target="_blank" title="Frost and Sullivan">Frost
and Sullivan</a>.</p>
<p>Growth rates for internet use in Africa are in the double digits but have
been predicated on a narrow base, and the overall number of internet users
remains limited.</p>
<p>However, the low penetration rates indicate a huge potential market for
internet services.</p>
<p>ISPs and governments are gradually designing new strategies, but are having
to cope with restrictive licensing regimes, poor telecoms infrastructure and low
affordability of services.</p>
<p>However, governments and private telecoms operators are making significant
investments in infrastructure in an attempt to exploit the potential of the
African internet market.</p>
<p>"The African internet services market is growing," said Spiwe Chireka,
research analyst at Frost & Sullivan.</p>
<p>"Most governments have embarked on ICT-led development strategies aimed at
developing e-governance and, subsequently, internet penetration."</p>
<p>Chireka predicts that markets such as Kenya, Tanzania, Uganda, Senegal,
Angola and Mozambique are set to enjoy high growth levels.</p>
<p>These countries enjoy technology-neutral licensing regimes, independent
regulators, high levels of foreign investment and highly liberalised markets.
</p>
<p>On the other hand, Ghana and Nigeria have high growth potential, but this is
hindered by poor economic performance and prohibitive licensing regimes which
have limited foreign investment into these markets.</p>
<p>The main factors dampening uptake are widespread poverty that makes internet
services unaffordable, low literacy levels that limit demand and high operating
costs that continue to keep service prices high.</p>
<p>Furthermore, poor telecoms infrastructure is hindering penetration rates even
as the restrictive regulatory frameworks contain market growth.</p>
<p>"ISPs will need to consolidate their efforts and create strategic
relationships with cellular operators," said Chireka.</p>
<p>"The further development and increasing penetration of cellular networks
would allow ISPs to offer mobile internet access and boost penetration of their
services, thus reducing the high initial investment costs."</p>
<p>At the same time, mobile handset operators need to partner with ISPs to
provide affordable tools for mobile internet access.</p>
<p>Developing a sound market share in the limited market base characteristic of
Africa needs product differentiation to increase consumers' switching costs.
</p>
<p>"In addition, ISPs need to target markets outside the major urban areas which
are saturated in terms of operators," added Chireka.</p>
<p>"Partnerships with cellular operators would go a long way to address this
challenge. Low cost and high speed access will also be crucial to ensuring
market growth."</p>
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