Posted by: Armel | May 1, 2009



“Subprime” Over charging  is the bread and butter of Telecom Companies  in Africa.

There is a research that basically confirmed with factual data what we’ve been saying on Armelopost for a while now. The project was conducted by RIA (Research ICT Africa) a network of Universities and Research Institutions from 19 African Countries. They used data representative of over 17 countries to analyze Mobile Telephony Access and usage in Africa.

By looking at the entire project, there are many conclusions you can draw including those already found by the researchers. I was particularly interested on the different results on Cameroon  because I can’t speak with certainty about the economic balance in other African countries except in general terms. What this research confirmed that is worth noting is that the lower class and the poor continue to be the bread and butter of companies operating in essential sectors .

Believe it or not, Mobile Telephone expenses are now an integral part of the budget of most Africans. But if we are to believe the data out of MTN and ORANGEfor example, the vast majority of new accounts are prepaid SIM cards with the highest per minute rates on calls in Cameroon. It’s practically impossible for people to sign up for longer contracts (crazy requirements!) and spend less on phone calls like the upper class is allowed to do.

Overall, it’s very simple if you ask me, just as Digicel made huge profits in the poorest country of the Western Hemisphere, poor people remain the bread and butter of the telecoms industry in Africa no matter how you look at it. Contrary to perceived assumptions, as people income rise, their Mobile Phone expenditure does not increase accordingly, hence my earlier conclusion.

It doesn’t end there, if you listen or read the 2009 guidance from global phone operators and handset makers after their quarterly reports, they continue to look towards Emerging Markets (Asia, Mid-East, Africa) for any growth. That growth is only coming from lower or poor households since they are the category fueling the current subscribers boom.

The only difference between the higher rates being charged to sub-prime customers in the mortgage and credit card industries and most African (Cameroon for instance) mobile phone subscribers is that there is no premise on which to judge the credit rating of the latter. Between those prepaid customers, a lot more could have qualified for lower fees and handset buy-in plans, but those are so far reserved only to the well-off minority.

 Armel Njeunou

Research ICT Africa PDF (courtesy of Hash)


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