Africa finds no place in global "new economy"

Africa finds no place in global "new economy"


As the world economy takes off into cyberspace, Africa, the perennial laggard, is in danger of missing the launch.

Africa is still critically short of the basic infrastructure, technology, systems and computer skills required to support electronic commerce and "the new economy", analysts and businessmen say.

The world's poorest continent has by far the lowest telephone densities in the world, the lowest number of computers and the most expensive telecommunication charges.

Mike Jensen, a Cape Town-based internet consultant, estimates that there are around three million Internet users in Africa with two-thirds of those in South Africa.

That works out at about one internet user for every 250 people compared to the world average of one for every 35.

Africa's 780 million people have as many Internet hosts as tiny Latvia, with a population of 2.5 million, the U.N. says.

"E-commerce in sub-Saharan Africa is going to be difficult. The main impediment is communications infrastructure, which is just not up to speed. Without that, e-commerce can't happen," said Greg Vercellotti, head of Internet services at South Africa's largest IT group Dimension Data .


State telecoms monopolies are part of the problem. Even in South Africa, the continent's biggest and most dynamic economy, a company with 70 percent state ownership, Telkom, enjoys a monopoly over fixed-line services until May 2002.

Telkom defends its record, saying it has spent nearly $3.5 billion in the past three years modernising and expanding its network. But many experts are still not impressed.

"The Telkom monopoly is not doing much for growth because bandwidth is expensive and Telkom's investment is more focused on meeting commitments to government," Vercellotti said.

With myriad more pressing priorities - like housing and education - African governments have put building communications links further down the "to do" list, though they say they recognise the problems.

"The first problem we have is to raise telephone densities which are currently below one for every 100,000 people, and then move on to improving access to computers," said Sizo Mhlanga of Zimbabwe's Posts and Telecommunications Corporation.


On the continent as a whole it remains prohibitively costly to access the Internet. The average cost for using an Internet account for five hours a month in Africa stands at $50 compared to about $29 for 20 hours in the U.S.

Africa, businessmen say, has no acceptable Internet-based payment system and regulatory regimes remain restrictive, starving the sector of vital investment.

The absence of a sophisticated banking system and the lack of credit cards in many African countries, which would allow for secure payment over the Net, makes e-commerce virtually impossible.

David Meintjes, commercial director of Internet services provider UUNET (SA) - owned by local IT group Datatec and WorldCom of the U.S., says it is often tough to find technically competent African partners.


Nevertheless, he says, there are opportunities for the bold.

Nigeria, Africa's most populous country, is waking up to the Internet and all but one - Liberia - of Africa's 54 territories now has Internet services.

"We believe there is potential in Africa," Meintjes said. "We are actively investigating expanding services in eight countries, and later in a total of 14."

The African Telecommunications Union says mobile phones will overtake fixed line communications in five years and businessmen say that should help the continent catch up.

"Generally the ability to deploy new age networks in Africa will enable the impediments to be overcome. You can use wireless - like satellite or radio - rather than fixed line, for example," Meintjes said.

Africa Online, one of Africa's biggest Internet service providers, in August launched an alliance with Britain's Barclays Bank which counts over a million customers in Africa, aiming to pave the way for Internet banking in Africa.

"Our e-touch product seeks to... provide Internet access points in far-flung places across the continent," Africa Online Communications Manager Sam Nganga told Reuters.

But projects like this are still few and far between, and reach only a minute fraction of Africa's people.

For the time being, Africa's economy has its feet firmly planted in the soil, based on growing crops or digging for minerals and oil.

The continent's share of world trade is miniscule - less than two percent - and analysts fear this will shrink further as the technological revolution leaves Africa behind. (Additional reporting by Hilary Gush in Johannesburg).

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