African Telecoms

africa

A first mover advantage in any industry is a huge benefit, but especially in the telecommunications business. This is due to the positive network effect where the more people that use it, the more people are enticed to use it. Telecom companies throughout the world always receive large market shares and fairly little competition due to incredibly high barriers of entry. Most of the developed and even the developing world have telecom networks set up with companies having their established market shares, looking for growth geographically. The final frontier of these businesses seems to be the African continent which has lagged behind the entire world in development.

Telecoms have started to become abundant in the most populous and prosperous countries in Africa {Largest Telecoms in Africa}. These include South Africa, Nigeria, Morocco, Egypt, and Kenya to name a few. Although the rise of the telecoms in Africa are inevitable, there are good and bad things about their vast power. The good represents the opportunities for civilians to have vast internet access, educational opportunities, business growth, and banking. The bad represents the monopolistic opportunities that these vast companies have due to their high market shares.

Safaricom, a telecommunications firm in Kenya, demonstrates these issues. With widespread internet access, Kenya has grown substantially and mobile banking has led to more business growth and wealth growth for average citizens. M-Pesa, a mobile financial transaction process created by Safaricom, allows citizens to exchange money with each other in the simplest fashion. In this regard, they are more advanced than the United States, where we still rely on cash and credit cards. However, Safaricom has 95% of the market in mobile payments. This gives them the opportunity to increase transfer fees without any loss of customers. Governments in other less developed African nations should look at the telecoms in the more developed African nations for lessons on how to handle them. Incentives must be made for multiple players with multiple payment systems giving citizens an easy path to transfer money in-between the multiple payment systems. This will lead to competition and advanced technologies which will be great for the consumer. There is a whole lot of people that still need to be connected throughout the rest of Africa, opportunities are endless.

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