Entrepreneur and multi-millionaire, Peter Gbedemah discusses the top five things to consider when launching a telecoms business in Africa.
Africa is one of the most attractive places in the world to do business. Sub Saharan Africa in particular is fast becoming a start-up hot-spot: the region’s big players – South Africa, Kenya and Nigeria – are among the fastest growing economies in the world. This growth represents a unique opportunity for telecoms providers looking for markets where there is increasing appetite for affordable connectivity and over-the-top services. These include the likes of WhatsApp and Netflix, where content is streamed directly through the Internet, bypassing traditional distributors like cable, broadcast and satellite TV. With 456 million users of mobile services by the end of 2018, burgeoning telecoms start-ups should strongly consider Africa.
However, in a continent where the existing digital divide is so vast, several key factors must be taken into consideration before launching a telecoms business.
Be thorough and innovative when seeking investment
Securing venture capital funding for an African enterprise can be difficult. Encouraging investors to take the plunge into an emerging market, rather than sticking to the likes of Western Europe and the United States, requires a robust business plan that’s extremely well thought-through.
A clear company mission, well-researched potential for demand, a thorough supply-chain framework and a risk audit covering political, economic and environmental factors will be key in wooing wary investors.
It seems many budding entrepreneurs have taken this advice on board, given a four-fold increase in total funding received for African start-ups in 2018. As the continent’s main players, Nigeria, South Africa and Kenya’s sophisticated tech ecosystems are a natural draw for any new business. However, other African destinations, such as Accra in Ghana, are emerging as viable destinations for funding. These may have lower overheads and so the amount of funding needed from an angel investor will be lower; alternatively, there may be less competition for investment, making the pitch easier.
Embrace technological change
Africa’s number of smartphone connections is forecast to double from 315 million in 2015 to 636 million in 2022. Taking advantage of the continent’s rapid digital transformation has never been more important for the next generation of entrepreneurs.
Technology is driving change in Africa and the telecom sector is predicted to thrive. More than half a billion people across the continent are now subscribed to a mobile network. This means communities are connected to one another, as well as having access to a range of services – from wider healthcare and financial services for big corporations, to micro-insurance where rural farmers are able to protect their crops against poor weather conditions.
Harnessing innovative uses of technology is imperative in order to stay ahead of competitors and provide customers with the most efficient service possible.
When Gateway Communications was first launched in Africa, nobody had deployed voice-over IP as a means of communications delivery. It was seen as untested and unreliable, but embracing this technological evolution allowed us to roll out services which had a tremendous impact on the lives of people living on the continent and allowed them to communicate remotely for the first time.
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Develop local relationships
Launching a business will often prove challenging and can be an alienating experience. However, Africa is fortunate to have a growing community of like-minded people eager to share knowledge and experience to further their understanding of the industry and develop their entrepreneurial abilities.
Entrepreneurs should take advantage of this community. Being able to call on established relationships in times of need can prove invaluable. Take an interest in the individuals you meet throughout your career and maintain contact.
As technology and entrepreneurship gathers momentum across Africa, conferences such as Africacom will encourage industry professionals to come together and explore the positive impact of mobile telephony. These events provide the perfect opportunity to network with like-minded thinkers and industry leaders.
The size and scale of Sub-Saharan Africa means the evolution of its mobile landscape is unlikely to be consistent. Stakeholders must look to work together in order to overcome the challenges associated with upgrading networks and reaching new customers if the region’s mobile future is to be a success.
Take calculated risks
When Gateway Communications was first launched at the height of the Dot Com boom in the nineties, many would have questioned why setting up a business in Africa was a top priority for me and my business partners. We recognised Africa was an emerging market that could stand to benefit from world-class technology and remote communication, which we would introduce. The decision to start there was a risk, but a calculated one: preparation was key.
Ultimately, Gateway provided connectivity for mobile operators and high-growth businesses, and turned into a multi-million-pound operation spanning dozens of countries across the continent. All because of that calculated risk.
Listen to your customers
Understanding what your customers need in terms of broadband connectivity and affordability is incredibly important.
In Africa, the world’s least – and best-connected communities sit side-by-side. While more of Africa is online than ever before, still only 24% of the continent uses the internet. In some countries, the broadband usage is akin to that of more developed markets. In others, the cost of accessing the internet remains out of reach for millions of Africans (despite falls in prices).
This dichotomy means conducting market research is vital to help establish an understanding of what your customers want and how the market might evolve.