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Africa warned against slowing down mobile phone revolution

A success risked being reversed

Témoignages.re / 28 janvier 2010

The increasing levels of taxes levied against international mobile phone operators in Africa could slow down the growth of the telephony industry in the continent, a World Bank expert warned here Wednesday. The Bank’s Information, Communications and Technologies (ICT) Sector Manager, said the success achieved in connecting the African population through mobile phones, risked being reversed unless the increased taxes were removed.

World Bank’s top expert on Telecommunications, Phillipe Dengier, said there was a growing trend by African governments to demand for the re-negotiation of telecommunication licenses issued to foreign firms operating mobile phone networks.

Dengier, the Bank’s Information, Communications and Technologies (ICT) Sector Manager, said the success achieved in connecting the African population through mobile phones, risked being reversed unless the increased taxes were removed.

"We have 65 per cent of Africa covered by telecommunications, but there are other areas which have also not been covered," the expert told a meeting of senior ICT experts attending a Panel Discussion on the role of ICTs in Africa’s economic development.

African leaders are gearing for a ground-breaking meeting on the role of ICTs in the development of the continent during the annual heads of state and government assembly meeting, underway in the Ethiopian capital, Addis Abeba.

Sector particularly tempting

Africa has achieved a faster rate of economic growth over the past 10 years as a result of investments in the mobile phone and internet connections. This has been partly driven by investments from governments and international telephone companies.

Most African governments are currently targeting the international mobile phone companies for heavy taxation. These taxes range from demands to increase mobile telephony license fees and taxing incoming international calls.

"The governments have found this sector particularly tempting in terms of improving tax collections for the government. They are forcing the international operators to pay more and to re-negotiate the licensing fees. This will have impacts" Dingier said.

The number of mobile phone users in Africa has increased from just two million less than 10 years ago to the current level of 400 million.

But experts say the continent’s rural populace remains largely uncovered by voice communication.

Network congestion in most networks

The governments of Africa are also on the spotlight over the increased level of government monopolies, especially dominated by government-owned agencies.

The sectors mostly dominated by the governments cover international telephone gateways, which is largely left to government-owned companies. The international phone companies are forced to pay back revenues from voice to these gateways.

Besides, experts say Africa’s international communications is still largely based on expensive satellite connections, which mostly has limited space. This leads to network congestion in most networks, which leads to poor voice and internet connections.

"We do not know if these demands for (license) re-negotiation will slow down the rate of foreign investments in this field, but what we know is that it will reduce the predictability of this mobile phone growth in Africa," the World Bank official said.

More than US$ 30 million for a license

In some cases, the mobile phone licenses in Africa cost more than US$ 30 million.

A Kenyan operator, Safaricom, partly owned by the British operator, Vodafone, paid US$ 25 million for a three generation (3-G) network license in Kenya.

Kenya’s Communication Commission (CCK) retains the license fee at US$ 25 million and refuses to lower the fee.

"The cost of a license fee in the European Union countries for 3-G is four times that of Kenya. The payoff is good for the mobile phone companies that get these licenses," a source at the CKK, who did not want to be named, told PANA.


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