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Uganda- the Pearl of Africa

The next country we are visiting in our “Mobile Market Look” series is the East African country of Uganda. Uganda is a small landlocked country surrounded by the Sudan to the North, the Democratic Republic of Congo to the East, Kenya to the West, and Rwanda and Tanzania to the South. An English speaking country, with many local dialects also spoken, and a population of 37.5 million, Uganda has experienced a period of political stability and economic growth. Under the leadership of President Yoweri Museveni, who came into power in 1986, Uganda has seen steady economic growth and currently has a GDP of $21 Billion USD. GDP grew by 5.8% in 2014 with expected growth of 6.6% for 2014 and the economic prospects for this country are looking up.

Business and Economic Environment

Uganda is well endowed with natural resources and agriculture and fishing are two of the biggest industries in Uganda. Up to 80% of Ugandans are farmers and agribusiness is big. Uganda is among the leading producers of coffee and bananas. It is also a major producer of tea, cotton, tobacco, cereals, oilseeds, fresh and preserved fruit, vegetables and nuts, essential oils, orchids, flowers and silk.Kampala__Uganda

Uganda also has its own issues. With a weak infrastructure, lack of education, lack of training, high unemployment (as high as 62% amongst the youth), Uganda ranks 132nd on the World Bank’s Ease of Doing Business List out of 189 countries. The government is also facing an increasing threat from civil unrest. Protests commonly occur in Kampala and have turned violent although foreign interests are not generally targeted. There are moderate risks in areas of terrorism, health, crime, poor transportation infrastructure and Uganda is prone to flooding. Even with these challenges things are looking bright, especially in the area of mobile technology.

Uganda’s Mobile Landscape

Uganda has a young population, the second youngest in the World according to the World Bank. 70% of the population is under the age of 25 and mobile technology is their technology of choice. Uganda has 16 million mobile subscribers and most Ugandans own multiple phones to save money when calling different networks. Mobile providers do not offer contracts to consumers, so consumers purchase calling cards for a set amount of minutes or airtime. Uganda has a huge agency network of kiosks throughout the country where consumers can top up. Street hawkers also sell calling cards on the road, or side of the road, and Ugandans can purchase calling cards from even the remotest part of the country.MTN-mobile-money-customers

The mobile penetration rate in Uganda in 51%. Internet use is also growing as over 6 million people use the internet in Uganda, and of those 6 million people, 95% access the internet via their mobile device. Smartphones are not yet as prevalent in Uganda but Ugandans are still able to access social media via 2G and 3G technology. Ugandans use their phones to check social media, listen to the radio, and check news. Some of the most visited sites in Uganda are Facebook, Youtube, Twitter, Google, and Yahoo.

Mobile money and mobile banking are areas that have a lot of potential and have experienced major growth. Only 20% of the population is banked and 27 million Ugandans are unbanked due to poverty, bank fees, amount of documentation required to open an account, and travel costs. Mobile money has stepped in to meet the needs of this underserved part of the population. 68% of all mobile subscribers in Uganda are aware of and have used mobile money and mobile money applications. Mobile money transfers have grown from 87.5 million transactions in 2011 to 242 million at the end of 2012. The number of mobile money users has grown from 2.9 million in 2009 to over 17 million in 2014. There was an increase of 46% mobile money users from 2013 to 2014 and from June of 2013 to June of 2014 there were 445 million mobile money transactions valued at 22.2 Trillion Ugandan Shillings ($8.4B USD).

Ugandans prefer mobile money because it is a fast service and its’ accessible. Ugandans use mobile money not only to transfer money, but to pay water bills, school fees, and other utility payments such as Pay TV. Utility providers such as Umeme and National Water and Sewerage Corporation (NWSC) have partnered with mobile money service providers to ease payment systems and concentrate on their core businesses of power and water distribution.

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The list of current money transfer and mobile money providers include Airtel (Airtel Money), Africell, Uganda Telecomm (M-Sente), MCash, Yo!Payments , and WorldRemit. The biggest player in the market is MTN Uganda. MTN’s Mobile Money records 25,000 transactions per month and has a subscriber base of 8.8 million consumers.

Mobile money operators are doing well and to increase the levels of awareness for their services they have started to integrate with the banks. MTN joined a partnership with Crane Bank last year to offer MTN Mobile Money as a cash out ATM service. Other banks such as Centenary Bank and UBA (United Bank of Africa) have also gone into partnerships with MTN and other mobile money providers such as Airtel also have their own bank partnerships with financial institutions such as Equity Bank. Mobile money is continuing to grow and as technology and security becomes better will offer more value for their consumers. There is still room for value added services from the mobile money providers and financial institutions for the consumers, but overall the mobile technology space, especially mobile money and money transfers, is expanding and the future of this sector in Uganda is looking promising.

Please visit our “Mobile Market Look” series for Kenya, Nigeria, and Ghana

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nigeria-location-mapWhat lies beneath the surface of a troubled country?
People may question why would a company consider doing business in a country like Nigeria with poor infrastructure, frequent terrorist attacks, political instability, corruption, fraudulent internet activities, and more than 40% of the population living below the poverty level. What benefits could the country possibly have that outweighs such turmoil?

Most people only see the negative aspects of entering an African nation. However, to see the opportunities you have to look beyond the common perceptions and recognize the true market potential.

The most valuable resource
Africa is known for its abundance of resources such as oil, gas, gold, and diamonds, but what may be the greatest asset is often overlooked– the people. Africa is home to 1.11 billion people making it the second largest and second most populous in the world.

Traffic Lagos

Lagos, Nigeria

Nigeria is the largest country in Africa and ranked 7th worldwide in terms of population with 173.6 million people as of 2013. Not only is the population large but it is also young, entrepreneurial spirited, and growing. Roughly half the population is reported to be 19 years of age or younger. Interestingly, Nigeria reportedly has the highest total entrepreneurial activity in the world; many Nigerians tend to be innovative and business oriented by nature.

Growth and investment in a rising nation
Nigeria’s projected growth rates rival the top emerging economies – even the renowned BRICS nations.

In April 2014 Nigeria surpassed South Africa as the largest economy in Africa, with a GDP of $510 billion in 2013, $190 billion more than the GDP of South Africa. GDP grew by 7.4% in 2013 up from 6.5% in 2012 and is forecasted to achieve an average growth rate of 7.1% through 2030. Nigeria is ranked as the 26th largest economy in the world and is on track to break the top 20 by 2030. Nigeria plans to invest heavily in 5 major economic sectors to sustain growth: agriculture, trade, infrastructure, manufacturing, and liquid production of oil and gas.

The impressive growth has recently attracted investors all over the world. According to Frontier Market Sentiment Index report in the Wall Street journal, Nigeria is the number one frontier market in terms of attracting investment interests from European and American multinationals. Citing an average of 3 out of 10 major companies having Nigeria on their watch list. Large multinationals such as Dominos, YUM! Brands, and P&G are examples of businesses planning to further expand their current presence in Nigeria because of their success.

With an unsaturated market and promising future, Nigeria is considered an “economic sweet spot” for business.

A mobile hot spot  
The combination of the market size, age, and growth offers great potential to become the most lucrative mobile telecom markets in Africa. The industry accounted for more than a quarter of the GDP in 2013.

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Nigeria is ranked 8th in internet usage worldwide with over 67 million users, the majority accessing the web through their mobile phones as many do not have desktop computers and broadband issues remaining prevalent. Nigerians with their adaptive instincts have leap-frogged several technological product cycles; one instance is many people are buying cell phones before having a landline for their household. Nigeria has over 120 million mobile phone users with over 70% market penetration and is predicted to continue to grow substantially. Although mobile phone penetration is rapidly increasing, only about 25% of the population owned a smartphone in 2013 but this number is expected to increase as technologies become more affordable and as the middle class rises.

The mobile service carrier industry is fiercely competitive with main operators MTN, Airtel, Globacom, and Etisalat battling for market share. However, opportunities in other areas within the mobile sector such as applications, content, and payment methods are immense and profitable. Nigerians use their mobile phones for work, entertainment, and social media beyond typical talk and text features. Nigerians are the leading country in Africa in terms of social media use with well over 11 million users with over 6 million members on Facebook’s site alone. Nigeria ranks the 4th in terms of Facebook membership growth rate.

Nigeria is in a great position to benefit from worldly economic trends including the rising demand from emerging economies, growing demand for global resources, and spreading the digital economy. Despite the continued problems within the nation Nigeria continues to display impressive economic growth rates, a growing middle class, and a youthful population that embraces technological developments making the market extremely attractive for business.

Please visit our “Mobile Market Look” series and our look at the Kenyan mobile market

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This will be the first in our new series, “Mobile Market Look”, where we look at mobile markets in Africa and other emerging countries around the World. Kenya is one of the hotbeds in terms of mobile innovation and sophistication and we hope you enjoy this article and please feel free to leave any comments you may have.

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Africa has been growing at an unprecedented rate and Kenya is one of the fastest growing tech and mobile markets in the World. Known as “Savannah Silicon Valley”, Kenya is home to over 500 startups in the mobile and digital industries. Kenyans are extremely tech savvy and 70% of the population owns a mobile phone, with 16 million Kenyans accessing the internet through their phones. Nairobi, the capital of Kenya, is home to the ihubs, incubator space for the tech community that includes 10,000 members an over 150 incubator start-up companies. Companies such as Google, Intel, and Samsung have a presence in Nairobi and IBM set up its first African Innovation Lab in Kenya. If you are in the mobile or tech industry, whether as a company or an investor, Kenya is a country you should get to know and want to do business in.

Kenya is the most developed economy in East Africa with a good education system and a strong business environment. Kenya is a young country with 70% of the population of 44 million people under the age of 35. Kenya also has its issues as 50% of the population lives in poverty and unemployment, although officially listed as 10.5%, can be as high as 40%. There are obstacles, but there are also opportunities. And no opportunity is bigger in Kenya at this time than the mobile money and mobile payment market.

Kenya’s Mobile Market Landscape

Kenya phones Kenya has the most sophisticated mobile money ecosystem in Africa, and maybe the World. Infrastructure improvements, and lack of rigid regulations by the Central Bank of Kenya and the government, have led to market growth and an increase in digital services. M-Pesa, established by Safaricom in 2007, started the current mobile payment revolution and now transacts over $5 billion annually which accounts for 17% of Kenya’s GDP. Over 2 million mobile money transactions take place every day and according to MEF studies mobile money and mobile payments still present the greatest opportunity for growth in Kenya. It is estimated that 85% of the population has used mobile money at some point and most Kenyans prefer mobile money to cash because of the ease of use and the safety. Most African nations are cash-based and people still carry large sums of cash on them, especially when they are sending money to relatives in remote parts of the country, so mobile money offers a safer and easier alternative. Kenya’s financial institutions have picked up on this and are jumping on the bandwagon and creating their own mobile money products. Equity Bank has its own M-Kesho mobile money product and I&M Bank has its own prepaid Safari Card available on the M-Pesa platform.

Even with growth and prosperity Kenya faces security issues and economic problems. There have recently been terrorist attacks on the Kenyan coast by Al-Shabaab, a Somali terrorist group associated with Al-Qaeda, and no one should forget the terrorist attacks that took place at the Westgate Mall in Nairobi over a year ago. The country has a high poverty rate and weak infrastructure and on the business side there is a lack of capital and belief and faith by investors towards the Kenyan market, and also the Sub-Saharan African market as a whole. Even the mobile market is experiencing its own issues. There is a current price war which has benefited the consumers by leading to decreased prices and more mobile subscriptions, but has created lean profit margins and less profitability for the mobile operators. There is also the concern of the dominance of Safaricom and M-Pesa who currently has the dominant mobile marketshare of 70%. Other mobile operators such as Airtel, Yu, and Orange have a presence but pale in comparison to Safaricom.ihub Kenya

Obstacles do exist, but even with these problems and many others the mobile industry in Kenya is experiencing good times. Mobile phone penetration is 78% in Kenya and Africa had an annual mobile growth rate of 82% between 2000 and 2013, highest in the World. There are currently 500 million mobile subscriptions in Africa and there is expected growth in subscriptions of 50% over the next 5 years. Kenyans have also taken to smart phone technology and 67% of all phones sold in Kenya are smartphones. Kenyans like to listen to music, play games, look for sports updates, and watch TV and video on their phones. They also like social media and Kenya has the second most Twitter users in Africa behind South Africa and the second most Facebook users in Africa behind Nigeria. So the promise and potential is bright and the opportunities for business and investment is maybe the best it has ever been. Kenya is definitely a place you should want to be!

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