In October 2022, Zambia announced that it would zero-rate imports of telecoms equipment in a bid to encourage investment into the country’s ICT sector, which the government views as essential to job creation and economic development in the market.
The decision could prove to be prudent, as Zambia seeks to follow the example of African countries that are a few steps further along the journey to widespread ICT implementation. If Zambia’s endeavour proves fruitful, how likely are we to see the move replicated by similar African markets keen to replicate this success?
To find out, we spoke to IDC analyst Mark Walker, who highlighted Kenya and Rwanda as two of the standout nations in Sub-Saharan Africa in terms of ICT implementation. Walker noted that Kenya’s connection to subsea cables linking Mombasa to Nairobi has been hugely significant to the nation’s economy in terms of exposure to investment, but at a local level – for example provision of basic social services and access to communications, as well as services such as education and telehealth. Fintech in particular is a vibrant sector, and the proliferation of Safaricom’s M-Pesa service has significantly grown the Kenyan economy.
The key challenge has always been skills, but skill development is a lot easier as smartphones proliferate, as they provide access to tools, materials, technology and collaboration. Walker noted that Africa in general has a young population that is technologically literate, particularly with mobile – and added that the device profile of the continent is fast skewing towards smartphones, with access that has traditionally been concentrated in cities now spreading to rural areas. “If you speak to some of the major telcos across the region – MTN, the telcos in Zambia, Orange, Airtel - the way they see it is the cities are done”, explains Walker. “The mobile phone penetration has still got a way to go consumer-wise, but it's pretty much mature, and rapidly maturing.”
The next step is to bring it into the business environment, with a focus on B2B, enterprise, and providing access in more semi rural and rural areas. This is resulting in more data centre investment, with financial institutions and governments beginning to build and develop data centres – and this actually addresses pre-existing issues around data sovereignty in which data must be stored locally.
Meanwhile, operators are realising that they can no longer be pure communications technology providers, and are focusing more becoming digital service providers while also concentrating on the small/medium enterprise space. The future growth of African enterprises will depend on access to global markets as well as regional markets, and this will be enabled by technology – from basic manufacturing through to fintech.
“[Zambia is a] fast grower - it's a landlocked country, obviously, so what is the communication picture there? It's going to be fibre, they're going to have to work with their surrounding countries, most likely Angola and Namibia, Zimbabwe and Mozambique, to get access to the undersea cables” says Walker. “But there's a lot of development happening around the pan-continental fibre network as well, so they can tap into that.”
Walker highlights the country’s young population who are eager to acquire ICT skills – as evidenced in other markets such as DRC and Kenya, where development and coding camps are typically oversubscribed. He notes that there is a lot of investment into skills building in Africa by international organisations – and while infrastructure has to be there first, many countries are now getting this right, including Zambia.
Having previously cited Kenya and Rwanda as successful examples of African ICT implementation, Walker notes that Zambia shares similarities with the latter in particular, such as a concentration of good skill sets and a manageable, well-educated workforce, as well as forward-thinking politicians.
He describes Zambia’s zero-rating policy as a good start: “Once the infrastructure is in, then you can start building quickly out. It seems to me that they want to encourage very quick investment into infrastructure, get the comms equipment on the ground and connected, and the rest will follow, so getting the infrastructure layer sorted. That’s a good way to do it, especially if there's no tax on it to encourage local investment as well as international investment.”
While the impact of Zambia’s decision to zero-rate imports of telecoms equipment remains to be seen, it’s hard to imagine it will discourage investment in the sector. This begs the question of whether other countries could adopt similar measures. According to Walker, “if they’re wise they will. If they are serious about getting onto the growth bandwagon, then by all means it could be a template.”