Information and communication technology is driving the new “knowledge-based” economy in the developed and developing world. However, internet access remains comparatively low in Africa, with internet penetration at 20% for the continent.
The barriers to internet usage are many, including the high cost and lack of access, and for those who do have internet access it can be unreliable and slow. Zambia is no different, with an internet penetration rate of 16% for its population of 14 million people. Even worse, 75% of users are only in the capital city of Lusaka.
This creates obstacles for the small and medium enterprises and start-ups in the region, such as us at Impact Enterprises. Beyond just the price tag of getting reliable access, online services are rarely available making simple tasks cumbersome. Online payments and services are costly and rarely available and ecommerce is practically non-existent.
Countries are beginning to see that low internet adoption is becoming a hindrance to their economies, with 140 countries creating a specific broadband plan, compared to just 15 in 2005. As a result, many African countries, including Zambia, are looking to develop their fiber optic networks.
Expansion in Zambia
Internet in Zambia traces back to the Copperbelt Energy Corporation (CEC), which has provided power supply to the Copperbelt mining region of northern Zambia and southern Congo since the 1950s. Investment in the telecom infrastructure of the region eventually led to a joint partnership with Liquid Telecom Group to provide retail internet services.
Today, CEC Liquid Telecom is one of the largest companies contributing to fiber optic development in the region, which plans to lay 18,000 kilometers of cable on the continent by the end of 2015. The Zambia Electric Supply Corporation (ZESCO), the country’s power utility company, itself had installed 5,300 km of fiber network in the country by the end of 2013.
These investments have already led to great benefits. In February 2015, Liquid Telecom announced the launch of its Fiber to the Home (FTTH) service, which provides broadband services to homes and businesses. The new network means individuals gain access to unlimited data packages at speeds up to 10 Mbps with prices less than one fifth of the current available broadband options.
Success in Unusual Places
The increased fiber network and increased access has great potential to impact the local economy. By bringing data packages to homes and small business, it fosters the environment for the development of the technology sector in the economy.
According to a report by McKinsey on the impact of internet on developing countries, SMEs that leverage the internet have higher growth, higher profits, and productivity gains of 5-19%. Furthermore, for every job lost due to internet innovation, 3.2 new jobs are created.
Believe it or not, no place has demonstrated this potential better than Rwanda. Yes, that Rwanda.
20 years ago, the small east African country experienced one of the worst humanitarian events in history. Out of the ashes of the genocide emerged a well-organized economic restoration led by their visionary president, Paul Kagame. In cooperation with foreign governments, NGOs, and consultants, Rwanda laid out a clear plan for its future called Vision 2020.
A major chapter of the plan recognizes how critical ICT is for a country to compete in today’s world. Through major investment in infrastructure and partnerships, their telecom companies now provide coverage to 99.8% of the country, with user penetration predicted to be 95% by 2016. The capital, Kigali, even offers free WiFi across the entire city.
That’s an astounding accomplishment, considering the state of the nation just two decades ago. As a result of these reforms, Rwanda now ranks 3rd in Africa on the Doing Business rankings and is becoming a tech hub for entrepreneurs.
Looking at Zambia’s Future
The value that investing in the telecom network has on the economy is not lost on the Zambian government. The Zambia Information and Communication Technology Authority (ZICTA) acting Director General, Mulenga Chisanga, stated recently, “Broadband services would ease the way of doing business in the country and add value to the economy. There is therefore need for industries to embrace broadband services to complete on a global level to grow their businesses.”
According to the McKinsey report, governments need to focus on three types of initiatives – promoting access and literacy, creating a favorable regulatory environment, and e-government services. These all face challenges, including massive investments in curriculums and equipment and receiving pushback from incumbent parties who will be disrupted by change. But the benefits far outweigh the costs.
For us at Impact Enterprises, we are fully embracing the digital age in pioneering socially conscious outsourcing here in Zambia. The developments happening today are laying the foundation for success, but there is still a long way to go. Through our work, we hope to demonstrate the amazing potential the internet age has to offer the brilliant youth of this country and hope that will inspire a cohesive vision for the future.