Gloom, doom and boom!
The global meltdown and Africa ICT sector
by Segun Oruame
The global financial crisis may be taking its toll on advanced
economies with financial houses collapsing, companies closing down
and the unemployment rate hitting the ceiling; but developing
countries with lower deficit profile and more urgent need for
infrastructural development could ramp up on their inward strengths
to record more optimistic growth in spite of the global gloomy
outlook.
Many stakeholders across diverse sectors in Africa believe the
continent has a huge chance to grow its backwater economy if major
decisions are focused at making the continent to look inward,
develop its green technology markets and boost self-sufficiency in
food production. Africa will this year lose about $ 49 billion or
10% of its yearly income that comes from the advanced economies, to
go by the projection of the World Bank, but it could alter the
picture by looking inward.
Looking inward means building its agriculture to cut down on food
import and invest the savings on human capacity development through
its education sector; as well as putting more money and policy
strength in support infrastructure and green industries such as the
ICT sector. “ICT holds one of the keys to economic recovery,” said
Chief Executive of New Horizons Systems Solutions Limited, Mr. Tim
Akano in Lagos. The sector accounts for much of Africa’s optimistic
outlook in the last five years and appears to be the vulnerable to
external shocks.
As one Kenyan expert and chairman of CCK, Phillip Okundi, put it in
one report in Nairobi: “We expect even more drastic times ahead as
the recession takes toll on Kenya. We anticipate loss of steam in
the industry, but its vibrancy can be sustained. The ICT sector may
lose some height for a while, but it will adapt to the turbulence of
the global economic downturn before rising again to the usual cruise
of growth.”
Okundi, an influential figure in Kenya’s telecom sector, said “even
at the basic levels, the high prices of food were expected to have
ramifications on the consumption of ICT services, which would be
reflected in the average revenue per user.” His position is shared
in Nigeria by The National President of the Association of
Telecommunication Companies of Nigeria (ATCON) and Chief Executive
Officer of Teledom Group, Dr. Emmanuel Ekuwem.
“Naturally too, when every Nigerian begins to feel the heat of the
meltdown he or she will begin to prioritize and start rationalizing.
He will be frugal with spending. He will start reducing the number
of telephone calls he makes. He will start reducing the number of
short messages (SMSs) he sends and reduce the amount of time he
spends on the phone. Invariably, this action taking by consumers
will reduce revenue or turnover for the telcos,” said Ekuwem in
Lagos.
Cutting down is not the way out, getting more creative is it. Most
experts are convinced that the industry will survive as much on
government initiating the right policy actions as on the
creativeness of the private sector particularly in the finance and
ICT sectors. For Chairman of Zinox Technologies Limited, Chief Leo
Stan-Ekeh, the global economic meltdown offers a golden opportunity
for national growth if Nigeria gets her priorities right in terms of
government funding of support infrastructures and energizing the
financial players through the Central Bank to ensure unbroken
sustenance of liquidity for the burgeoning ICT industry.
According to Ekeh, Zinox is growing its industrial capacity base and
employing more skill hands in spite of the global slump because the
company already had blueprint for growth in the country’s green IT
sector that depends on indigenous human capital; and not necessarily
on the influence or margins of economic performance in the advanced
economies. For Ekeh, Zinox destiny is tied not to the economies of
the west but the continuous growth of the Nigeria’s economy.
But the snag is the IT sector risks crashing due to absence of
infrastructural support and shrinking access to disposable funds.
Ekuwem affirmed this fear: “Banks, which are suppose to provide the
capital for expansion, growth and development to the industry are
now themselves feeling the heat of the meltdown and are suffering
liquidity problems. Inter banking lending is no longer happening so
you see these banks who are expected to make these funds available
can no longer do so. What this means is that there is no guarantee
for the sustainable growth needed in this industry.”
According to Mrs. Florence Seriki, CEO of Omatek Computers Plc,
“[The global meltdown] is not supposed to have affected us the way
it is. But the problem we have is that the government itself is yet
to come up with a strategy to curb it. Government of a country
especially in these hard times should come up with something. The
money we have been saving [from crude oil export] should be spent
now. This is the time to plan properly for it…We have the
population, which means we can even take advantage of this global
meltdown to attract people and businesses our way. We can create
initiatives, create skills that would allow us to go and bring
business from this area and begin to produce here. Let the
government use this money to give us power; it will reduce the cost
of production. Government needs to spend on infrastructure now.”
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