WELL CONNECTED
The ICT sector has taken full flight on a gust of stable economic growth and sound regulatory changes from the government.
A steady economic growth rate of between 6% and 8%, ICT-related regulatory reforms, and the introduction of 3G and 4G services have helped to boost Tanzania's ICT sector. Experts suggest that the sector is growing by 15%-20% annually today, which is the highest growth rate in the East African Community (EAC) region. The rapidly growing economy has increased GDP per capita and personal disposable income levels, which in turn have boosted the ICT sector as more people purchase computers and mobile phones. The Tanzania Communications Regulatory Authority (TCRA) also liberalized the market in a series of reforms that made it easier to obtain licenses, while improving competition. The reforms also cut out much of the bureaucracy that was warding off some international investors. “Our framework is very conducive to encouraging competition and our regulations are highly detailed in terms of quality of service, consumer protection, and tariffs," John S. Nkoma, Director of the TCRA, explained to TBY.
Tanzania has also benefited from an improved IT infrastructure system, most notably the East African Submarine Cable System (EASSy) and African Cable System (SEACOM). EASSy is a 10,000-kilometer long fiber-optic cable that stretches along the East African coast. It transfers voice, data, video, and the internet throughout the region. EASSy made it possible to connect the littoral countries to a high-speed global telecommunications network at 4.72 Tbps. The cable is 92% owned by 16 African countries and the remaining 8% is the property of international telecommunications operators and service providers. The same group is also planning to build a terrestrial link to the landlocked countries off the coast. SEACOM is 17,000 kilometers long and connects the east and west coast of Africa with Europe, India, and Asia. SEACOM has a similar stakeholder share as EASSy, with it being 75% African owned and 25% owned by international telecommunications companies. Because of projects like EASSy and SEACOM, internet penetration rates have grown rapidly over the past decade. Before the laying of these cables, the market largely relied on expensive satellites for the internet, which made it essentially inaccessible to much of the country. In 2009, around 520,000 people, or 1.3%, had access to the internet, which increased to 4.9 million people, or a penetration rate of 11.5% in 2011. A major contributor to this was the switching-on of EASSy in July 2010 and SEACOM in July 2009, which drastically reduced internet costs for subscribers.
There are more than 14 internet service providers in Tanzania with SimbaNet, Benson Online, TTCL, and Africa Online Tanzania being some of the main companies. In 2Q2012, Tanzania had 5.6 million internet users, giving it the seventh highest usage rate on the African continent.
Because of historical infrastructure problems in Tanzania regarding the internet, the mobile phone has generally been the preferred means of communication. In 2011, there was a mobile phone penetration rate of 52% with 22 million subscribers, while the rest of the population relies on other forms of communication, with 0.04% subscribed to a fixed line. By the end of 2016, the mobile phone penetration rate is expected to have risen above 70%, with about 38 million people subscribed, and internet and broadband penetration increased to 29% and 3.3%, respectively. The main mobile service providers are Vodacom, Bharti AirTel, Tigo, ZanTel, TTCL, Sasatel, and Benson Informatics. Vodacom had the largest market share of the subscription market at 34%, followed by AirTel with 30%, and Tigo with 24% as of December 2012. The average person sends 36 SMS messages and talks for 203 minutes per quarter.
This increase in usage means that many sectors and government services are now looking to the mobile phone as a means of delivering services directly to the population. “Mobile phones are very important in Africa, and mobile money presents a number of opportunities for education, mobile payments, health, agriculture, and many other sectors," Manzi Rwegasira, CEO of Zoop, told TBY. Zoop is one of many companies looking to take advantage of direct access to the customer via their mobile phone. It wants to allow people to use their phones as a mobile payment system, and in Zoop's case allow them to pay for their education via mobile services. “We did the calculations and saw that in terms of private schools there is about $300 million to $400 million of cash flow per year, meaning that if we could attract 3%-4% of that, it would be a success," Rwegasira went on to explain. Banks are also seeing the wider potential benefits of mobile phones. Third-party agencies are beginning to team up with banks, allowing customers to settle bills, pay for and groceries, and even deposit/withdraw money using their mobile phones. At the moment, the majority of mobile phone users reside in urban areas, but were the penetration rate to spread in rural areas, this informal style of banking could become a lucrative market.
In May 2013, Smile Communications Tanzania, a subsidiary of Smile Telecoms Holdings, became the first company to commercially launch a 4G LTE broadband network in Tanzania. This was a milestone not just for Tanzania, but also for East Africa as a whole. At the moment, the service only covers Dar es Salaam, but Smile Communications is planning to roll out the network to other parts of the country over the next two years. The new licensing reforms and the liberalization of voice over internet protocol (VoIP) has brought a large number of new players into the market, similar to that of Smile Communications.
WELL CONNECTED
TABLE OF CONTENTS
Interview
Bernard Kamillius Membe, Minister of Foreign Affairs & International Cooperation, the United Republic of Tanzania
TBY talks to Bernard Kamillius Membe, Minister of Foreign Affairs & International Cooperation, on the concept of economic diplomacy, the significance of President Obama's visit, and Tanzania's regional leadership.
read articleInterview
Tan Sri Omar Rahman, CEO & President, Malaysia University of Science and Technology
TBY talks to, Tan Sri Omar Rahman, CEO & President, Malaysia University of Science and Technology (MUST) Ehsan Foundation, on the Smart Partnership, the challenges of implementing policies, and human resources.
read articleReview: Capital Markets
Learning to Share
Inaugurated in 1996, the Dar es Salaam Stock Exchange reflects the Tanzanian government's program of economic reform, geared at leveraging capital from diverse sectors in support of key industries, and toward realizing the Development Vision 2025.
read articleInterview
Israel Kamuzora, Commissioner of Insurance, the Tanzania Insurance Regulatory Authority (TIRA)
TBY talks to Israel Kamuzora, Commissioner of Insurance at the Tanzania Insurance Regulatory Authority (TIRA), on the regulatory framework, increasing penetration, and growth sectors.
read articleInterview
Felchesmi J. Mramba, Acting Managing Director, Tanzania Electric Supply Company (TANESCO)
TBY talks to Felchesmi J. Mramba, Acting Managing Director of Tanzania Electric Supply Company (TANESCO), on tackling power shortages, diversifying the energy matrix, and developing new projects.
read articleInterview
A.B. Samaje, Acting Commissioner for Minerals, Tanzania Mining Commission
TBY talks to A.B. Samaje, Acting Commissioner for Minerals of the Tanzania Mining Commission, on the valuable minerals that the country is producing and the new regulatory environment in the mining sector.
read articleB2B: World Bank
Technology Support
TBY talks to Chris Vein, Chief Innovation Officer for Global ICT Development at the World Bank, and Samia Melhem, Lead ICT Policy Specialist, Transformation Chair, eDevelopment Thematic Group, at the World Bank on the improved integration of ICT technology to encourage development.
read articleInterview
Khamis Kagasheki, Minister of Natural Resources & Tourism, the United Republic of Tanzania
TBY talks to Khamis Kagasheki, Minister of Natural Resources & Tourism, on the reasons why tourism is a key driver of the economy and the potential for the development of beach tourism.
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