Serving East Africa

The potential for the IT market in East Africa and the broader sub-Saharan region continues to attract the interest of global IT and consumer electronics vendors and regional distributors. Given the diverse nature of doing business in Africa, what does it take to build a successful channel business in the East African region.

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Serving East Africa
By  Piers Ford Published  June 25, 2014

Developing markets full of growth potential are increasingly rare, so it is not surprising that vendors and distributors have set their sights on East Africa. This rapidly emerging ICT landscape certainly has its more challenging aspects – not least the grey market, which looks set to be a thorn in the side of the distribution channel for the foreseeable future.

However, a combination of the mobile boom, opportunities created by the number of green-field sites, and government investment in infrastructure is already proving irresistible to suppliers at every level. Analyst IDC expects the Kenyan ICT market alone to be worth $2bn by 2015.

According to Onesmus Mbogo, country manager – East Africa at IDC, BYOD and social media are two of the most significant trends in the region, as well as a drive to increase bandwidth and optimise corporate networks in order to exploit the benefits of cloud services. But perhaps the greatest influence is coming from governments as they drive ICT adoption deep into their structures and processes.

“Recent efforts in e-government deployments, automation of revenue collection processes by the Kenya Revenue Authority (KRA) and the planned automation of payment systems in the country have shown a clear intent by the government in adopting technology to facilitate efficient and faster delivery of services, transparency and accountability, and citizen empowerment,” said Mbogo.

“The potential for growth is coupled with the openness of industry in adopting new, affordable technologies, especially in the SME segment. The region is also experiencing an influx of multinational corporations setting up shop to tap into green-field IT projects and take advantage of the new wave of tech opportunities created through government mega IT projects. Most governments in the region have rolled out ICT master plans with clear policies on ICT investments and adoption.”

A historical infrastructure deficit – which is fast being turned around – is the main reason why the market has remained largely untapped by leading ICT vendors until very recently. But as Manish Punjabi, channel marketing manager MEA at Alcatel-Lucent Enterprise said, the advent of 4G and LTE networks will soon overtake the problems posed by low internet speeds and expensive satellite bandwidth in remote areas, and enable much wider connectivity. Consumers and business users have already shown their enthusiasm for BYOD with their rapid adoption of low- and mid-range mobile devices.

“Beyond just putting mobile devices in the hands of the population, use of advanced technologies including data networking, telephony and WiFi will enable the East African socio-economy to develop,” said Punjabi. “It will enable the community to have better access to amenities such as healthcare, education, transportation, banking and energy.”

He said countries such as Kenya, Tanzania and Uganda are driving demand for voice and data services.

“In Uganda, we recently worked with the Civil Aviation Authority to enable them to improve voice communications across 14 airports in the country,” he said. “Using our advanced IP telephony solutions, it was able to better manage coordination among the airports and improvise a system for easier management of baggage handling. Additionally, they increased operational efficiency while reducing costs.”

These are the goals of most of East Africa region’s businesses when it comes to ICT adoption. They need to be able to expect a clear ROI and cut costs, and this has not been so readily achievable while connectivity still commands such high premiums.

“The potential for diverse business from many of the countries within the region is what makes this emerging market so attractive,” said Khwaja Saifuddin, senior sales director, Middle East, Africa & Turkey at storage vendor WD.

“That said, although Africa is a single continent with many countries that share borders, the fact that almost every country has its own rules and regulations dictates that vendors should look at each market as a unique entity. Kenya, for example, is a country that actually feeds products into countries like South Sudan, Uganda and Rwanda. Therefore, it can be classified as a feeder market. Tanzania on the flipside consumes technology products as opportunities arise from large corporates and NGOs who have significant presence within the country.”

The channel does, however, face a number of familiar technological and logistical challenges when it comes to exploiting these local variations: intensifying competition, a perennial skills shortage, a thriving grey market, and corruption – a constant factor in many big ICT deals.

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