Unlocking North Africa's ICT market

With political stability returning, the region is not only heading towards channel maturity, but is hungry for new technology

Tags: Alcatel-LucentIDC Middle East and AfricaTP-LINK (www.tp-link.com/en/‎)Toshiba CorporationWestern Digital Corporation
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Unlocking North Africa's ICT market
By  Manda Banda Published  August 24, 2014

The North Africa ICT market continues to be a tonic for any palate jaded by the precarious regional political instability. Despite the tough economic conditions and political instability that have characterised North Africa in recent years, the ICT market has been more resilient than certain other sectors like real estate and banking.

And although the Arab Spring dented the short-term economic growth outlook for the region, Business Monitor International (BMI) is forecasting growth to come in at an average of 4.2% over the decade to 2022.

Research firm IDC is predicting the ICT market in North Africa will face radical changes in terms of adoption for new technologies such as cloud computing, mobility and big data.

IDC said it expects Morocco to lead the change, with the market seeing major investment around cloud computing and big data.

Ouafa Kathir, country manager – North and French speaking Africa at IDC, said the growing North African ICT market is set for further expansion in the coming years. Kathir said the market’s previous growth was primarily driven by large-scale government, telecommunications and banking infrastructure projects. However, said Kathir, it is anticipated that next-generation integrated ICT services that utilise the large-scale installed infrastructure will grow in order to meet increasing demand from businesses that prioritise quality and efficiency of services.

Khwaja Saifuddin, senior sales director, India, Middle East, Africa and Turkey at WD, agreed and said the biggest technology effect that is emerging in the region is that IT utilisation and reach rates are increasing and readily available through multiple channels, which encourages IT use to solve different challenges and satisfy business and personal needs on all levels.

Saifuddin said the IT market is picking, even though it hasn’t come back to the pre-Arab Spring levels. “As the political situation settles down, we are seeing an increased number of IT investments from both governments and businesses,” Saifuddin said.

The political stability is what Santosh Varghese, general manager, Digital Products and Services at Toshiba Gulf FZE believes is behind the consumer confidence and demand for electronics, IT products and services in North Africa.

Varghese said as political stability is slowly returning to countries impacted by the Arab Spring, the markets are witnessing a return of strong consumer confidence and demand for IT solutions. “Libya, Egypt and Algeria are showing signs of consumer confidence and IT demand across various segments of the industry,” he added.

He added that while many vendors, retailers and resellers see the growth in the region, they should not use these markets as dumping grounds to compensate for loss of sales in bigger and more mature markets in the region.

While there is no denying that North Africa is not as mature as other regions in the Middle East, the IT sector is catching up with the rest of the markets and is also a hungry consumer of new technology.

Manish Punjabi, channel marketing manager (MEA) at Alcatel-Lucent Enterprise, said North Africa is a region in transition, with urbanisation and the rise of the middle-class consumer fuelling IT growth.

Punjabi said evidence of what is to come can already be seen in North Africa’s major cities, where consumers have disposable income, more than half have Internet-capable devices and 3G networks are up and running. “There is a growing wave of innovation as entrepreneurs and large corporations alike launch Web-based ventures, from e-commerce sites and digital entertainment platforms to mobile health technologies and online educational content,” Punjabi said.

He explained that governments have placed Internet-driven growth firmly on the agenda: Rwanda, Morocco, and Nigeria, for example, have ambitious plans to expand high-speed Internet access to most of their populations. “Algeria has one of the highest rates of urbanisation in Africa, which further contributes to growth potential in the consumer goods industries,” he said.

Adel Elnaggar, country manager – Egypt, Libya and East Africa, at security appliances vendor Fortinet, agreed and said the IT landscape in North Africa is yet to reach a maturity level that is on par with other developing countries in the region. Elnaggar said investment priorities have shifted as a result of the Arab Spring and there has been a freeze on government IT spending over the last three years. However, Elnaggar said there is constant growth in the telecommunications sector, which is witnessing a steady rise and driving investment in large IT projects.

A large part of the renewed IT spending and growth has been brought about by governments as they increase investments in modernisation projects in order to better tackle challenges around skills, cost of delivering services to citizens and the increasingly complex IT threat landscape in the region.

IDC’s Kathir pointed out that over the last few years, the ICT market in North Africa has been characterised by a growing awareness on the importance of IT investments among all market players especially CIOs. She said the market has seen the emergence of several national distributors commonly known as “local champions” and also the installation of major global IT distributors. “Since, the ecosystem of ICT has been changed by these new entries, major brands have been brought to review their channel strategy and recruit new ones to meet the consumer’s expectations,” Kathir said.

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