Africa remains the region with the least developed telecommunications infrastructure in the world today, but with the fastest-growing penetration of mobile telephony in the world, according to the Global System for Mobile Communications (GSMA). By 2025 mobile broadband will account for 87% of mobile connections, in Africa. The current figure for these services is 38%.

During the year 2019, 3G will overtake 2G to become the leading mobile technology in the region, with just over 45% of total connections by the end of the year. 3G adoption has doubled over the last two years as a result of network coverage expansion and availability of affordable devices.

Across Sub-saharan Africa, mobile-enabled platforms are increasingly becoming the modem for conducting e-commerce. These platforms extend the reach of services and provide greater choice to customers.

The GSMA estimates that in 2018, mobile technologies and services generated 8.6% of GDP in Sub-Saharan Africa, a contribution that amounted to over $144 billion of economic value added. The mobile ecosystem also supported almost 3.5 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with almost $15.6 billion raised through taxation.

An efficient telecommunications infrastructure is the backbone of a country’s industrial development, it contributes to the efficiency of the economy of a country. It facilitates economic activity in a country.

The case for liberalisation of telecommunications in Africa

A liberalised telecommunications sector presents opportunities for competition in the market, thereby reducing the cost to the consumer, it also presents an opportunity for the government to impose universal service obligations to telecommunications service providers to ensure that even poorer areas are provided with telecommunications services. This can be imposed as part of the licensing conditions.

To underpin liberalisation and to ensure that unintended consequences of liberalisation are avoided and for Africa as a continent to benefit from these opportunities, the liberalisation process should ensure: eradication of monopoly arrangements that exclusively benefit incumbents; establishment of conditions that attract private investment in the telecommunications sector; and establishment of regulatory institutions to protect consumers, prevent and correct market failures where they occur.

The Pan-African Regulatory and Liberalisation Framework under the AfCFTA

The Assembly of Heads of States of the African Union resolved that the liberalisation of trade in services in the AfCFTA shall be negotiated in two phases. Phase one shall involve liberalisation of what is referred to as priority sectors, telecommunications being one of them.

The negotiations on the liberalisation of telecommunications have not yet begun. It is however expected that the framework of the telecommunications sector in the AfCFTA will include: regulatory disciplines, data transmission, cellular telephone, fixed telephone, mobile satellite, value added data services and other services to be determined by the negotiating parties.

The AfCFTA does not intend to harmonize telecommunications regulation, nor is the intention to usurp the function of the national regulator, rather, it is to ensure that amongst others, there is a minimum standard of treatment or regulatory principles:

Competition to avoid abuse of dominance, interconnection to guarantee fairness , independence of operators, universal service requirements, transparency provisions, technical standards, licensing criteria and procedures and qualification criteria and procedures

The telecommunications section of the AfCFTA will include what is referred to as a schedule of telecommunications service commitments, which sets out the scope and depth of market opening that is offered (market access), national treatment obligations and any additional commitments to be offered.

Under the AfCFTA telecommunications regime, the following measures shall be prohibited: limits on the number of suppliers, limits on the value of transactions or assets, limits on the number of operations or the quantity of output, limits on the number of persons that may be employed in a sector or by a supplier, measures that restrict or require specific types of legal entity or joint venture and limits on the participation of foreign capital

Although the process of granting a licence to operate shall be determined at national level, the AfCFTA telecommunications regime will set minimum standards or criteria for granting of licences, this is important for the purpose of ensuring predictability and certainty of the market.

Such criteria may include financial capability and willingness to invest sufficient capital to provide a satisfactory public service; service proposed must be technically sound; proven managerial and technical expertise and a workable and defined corporate structure; and where interconnection with public telecommunication networks/services is required, equipment shall meet the technical specifications for interconnection.

A liberalised telecommunications sector as a contributor to economic development in Africa

As noted above, until recently the telecommunications sector in most countries in Africa operated under a legal monopoly regime whereby one or a few operators held the exclusive right to provide telecommunications services.

Liberalisation of telecommunications is a critical component of financial inclusion, the total value of mobile money transactions in Sub-Saharan Africa last year was worth $19.9bn, as individual transactions grew by 17.9 percent to 1.2 billion year over year. All of this is enabled by a liberalised telecommunications sector.

E-commerce and digital trade are on the rise in Africa; e-commerce sales in the Sub-Saharan region reached $16.5 billion in 2017 and are expected to reach $29 billion by 2022. This trend is primarily driven by the increasing the purchasing power of the middle class, increasing internet and smartphone adoption, and the growth of digital payment solutions.

Leading e-commerce platforms in Sub-Saharan Africa include: Jumia – the largest e-commerce retailer in Nigeria with operations spread across 14 countries an Takealot – the largest e-commerce retailer in South Africa.

It is doubtful that Sub-Saharan Africa will see such growth in the telecommunications sector and the positive spin-offs in e-commerce and digital trade, in the absence of a liberalised telecommunications sector. Therefore the AfCFTA telecommunications regime has the potential to consolidate the moderate gains of liberalisation initiatives undertaken by individual countries.

  1. Challenges presented by telecommunication liberalisation under the AfCFTA

The process of liberalisation may have the effect of smaller mobile network operators being crowded out of the market, in an industry dominated by few big operators. These few operators will increase their market share and have the power to influence prices.

Based on the point made above, it is therefore of critical importance that a strong regulatory institution is established, in order to prevent unfair competition in the market. Although the AfCFTA will establish a minimum set of standards in this regard, the role of national regulators will remain critical.

In order to be globally competitive, the telecommunications infrastructure will require a significant amount of investment both by domestic and foreign investors.

A significant challenge will be to ensure complementarity between the AfCFTA telecommunications regime – the regulatory principles and the market access commitments – with the telecommunications legislative and regulatory frameworks at national levels.

Being a paper presented by Mr. Liman Victor Liman, acting Director General Nigerian Office for Trade Negotiations at a 2-day stakeholder sensitization workshop on the implications of the African Continental Free Trade Area (AFCFTA) Initiative for the communications industry in Lagos.


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