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African telecoms top investment for 2010

Telecommunications in Africa will be a key investment opportunity next year.

Business process outsourcing (BPO) and telecommunications in Sub-Saharan Africa rank among its top investments for next year, says Frost & Sullivan.

The global research company has ranked BPO and telecommunications in Sub-Saharan Africa among other investment opportunities, such as biofuels, renewable energy, water treatment and coal-mining.

Africa has garnered new interest from investors over the last year, as the economic slowdown in developed economies highlighted the growth potential on the continent. Many sectors in Africa have continued to shine, despite the global economic turmoil.

“Africa is emerging as a significant frontier for growth in the current economic climate,” notes Frost & Sullivan corporate communications manager Patrick Cairns. “Frost & Sullivan has identified areas of potential we believe investors should keep an eye on over the coming year.”

Opportunities

SA has a $960 million annual BPO industry, which is forecast to grow to $1.9 billion by 2015. Kenya's BPO market is worth $23 million, and is expected to grow to $89 million in the same period. Nigeria is at $8.3 million, and this should shoot up to $114 million.

Frost & Sullivan ICT industry analyst Spiwe Chireka says global analysis showed major BPO players had a presence in every other corner of the globe, expect Africa, which is a “big white space”.

As demand for call centres and BPO is increasing, Africa is expected to benefit, especially SA, Kenya and Nigeria, she says. The investment into these countries will grow as more broadband becomes available.

Contact centres represent more than 90% of spend on BPO in the region, and SA is the most mature BPO market.

However, greenfields opportunities exist in Kenya and Nigeria, where call centre staff are generally better qualified, explains Chireka.

Left behind

In addition, says Frost & Sullivan, high levels of demand for telecommunications, which so far have not been met, will offer growth opportunities.

While mobile voice has taken off on the continent, data and broadband have been largely neglected, notes Chireka.

Penetration levels remain below global averages for voice and data communications. As a result, unmet demand is the key driver for growth in the telecommunications markets, says Frost & Sullivan. In addition, universal access obligations are expected to encourage investment in innovative and cost-effective home-grown solutions.

Chireka explains that access to finance is costly and inhibitive, which has limited investment in infrastructure.

However, opportunities for investment are becoming available as undersea cables start landing. The resultant fibre expansion projects will ease constraints for data delivery and encourage market growth.

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