An analysis of the mobile communications market in Kenya underlines once again the array of opportunities awaiting mobile service providers, especially in the mobile money sector, in Africa.
By Quentin Capelle February 28, 2014
Although the African market does not compare in terms of volume with major developed countries, it has seen extremely fast and deep penetration of mobile communications, which many consumers see as a cheap, convenient alternative to PCs for accessing the Internet. The mobile industry – including among other things mobile payments, e-health services and video-viewing facilities – today has a market value estimated at some $60 billion in Africa, equivalent to over 3.5% of the continent’s GDP. Now MEF Africa, the African arm of the MEF association of mobile content and commerce providers, has teamed up with consultants KPMG to produce a Growth Markets Survey 2013 Kenya Country Report. The report concludes that the coming years could see a real mobile take-off, with the market rising to $245 billion by 2020. The report on Kenya is the first of three planned country reports intended to highlight the various aspects and success prospects for mobile in Africa. It shows mobile payments way ahead in terms of both current growth and opportunities for further market growth, but also points to a far from optimal infrastructure situation across the country and the fact that a genuine mobile consumer culture has yet to take root.
The KPMG analysts worked with MEF Africa to differentiate the various mobile revenue streams.In terms of current end-user revenue sources, video only accounts for 8%, and mobile advertising for 16% of the total. It is mobile financial transactions that lead the way, representing 53% of all mobile sector revenue, with mobile commerce somewhat lagging behind on 30%. This pattern is partly replicated in terms of the prospects for market growth in the mobile sector, as 87% of the Kenyan business people surveyed for the report felt that mobile payments are still the best bet for the future, followed by 64% of those polled who saw mobile advertising as offering the greatest opportunity to make money. On the technical side, a majority of the business professionals responding to the survey reckon that downloadable smartphone apps are driving progress in the mobile industry, with just 26% pointing to growth opportunities arising from the convergence of devices and operating systems. Aside from the quantification of business opportunities however, Kenyan business people are generally optimistic, 70% of those polled saying they were ‘optimistic’ or ‘very optimistic’ about growth in the mobile communications market.
Nevertheless, further penetration of mobile devices and services is still apparently being hampered by some real obstacles. Fully 72% of those surveyed by KPMG-MEF said that operator charges are a major challenge for the overall growth of the mobile market. In addition, 57% of the respondents regard network capacity as inadequate in comparison to the intensity of mobile usage, pointing to the rather fragmented geographical coverage. Good country-wide coverage will be essential if businesses are to approach the rural community, which still represents a large proportion of the population in African countries. Last but not least, a majority of the Kenyan business professionals surveyed feel that there is a general lack of understanding of mobile devices and even a lack of trust in their use among consumers, which could, if not resolved, certainly hamper growth in mobile commerce in the country.