Ethiopia is liberalising its telecoms sector. It will be the last in the continent to do so and their considerable desire in Addis Ababa to do it right.
Global experts gathered there last week to share experiences on market liberalisation and best practices in a competitive market.
The government recognised the importance of a competitive market in improving accessibility and affordability of telecommunication services to the people.
It is often easier said than done. Policy changes aimed at a key sector like telecoms often seek to rearrange existing power dynamics that can either enable or constrain its implementation.
In Kenya, for example, it took more than eight years to fully liberalise the sector mainly because certain elements in government and the defunct Kenya Posts and Telecommunications Company (KP&TC) kept impeding the process through flimsy arguments that the corporation was part of the national security.
The breakdown of KP & TC wasn’t done with the corporation’s eager co-operation. There were young people interested in setting up Internet Service Provider companies, several advocacy groups, NGOs and development agencies pushing for full liberalisation.
They argued that liberalisation would enhance competition and lower consumer price. In competition, markets grow and bring economic and social benefits.
Ethiopians acknowledge that Kenya rapidly advanced its capacity to innovate and create new organisations as a result of a liberalised sector.
Indeed, KP&TC as an incumbent monopoly used to frustrate innovation and was slow to respond to customers. As a result, there was low teledensity, high telecom costs, antiquated business models and virtually no information and communications technology (ICT) ecosystem.
As the Fourth Industrial Revolution (4IR) takes shape, Ethiopia has realised that despite its economy growing at the fastest rate in the world, they lag in mobile and broadband penetration and the reason is that the incumbent telecom monopoly has not pursued new business models that could create future jobs as well as greater inclusivity to its people.
There are abundant opportunities for this second-most populous country in Africa with 109 million people.
With the emergence of 3D printing, one of the 4IR technologies, Ethiopian Airlines is expanding into the area of original equipment manufacturers to set up an aerospace manufacturing industry in Ethiopia.
They will be building on the small facility for manufacturing wire harnesses for Boeing and eventually establish a full-fledged aerospace manufacturing plant in Addis Ababa to manufacture wire kits, sheet metal, machine parts and thermal blankets.
ICTs play a major role in international collaborations whether it is outsourced manufacturing of parts or other works such will continue to rise because Africa now has resourceful youth.
If Africa leverages ICTs to train the youth to global standards, more work will inevitably be outsourced into the continent. But first, we must provide access to affordable broadband. Monopolies have failed to do that.
Those who oppose liberalisation argue that competition destroys value, brings market confusion, marginalises rural connectivity and compromises other risky state investments like security installations.
They sometimes argue that monopolies too can adopt an innovation culture. Monopolies that do innovate have large research and development budgets. Since research spending in Africa is low, it is better to leave innovation to agile start-ups that will bring value to realise Ethiopia’s full potential.
Whichever way Ethiopia decides, there is a price to pay. The status quo may, however, be the most expensive option since it is patently clear that ICTs indeed can create both economic and social benefits.
A liberalised market, although painful as it will lead to job losses, compensates in new business models that could bring greater financial inclusivity.
There will be very difficult decisions to be made in the coming days. It takes courage to make difficult decisions that will have a greater future impact.
Change is difficult and it is often underpinned by the dynamics of power relationships and without dealing with it upfront, the entire process of liberalisation could flop. There is wisdom in involving all stakeholders in the process no matter how painful it may be.
It pays to remember the great African proverb that says, “If you want to go fast, go alone. If you want to go far, go together.”
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