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Swedish investors have eye on Africa’s ICT industry

Swedish technology giant Ericsson is seeing “phenomenal potential” in sub-Saharan Africa as mobile phone penetration and mobile broadband access continue to grow.

Ericson head of region for sub-Saharan Africa Fredrik Jejdling

Ericson head for sub-Saharan Africa Fredrik Jejdling

Ericsson’s head for sub-Saharan Africa Fredrik Jejdling says the continent has gone through a “voice revolution” over the past two decades and the growth expected in coming years makes the area interesting for the company.

According to a recent Ericsson Mobility Report, mobile phone subscriptions in sub-Saharan Africa will increase from 560m in 2013 to about 930m by the end of 2019. The report describes sub-Saharan Africa as “a land of opportunity” and “one of the world’s fastest growing mobile markets”. While mobile subscriptions stood at 70% in the third quarter of 2013, which is much lower than the global average of 92%, Ericsson says it expects the numbers to grow rapidly.

“The more interesting parameter is probably what is going to happen to mobile broadband subscriptions. In Africa today we have got 75m plus some mobile broadband subscriptions and in our forecast that is going up to about 720m at the end of 2019,” says Jejdling.

He cites South Africa, Nigeria and Kenya as countries with the most subscriptions at this time as the more attractive markets, but adds that other countries are likely to pick up.

“Those are more sort of mature markets and we see a lot of patterns of consumer behaviour developing in these countries. But of course there are other countries that are coming with lower penetration which will pick up over time. So each country is important and interesting in its own right from the perspective of where they are in terms of development.”

Jejdling explains that to a large extent ICT “is one of the engines in Africa” that will spur economic growth across various sectors.

Risks and challenges

The Stockholm headquartered firm’s portfolio spans mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry.

“[There are] practical issues which drive the adoption of mobility such as handset pricing and making sure that [customers] get a relevant offering of handset at a price which makes sense. You then have to have relevant service offering around that handset… then you start to see demand growing around that market. Those different pillars [which] generate consumer demand have to be facilitated,” says Jejdling.

While there are many challenges to doing business in Africa, Ericsson’s sub-Saharan Africa boss says he chooses to focus on the opportunities and on satisfying his customers’ needs.

“That is how I mitigate challenges.”

Swedish ICT is not only Ericsson

The opportunities Ericsson is seeing in Africa are becoming more glaring for other Swedish technology companies.

Ericsson and the Swedish government recently organised a delegation of IT companies from the country to scout for opportunities in Africa, meet partners and get a good understating of the market. The delegation visited 10 countries including Uganda, Kenya, Nigeria, Ghana, South Africa, Tanzania, Mozambique and Angola.

While Ericsson is Sweden’s largest technology company, the country’s Ambassador to Kenya Johan Borgstam notes that “Swedish ICT is not only Ericsson”.

“Sweden is a country of 9.6m inhabitants but close to 200,000 Swedes work in the ICT sector and the annual sales of the Swedish ICT sector [was] close to US$85bn [last year], twice the size of the Kenyan GDP. Many inventions in the ICT field today… come from Sweden. If you have a conversation on Skype remember that Skype is a Swedish invention [and so is] Bluetooth,” says Borgstam.

Business Sweden Southern Africa manager Samuel Holst told How we made it in Africa that Swedish IT companies view Africa as a growth market and want to invest here.

Jointly owned by the Swedish government and business community, Business Sweden’s mandate is to support companies from the country, particularly small and medium enterprises, in reaching export markets and growing internationally.

“[The] majority of the Swedish companies we talked to wanted to be here because they see this as a growth market, [with] huge potential and they see opportunities for partnership with African players,” says Holst. “I think that the 10 markets we focused on this year are probably the ones we see as having the biggest potential.”

Business Sweden Eastern Africa manager Robin Pettersson agrees, noting that there is “so much increased interest” in Africa among Swedish businesses and investors.

Their particular area of interest within the ICT industry includes applications, infrastructure, e-health, mobile money, finance, e-learning and capacity building.

“This is a very interesting time to be in this part of the world if you are a Swede,” says Patterson. “[We] are seeing the opportunities and possibilities here. [ICT] is one of the sectors where Sweden is very strong and where there is a lot happening in this region.”

However, Patterson explains that there is a general lack of information about the continent among Swedes.

“My job… is to promote possibilities that are here in the region to Sweden. Quite often it is quite a lagging picture of this region… It is not quite up to date [in terms] of what opportunities there are.”

Getting it right

Ericsson’s Jejdling urges Swedish companies expanding to Africa to be careful in their approach of doing business in the continent, noting that “Africa is vast, huge and diverse”.

“You need to be careful not to generalise Africa. It is very diverse and each country has its own characteristics and it is not good advice to look at everything across one line. [African countries] are at different development stages and you need a different strategy in each market that you go into. You can’t afford to make a mistake on that.”

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