Despite internet growth that is three times that of the rest of the world, Africa’s regulators and listed company executives are not adopting online strategies quickly enough. Yes, there are barriers to using the internet, but these are falling fast. The frequent complaint that rural shareholders are cut off from online communications is missing the point: Many can receive data on their mobile phone, in all likelihood there is an internet café around the corner, and in any case, if someone can make their way to a stockbroker to invest in shares, then surely they can also be expected to find an internet connection.
The figures simply tell a different story
These are the messages I hear about African telecommunications and capital markets:
- Huge increase in internet connectivity coming onstream before 2010;
- Continued strong mobile growth.
- As a consequence, mobile internet in Africa is the next big thing;
- Many thousands (millions?) of investors result in high cost of engagement; and
- The absence of retail shareholder engagement is an opportunity lost.
So where does African internet usage stand in overall world statistics? According to IWS News and the World Internet Stats website, the new total for the world population is estimated at 6.768bn persons for mid-year 2009, an increase of 91.685m, or 0.4%, over twelve months.
It is estimated that by mid-2009, 24.7% of the world population, or approximately one out of every four persons, uses the internet. And the number of internet users rose at a faster rate than world population since mid-year 2008, when internet penetration was only 21.9%. Each geographic region had a different growth pattern, but Africa’s internet growth rate far exceeds that of the rest of the World by over three times over the past 10 years and looks to accelerate even further.
| Internet usage statistics for Africa | ||||||
| Country |
Population (2009 Est)
|
Internet Users Dec-00 | Internet Users Latest Data |
Penetration (% Pop.)
|
User Growth (2000-2009) | % Users in Africa |
| Mauritius | 1,284,264 | 87,000 | 380,000 | 29.60% | 336.80% | 0.60% |
| Egypt | 78,886,635 | 450,000 | 12,568,900 | 15.90% | 2,693.10% | 19.10% |
| Zimbabwe | 11,392,629 | 50,000 | 1,421,000 | 12.50% | 2,742.00% | 2.20% |
| South Africa | 49,052,489 | 2,400,000 | 4,590,000 | 9.40% | 91.30% | 7.00% |
| Kenya | 39,002,772 | 200,000 | 3,359,600 | 8.60% | 1,579.80% | 5.10% |
| Uganda | 32,369,558 | 40,000 | 2,500,000 | 7.70% | 6,150.00% | 3.80% |
| Nigeria | 149,229,090 | 200,000 | 11,000,000 | 7.40% | 5,400.00% | 16.70% |
| Zambia | 11,862,740 | 20,000 | 700,000 | 5.90% | 3,400.00% | 1.10% |
| Namibia | 2,108,665 | 30,000 | 113,500 | 5.40% | 278.30% | 0.20% |
| Botswana | 1,990,876 | 15,000 | 100,000 | 5.00% | 566.70% | 0.20% |
| Ghana | 23,887,812 | 30,000 | 997,000 | 4.20% | 3,223.30% | 1.50% |
| Swaziland | 1,337,186 | 10,000 | 48,200 | 3.60% | 382.00% | 0.10% |
| Rwanda | 10,746,311 | 5,000 | 300,000 | 2.80% | 5,900.00% | 0.50% |
| Mozambique | 21,669,278 | 30,000 | 350,000 | 1.60% | 1,066.70% | 0.50% |
| Tanzania | 41,048,532 | 115,000 | 520,000 | 1.30% | 352.20% | 0.80% |
| Malawi | 15,028,757 | 15,000 | 139,500 | 0.90% | 830.00% | 0.20% |
| Sub-total | 490,877,594 | 3,697,000 | 39,087,700 | 7.96% | 1,057.28% | 59.60% |
| Total Africa | 991,002,342 | 4,514,400 | 65,903,900 | 6.70% | 1,359.90% | 100.00% |
|
NOTES (1) Africa Internet Statistics were updated for June 30, 2009. (2) Population numbers are based on data from the U.S. Census Bureau. (3) The most recent usage information comes mainly from data published by Nielsen Online, ITU, WWW and other local trustworthy sources. (4) For growth comparison purposes, usage data for the year 2000 is displayed. Copyright 2009, ©Miniwatts Marketing Group. All rights reserved worldwide. |
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In African countries with stock exchanges, one in thirteen people, or 6.7%, have access to the internet. However, this is distorted by some of the larger markets, i.e. South Africa, Nigeria and Egypt, who between them account for over 50% of the target population. The country with the highest internet penetration is Mauritius with 29.6%, followed by Egypt 15.9%, Zimbabwe 12.5%, South Africa 9.4%, Kenya 8.6%, Nigeria 7.4% and Uganda 7.7%.
The SEC in the USA commissioned a study on the demographics of the USA’s investors, how technology permeates through society and how this affects regulation and company communication in the capital markets.
Those markets in Africa whose profiles fit the points above – e.g. Nigeria and Kenya should do the same and carry out the following:
- Analyse how the investment community has access to technology and how it uses technology for communications;
- Learn from the investment community what their needs are;
- Identify how the gap between investor needs and existing technology and future technology can be bridged at the lowest cost and greatest efficiency;
- Pursue holistic solutions to market needs;
- Use the private sector to implement these solutions. The private sector has the skills and resources and innovation to apply appropriate solutions at the lowest cost. This will be the greatest challenge.
- Constantly monitor developments thereafter.
Getting regulators involved
And the message to Africa’s regulators is: You have the tools, you have the technologies, and you also now have critical mass. Get the information, assess what you have, then work out how to bring it all together to work in a manner that it specific and relevant to your market. Why?
- To strengthen the reputations of listed companies, regulators and the investment climate as a whole;
- To lower IR communications costs;
- To reach investors in new and existing markets more efficiently;
- To improve investor understanding of listed companies’ potential;
- Facilitate more accurate valuation of listed securities; and,
- Contribute to a fair and vibrant capital market.
Some ideas on how to gather information:
- Set up a national investor information appraisal to get buy in from a broad range of stakeholders. Regulators drive it, politicians endorse it, the private sector facilitates it. Investors participate in it and everyone sees it. It’s in the national interests.
- Set up an interactive website and solicit feedback at every opportunity through all information disseminated through the website and beyond.
- Engage the cell phone companies to explore whether their subscribers own shares either directly or indirectly or are able to take part in a simple cell based questionnaire – offer airtime for a prize to those that do.
- Require every share transfer form to be accompanied by a questionnaire for a fixed period of, say, six months.
As to what to ask, here are a few pointers:-
- Do they own shares directly or indirectly?
- Average income?
- What percent of shareowners use or can access the internet?
- Is access at home or at work?
- What percent have access to mobile phone?
- How often do they trade shares?
- What information would they desire from listed companies?
- Are they happy with the amount of information disseminated by listed companies?
- Are the regulators doing their job?
The information gleaned from such a broad study would provide a useful insight into what people think of investment and how their needs could be met. All it needs is some forward thinkers.
Sources: IWS News & African Is Cool & World Internet Stats