Frost: African Investment Climate Presents Business Telephony Market Opportunities
December 19, 2007 // Published as a news service by IHS
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Investments by government and government-aided organizations, contact center service providers and the primary sector are stimulating growth in the African business telephony market.
According to Frost & Sullivan, multinational aid and international loans helped governments finance secondary and tertiary sectors in the continent, creating a market for business telephony.
Recent analysis from Frost & Sullivan of the African business telephony market found earned revenues of €158.3 million in 2005, with estimates to grow at a compound annual growth rate (CAGR) of 12.3% to reach €345.3 million in 2012.
Economic progress in certain countries, due to a favorable petroleum and commodities market, helped the continent's gross domestic product (GDP) to grow at an average of 5.7% in 2006, as reported by the U.N.'s economic commission for Africa.
The global demand for key African export commodities, especially crude oil, metals and minerals, helped several economies in Africa become net exporters. Analysts said a share of this excess capital is being invested into infrastructure and private sector projects.
"The growth of the economy is primarily the result of improvement in the macroeconomic management of many countries," said Frost & Sullivan industry analyst Shomik Banerjee. "This has created new investment opportunities and a growing market to be tapped into by business telephony vendors."
Analysts said unsafe business conditions, corruption, high tariff barriers and hostile regulations can affect market growth. These are further compounded by poor infrastructure, the need for structural reforms and a limited pool of skilled labor.
African leaders need to focus on creating an environment conducive to business, analysts said, a fact stressed upon by business executives during recent discussions on the sidelines of the World Economic Forums.
Despite present challenges, Africa holds great promise in the future. Analysts said fundamental changes are taking place in the market dynamics including the initiation of public-private partnership projects in the social sector. Deregulation in the telecommunications market and the entry of private participants is also creating a competitive environment offering choice to consumers, in addition to increased value for the money.
The African business telephony market will continue to expand with several opportunities arising from the 2010 World Cup to be held in South Africa.
"The event will create unique business opportunities in the travel and tourism, retail, food and banking space," said Banerjee. "Africa will not only invest in building stadiums, road and rail networks, but also in improving communications."
Source: Frost & Sullivan.