African markets

As Zambia imposes zero rates on equipment imports, could other African markets follow suit?

In October 2022, Zambia announced that it would apply a zero rate to imports of telecommunications equipment in a bid to encourage investment in the country’s ICT sector, which the government considers essential for job creation. and the economic development of the market.

The move could prove prudent, as Zambia seeks to follow the lead of African countries that are a few steps further along the path to widespread ICT implementation. If Zambia’s effort proves successful, how likely is the movement to be replicated by similar African markets eager to replicate that success?

To find out, we spoke to IDC analyst Mark Walker, who highlighted Kenya and Rwanda as two of the most notable nations in sub-Saharan Africa in terms of ICT implementation. Walker noted that Kenya’s connection to the undersea cables from Mombasa to Nairobi has been hugely important for the national economy in terms of exposure to investment, but at the local level – for example the provision of basic social services and access to communications, as well as services such as education and telehealth. Fintech in particular is a dynamic sector, and the proliferation of Safaricom’s M-Pesa service has greatly expanded the Kenyan economy.

The main challenge has always been skills, but skill development is much easier as smartphones proliferate, as they provide access to tools, materials, technology and collaboration. Walker noted that Africa in general has a young, tech-savvy population, especially with mobile – and added that the continent’s device profile is rapidly shifting towards smartphones, with access traditionally concentrated in cities. now extending to rural areas. “If you talk to some of the major telcos in the region – MTN, Telcos in Zambia, Orange, Airtel – the way they see it is that the cities are over,” says Walker. “Mobile phone penetration still has some way to go in terms of consumption, but it’s pretty much mature and maturing fast.”

The next step is to introduce it into the business environment, with a focus on B2B, enterprise and providing access in more semi-rural and rural areas. This translates into increased investment in data centers, with financial institutions and governments beginning to build and expand data centers – and it actually solves pre-existing data sovereignty issues where data must be stored locally.

Meanwhile, carriers are realizing that they can no longer be pure communications technology providers and are focusing more on becoming digital service providers while also focusing on the small and medium space. companies. The future growth of African businesses will depend on access to global markets as well as regional markets, and this will be enabled by technology – from basic manufacturing to fintech.

“[Zambia is a] growing fast – it’s a landlocked country, obviously, so what’s the picture of communication there? It will be fiber, they will have to work with neighboring countries, most likely Angola and Namibia, Zimbabwe and Mozambique, to get access to undersea cables,” says Walker. “But there’s also a lot of development around the pan-continental fiber network, so they can take advantage of that.”

Walker highlights the country’s young population that is eager to learn ICT skills – as evidenced by other markets such as the DRC and Kenya, where dev and coding camps are typically oversubscribed. He notes that there is a lot of investment in skills building in Africa by international organizations – and while the infrastructure should be there first, many countries are now getting there, including Zambia.

Having previously cited Kenya and Rwanda as successful examples of ICT implementation in Africa, Walker notes that Zambia shares similarities with the latter in particular, such as a concentration of good skills and a manageable and well-rounded workforce. formed, as well as forward-thinking politicians. .

He describes Zambia’s zero rate policy as a good start: “Once the infrastructure is in place, you can start building quickly. It seems to me that they want to encourage very rapid investments in infrastructure, put the communications equipment in the field and connect it, and the rest will follow, so sort out the infrastructure layer. It’s a good way to do it, especially if there is no tax on it to encourage local investment as well as international investment.

While the impact of Zambia’s decision to zero-rate imports of telecommunications equipment remains to be seen, it is hard to imagine that it will discourage investment in the sector. This raises the question of whether other countries could adopt similar measures. According to Walker, “if they are wise, they will. If they really want to get on the growth bandwagon, then this could definitely be a model.