Transcript Powerpoint Template 2011

Realizing The Knowledge-Based Economy
Through a Comprehensive Policy
Environment
Karel Pienaar
CEO
MTN South Africa
Contents
1. Africa is poised to reap the rewards of the Knowledge
2.
3.
4.
5.
6.
7.
8.
Economy.
What can a knowledge-based economy deliver for Africa?
Broadband investment is the foundation to enable a
Knowledge Economy.
The Knowledge Economy Index – Where is Africa today?
Mobile communications remains the key driver for organic
growth in African ICT markets.
Mobile industry partnering with governments to bring the
benefits of the African continent’s ICT development goals.
Competition engineering through licensing does not work.
Conclusion and recommendations.
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2
African Growth
The trends suggest that Africa is poised to
reap the rewards of the Knowledge Economy
Trend 1: A larger, younger and more
affluent population
Trend 2: Africa’s urbanising population
Driven by key
trends
Trend 3: Africa is leapfrogging
through technology
Trend 4: Africa’s commodity wealth
Trend 5: Africa’s expansion of its
financial sector
Source: Freemantle, SBSA
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3
African Growth
A larger, younger and more affluent population
that is urbanising rapidly
•
Africa as a continent has 52 cities with
more than 1.0m residents, almost the
same number as in Europe and more
than Latin America, according to
McKinsey Global.
•
Between 2010 and 2050, Africa’s
economically
active
population
is
forecast to grow from 56% to 66%, at a
time that most of the developed nations
and
major
emerging
markets’
populations will be ageing and moving
into the dependent category.
Source: IMARA Securities FMCG Sector
Report March 2012
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4
Africa’s commodity wealth is further enhanced by
becoming a player in the world’s energy markets
Africa’s share of world
commodities
Copper production
growth, 2006 − 2010
Proved oil reserves as at
2011, bn barrels
Africa had 9.5% of
world’s crude oil and
8% of the world’s
natural gas reserves at
the end of 2011
Source: SBSA, Africa Macro Insight & Strategy
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5
What can a knowledge-based economy deliver
for Africa?
Global
Competitiveness
• From resourcebased
economies
• From industrialbased
economies
Diversification
• Increased
productivity
• Efficient use of
factors of
production
• Increased
innovation and
competitive
advantage in
terms of
patents, skills
Socio
Economic
Advancement
• In technology
• In research and
development
• In access and
infrastructure
Foreign Direct
Investment
• Improved GDP
• Improved
income per
capita
• Increased skills
levels and
employment
capacity and
capability
• Improved
quality of life
Adapted from World Bank Institute and K4D
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6
Broadband investment is the foundation to
enable a Knowledge Economy
Source: The World Bank, K4D
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7
Broadband Internet users and
traffic – How do we light up the
African continent?
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8
The Knowledge Economy Index
– Where is Africa today?
The KAM Knowledge Index (KI) measures a country's ability to generate, adopt and
diffuse knowledge.
This is an indication of overall potential of knowledge development in a given country.
Africa does not feature on the top 50 KEI rankings for 2012.
Source: The World Bank, K4D
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9
GDP per Capita(2009)
Recent KEI (World Bank)
Luxembourg
Norway
Ireland
Netherlands
Austria
United States
Finland
Australia
Belgium
Sweden
France
Germany
Canada
Japan
Iceland
Singapore
United Kingdom
Italy
Spain
Kuwait
Cyprus
Greece
New Zealand
Israel
Slovenia
Portugal
Malta
Czech Republic
Slovak Republic
Estonia
Croatia
Saudi Arabia
Hungary
Latvia
Poland
Lithuania
Chile
Uruguay
Turkey
Brazil
Mexico
Argentina
Romania
Kazakhstan
Panama
Mauritius
Malaysia
Costa Rica
Bulgaria
Botswana
South Africa
There is also a positive correlation between
economic development and the KEI
GDP per Capita vs KEI
$120 000.00
10
$100 000.00
9
8
$80 000.00
7
6
$60 000.00
5
$40 000.00
4
3
$20 000.00
2
1
$0
Source: IMF and the World Bank
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10
There is a positive correlation between
broadband penetration and economic growth
•
According to the World Bank (2009), every 10% incremental broadband penetration delivers 1.38 percentage
point incremental GDP growth. At current GDP levels, this translates into approximately R58bn.
GDP per Capita vs ICT Penetration
$120 000.00
10
9
$100 000.00
8
7
$80 000.00
6
$60 000.00
5
4
$40 000.00
3
2
$20 000.00
1
Luxembourg
Ireland
Norway
Austria
Netherlands
Finland
United States
Belgium
Australia
France
Sweden
Germany
Japan
Canada
Iceland
Singapore
Italy
United Kingdom
Spain
Kuwait
Cyprus
Greece
Israel
New Zealand
Slovenia
Malta
Portugal
Czech Republic
Slovak Republic
Croatia
Estonia
Saudi Arabia
Latvia
GDP per Capita(2009)
Hungary
Poland
Chile
Lithuania
Uruguay
Brazil
Turkey
Mexico
Romania
Argentina
Panama
Kazakhstan
Malaysia
Mauritius
Bulgaria
Costa Rica
Botswana
0
South Africa
$-
Source: IMF and the World Bank
Recent ICT Pentration (World Bank) is a simple average of normalised scores (which form part of the KEI calculation) on three key variables: telephone, computer and internet penetration (per 1000 people)
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The answer to African KEI growth is… mobile
broadband infrastructure and investment
Reported Monthly Unique Internet Users
unique users
30000000
25000000
20000000
15000000
10000000
5000000
0
MTN
VC
Total
Mar-12 Act
11488000
12200000
23688000
Mar-13 fc
13000000
13400000
26400000
Mar-14 fc
14000000
14200000
28200000
Definition:
*Any user who made use of a mobile internet connection to download content (ringtones,
wallpapers) or browse the internet for information or social purposes (google, facebook, instant
messaging).
**Also includes telemetry devices.
***fc = MTN estimates
As a result of the availability and use of smartphones and ordinary internet capable
handsets, access to the internet is driven predominantly by mobile.
Growth has been phenomenal – How far can SA go?
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12
African governments and the mobile industry must
continue to work together in partnership to bring the
benefits of the African continent’s ICT development goals
Contribution to the target
Government fosters a conducive investment climate.
•
Policy & regulatory framework (e.g. spectrum licensing, access
regulation, investment certainty, IT literacy)
•
Local regulations (planning, environmental laws, etc.)
•
Smart subsidies
•
•
•
•
•
•
•
•
Skills development and education partnering
with private sector to achieve this
Risk capital
Market knowledge
•
Long-term market
Technology and distribution know-how
support
Innovation and platform competition
(supply/demand-side
Scale and efficiency
subsidies)
Competitive “trial and error”
Optimum network configuration (sharing) and market structure
100% access target
Private sector invest is building capacity and capability
efficiently.
Adapted from World Bank Institute
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13
Bringing Broadband to All requires substantial
infrastructure investment
•
•
•
•
•
•
•
Risk capital
Market knowledge
Technology and distribution know-how
Innovation and platform competition
Scale and efficiency
Competitive “trial and error”
Optimum network configuration (sharing) and market structure
Private sector invest is building capacity and capability
efficiently.
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14
Competition engineering through licensing does not
work
EU case study – 10 years
New 3G licensees in Europe around 2000
2000
Remaining new 3G licensees in 2011
•
bankruptcy
•
M&A
•
Returned
licenses
19 3G
new entrants
licensed
across
Private
sector
invest
is
15 countries
7 3G new entrants left, many in a
building
capacity
and
capability
precarious
financial
position
2011
No country with 2 new entrants
efficiently.
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15
Use the USO funds but USO needs to be
“smarter”
Performance of 15 developing
countries USFs.
•
Poor global track record of USO funds:
• No fund has been capable of
distributing more than 2% of sector
revenue.
•
Government can play a significant role in
releasing funds to subsidise roll-out of fibre
in rural areas through SOEs where
commercial incentive is lacking.
•
Learn from past South African experience,
e.g. UALs.
Private sector invest is building capacity and capability
efficiently.
Source:Intelecon
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Conclusion: An ICT framework to help Africa leapfrog
towards a KE?
INVESTMENT
Mobile is key to deliver lion’s share of KE infrastructure (but fibre needed in backhaul
and backbone, too).
Urgent need for DD spectrum now. Do not fragment allocations: this increases costs.
Essential to leverage incumbents investment capacity and existing infrastructure
Invest in skills and education
COMPETITION
Delicate mix between infrastructure and service-based competition, incumbents and
new entrants
Policies should protect competition and not competitors
Network sharing in rural areas likely to be key to deliver Broadband for All
GOVERNMENT
Facilitate (Digital Dividend, e-skills, Right of way, planning, local content support),
rather than participate
Focus scarce Government resources where private investment cannot reach
Let SOE’s tender with the private sectors for ICT expansion initiatives
USO
Focus SOEs on delivering support infrastructure in rural areas (fibre backhaul)
Smart USO obligations in spectrum licenses
Subsidies for rural access and capacity expansion
Incentives for innovation
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Thank you
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18