Getting the right technology: Digitalising systems and upgrading offerings

The telecommunications sector in Côte d’Ivoire has seen notable growth in recent years, contributing 7% of GDP in 2013. As is the case in most African markets, the IT segment, including networking, software and hardware activities, has seen a more modest pick up. High fragmentation, low infrastructure development and limited human resources has kept IT development and adoption rates low, and behind neighbours like Ghana and Nigeria. Industry players have specifically called for educational support for the sector. “The future of the IT sector lies in the quality of educational programs,” Nongolougo Soro, CEO of the Société Nationale de Développement Informatique (SNDI), told OBG. “To catalyse the industry, we need to reinforce our human resource capacity with vocational training programmes.”

In recent years the government has unveiled a spate of initiatives aimed at changing this, including the roll-out of an e-government programme, set to interconnect public offices at all levels; e-agriculture, targeting the establishment of a central digitalised platform with information of prices, good farming techniques and weather predictions; and a national fibre-optic backbone. Progress on these projects, many first announced in 2011, has been hampered by fiscal constraints. In a bid to renew efforts behind its IT agenda and attract support of international donors, Bruno Nabagné Koné, minister of post, information technology and communication, marked 2014 “the year of results”, in a speech to local media at the start of the year.

Regulators

The renewed approach is most visible in the ministry’s repositioning of one of its bodies, the National Agency of the Universal Service of Telecommunications (Agence Nationale du Service Universel des Télécommunications, ANSUT), established in mid-2012 with a mandate to promote, manage and finance the public digitalisation effort, as the entity responsible for dealing with private operators and investors.

A flagship initiative ANSUT is overseeing is the roll-out of the National Broadband Project. The programme will establish a 7000-km national fibre-optic backbone, which is set to lower broadband connection costs, drive up mobile connectivity through the deployment of code division multiple access (CDMA) base stations along the link, and establish a gateway to cater to the needs of the digital economy. By mid-2014, the government was in preparations to contract the final three sections of the link and seemed on track to see through the project’s completion by the end of 2015. As availability to bandwidth progresses, efforts to increase end-user access — and thus consumer demand for IT services — are likely to gain steam. One such example is the ministry’s “One Citizen, One Computer, One Internet Connection” plan, which aimed to see the number of public cyber-centres at 5000 by the end of 2014.

E-Government

Conversion towards a digital economy has been a pronounced goal since the inauguration of President Alassane Ouattara’s administration. In addition to its socioeconomic benefits, moving from paper to digital data is expected to help the government reduce its financial deficit by cutting its large public operational expenses. The move to digital is particularly relevant in a country where the administrative and economic capitals are two different cities.

Moreover, the government plans to boost productivity via online meetings, rather than having public officials shuttling between cities, optimise transparency in public finances and procurements, and increase response times to public inquiries. However, shortly after its inception, the project saw difficulties due to a lack of financing and legislative challenges. At end-2013, only 10 out 117 modules had been completed.

Plan Of Action

As part of its renewed approach to the roll-out of the national IT agency, the government updated the master plan for its e-government strategy, in a bid to streamline intra-departmental requirements and execute efforts in line with the 2012-15 National Development Plan. Under the revised framework, the number of modules increased to 200 with completion set for 2017. The roll-out is guided by three main axes, parts of which have been initiated in recent years. The first axis concerns legal and institutional reforms to pave the way for laws regulating electronic transactions, protection of personal data and cyber security. Second, a government-wide intranet is being installed targeting the interconnection of all national, regional and local public offices, digitalisation of archives, videoconferencing and integration of administrative systems. The third axis will see extension of connections to education and medical facilities as well as introduction of IT infrastructure in schools and hospitals.

Enabling Environment

In late 2013 a number of legal proposals were prioritised and have either been passed through the government or are in the final approval stages. One such example is a law on the protection of personal data, introduced in September 2013. Although its actual application is yet to be defined and approved, the law will establish guidelines on the privacy rights of individual users, which is likely to boost behaviour on social media and e-commerce platforms.

A second regulatory item is the proposed introduction of a law on electronic transactions, including the validity of a digital signature, which is a key requirement to facilitate the conversion towards a fully fledged digitalised administration and will also encourage the viability of electronic platforms. Legislation has also been proposed to tackle cyber-security breaches. According to Boukary Ouédraogo, general manager of IT service provider Bull, the cost of cybercrime, including preventative measures, to the private sector is estimated at CFA20bn-50bn (€30m-75m) per year. This is particularly prominent in the financial sector where most players rely on investment-intensive satellite connections, which are considered to be more secure. “Demand for security services is growing rapidly as companies are more and more concerned about data protection and identity management,” Ouédraogo told OBG. In an initial bid to curb rising number of incidents, the government set up a dedicated task force called the Platform for Fighting Cybercrime, the first of its kind in Africa. Since its establishment in 2012, the agency has registered close to 12,000 declarations of cybercrime and prosecuted some 150 individuals.

Government Clients

As regards the second axis, interconnected public offices, progress can be observed at the ministerial and presidential levels. “After a slow start, we have seen a remarkable uptake of centralised IT systems in the country’s highest levels of government,” Nongolougo Soro, CEO of SNDI, told OBG. Implementation at other levels has also begun. “Despite some resistance in the early stages, the rollout is now very much demand driven,” Soro said.

With over 140,000 officials on the public payroll, the task is no easy feat. Aside from physical infrastructure, end-user training constitutes a critical component in the plan’s roll-out. “Training programmes range from basic literacy requirements to more sophisticated, customised applications in areas of public procurement processes and public financial administration,” N’goran said. The structured roll-out of the new framework is meant to help make modules more marketable to donor financiers whose involvement is critical to keep pace behind the project, worth some CFA300bn (€450m), according to government estimations.

As Oumar Konaté, the national coordinator of the egovernment project, recently told local media, the new framework is more optimally adapted to market requirements, particularly regarding the financial needs. “We have put in place in a financing committee as well as single window system that allows to bid for, track and evaluate separate modules,” Konaté said.

Local Resources

Expanding broadband infrastructure, a growing market for adapted software and strong growth in the mobile space is demonstrating a pressing need for local IT solution providers. Efforts to expand the labour pool are currently under way, with the African School of Information and Communication Technologies (Ecole Supérieure Africaine des Technologies de l’Information et de la Communication, ESATIC), offering Bachelor and Master-level degrees in a range of ITrelated disciplines. The overhaul of the university in 2012 has led to new relationships with both domestic and international IT players, including the Group of ITC Sector Operators(Groupement des Opérateurs du Secteur des Technologies de l'Information et de la Communication, GOTIC), the industry association that represents IT operators, and the Microsoft IT Academy.

Nevertheless, current growth prospects indicate the need for more efforts. “Provided demand and supply mechanisms stay as they are, we expect to face a deficit of 15,000 to 20,000 professionals,” Patrick M’Bengue, chairman of GOTIC, told OBG. Faced with the challenge and the drive to accelerate stalled projects, public initiatives have increasingly relied on foreign suppliers.

One such example is the engineering of the national fibre backbone, which has thus far been contracted to Chinese firms, much to the frustration of domestic players. “Local participation in public projects is the most optimal manner to foster the quantity and quality of our country’s IT professionals, but thus far we have seen little commitment from the government to support that objective,” M’Bengue said.

Progress

Among its various priorities, the establishment of a dedicated agency attached to the prime minister’s office to oversee contracting of IT projects to the private sector ranks high on GOTIC’s agenda. This has led to some progress, notably by the establishment of regular consultation between private and public entities on upcoming projects. In addition, GOTIC is pushing for regulatory amendments to lower barriers for local firms to participate in public tenders. At present, criteria such as capitalisation and project track record often rule out local players from applying, but unfairly so, according to GOTIC. “A restructure of large-scale public projects into smaller modules would allow qualification of many of our members,” M’Bengue said.

Atttracting Investment

As is the case in a number of sectors, the state is taking up a pole position in the IT sector as an investor, with a hefty public spending campaign driving the expansion of e-government, broadband and mobile data projects. In addition, the government has introduced a telecoms infrastructure fund generated by a contribution of 2.5% on the turnover of telecoms operators. With turnover of the sector as a whole expected to be in line with forecasts for 2014, the fund will reach between CFA17bn (€25.5m) and CFA20bn (€30m) per year. Although far from the amount required to finance the project, the fund will help to cater for the costs of external long-term financing.

The private sector is also seeing an uptick in participation as well. To help accelerate this, a public-private partnership is working on an IT-dedicated free zone near Grand-Bassam, 30 km west of Abidjan. The zone is run by the Village des Technologies d’Information et de la Biotechnologie, (VITIB), a dedicated management company whose ownership comprises shareholders from the Ivorian government, mobile operators MTN and Etisalat, and a consortium of Indian companies.

Initially launched in 2010, the project gained new impetus in late 2013 when one of its donors, India’s Eximbank, reactivated a loan of CFA10bn (€15m). These funds have been complemented by support from the West African Development Bank and the ECOWAS Investment and Development Bank and will be going primarily towards the construction of general infrastructure and acquisition of construction equipment.

At the start of 2015, Philippe Pango, VITIB’s managing director, told local media that six firms had signed agreements to set up in the park, attracted by fiscal incentives like a five-year income tax break and full exemption on Customs duties and value-added tax. Tenants also have access to research facilities of the country’s universities, including ESATIC, the University of Abobo-Adjame and the Institut National Polytechnique Houphouët Boigny, in Yamoussoukro.

One recent newcomer is Portugal-based JP-Inspiring Knowledge, which saw the start of construction of a computer assembly factory in September 2013. The company, operated through local subsidiary MGCITechnologie, plans to tap into the needs of the educational sector in Côte d’Ivoire as well as neighbouring countries. In 2013 Prestige Telecom, a mobile communication service provider part of Etisalat Group, also started operations in the zone, serving the domestic and regional markets including Togo, Niger and Gabon.

New Services

Dedicated infrastructure and a growing base of IT providers are offering perspectives for regional support services such as business process outsourcing (BPO) and call centres. Specific opportunities exist in the financial and telecoms sectors, which, despite their dynamism in recent years, have a limited track record in shared back-office infrastructure.

“Looking at examples in Morocco and Tunisia, the service industry is the anchor for establishing call centres and basic BPO services,” M’Bengue told OBG. As most of these players operate throughout the region, the private sector sees opportunities to position Côte d’Ivoire as a central BPO hub. “The quality of our human resources, cost-competitiveness and our location in the middle of francophone growth economies, puts us at a favourable position vis-à-vis competing destinations in West and North Africa,” M’Bengue told OBG.

Historically, regionally high phone tariffs and a deficit in fixed line infrastructure limited profitability levels. As a result, the Telecommunications/ICT Regulation Authority of Côte d’Ivoire, which regulates the telecoms segment, has prioritised the reduction of fixed and mobile rates as a key objective. Furthermore, with the ongoing roll-out of 4G technology, these obstacles may be overcome in the near future. “The gradual return of political stability in Côte d’Ivoire is causing a strategic review among companies operating in the country and the wider West Africa region. We have an opportunity to position our IT advantages as a decisive element in that process,” M’Bengue said.

Another avenue for growth is e-commerce. In other regional markets, such as Ghana and Nigeria, online shops like Jumia and Konga are growing at double-digit rates. Developments in those markets are much facilitated by low financial penetration, high mobile growth rates and a large, young population, characteristics Côte d’Ivoire shares with its neighbours. The fast pace of adoption of mobile money services in the past few years could support such developments. In June 2013 a total of 5m mobile money accounts were registered, up from 2m a year and a half earlier. Specific laws on cancelled online purchases and refunds, as well as the legal recognition of digital signatures, are of particular importance. “E-commerce in Côte d’Ivoire has a bright future,” René Yédiéti, director-general of Librairie de France, told OBG. “It is set to increase consumption by offering consumers new and easier ways to shop.”

Moving forward, cloud-based solutions will likely take on a more prominent role, particularly in terms of reducing what would otherwise require high capital costs for firms in a market where overhead is already high. VITIB inaugurated its own data centre over the course of 2013, providing the private sector with one of the country’s first shared commercial facilities. However, while the benefits of virtualisation and cloud computing are clear for both large and small businesses, adoption of cloud-based solutions remains slow. “Our interests in locally hosted, cloud-based solutions are both of economic and national strategic value,” André Apete, the ministry’s cabinet director, told OBG.

Outlook

Although fiscal constraints have limited progress in recent years, a renewed push by the government to streamline the operating environment for IT services and to encourage greater capital spending on infrastructure should have a significant impact on the sector over the next three years. The extent to which the private sector can tap into such developments will depend on the pace and depth of the sector’s ongoing regulatory reform. The legislative proposals are proof of the government’s willingness to enable the operating environment, but their implementation leaves room for uncertainties on for private operators, in particular e-commerce platforms. Provided that the announced plans concerning the protection of private data and the authorisation of online payments are accomplished, this space could attract attention and achieve success comparable to that seen in other regional economies, making 2015 an important year.

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The Report: Côte d'Ivoire 2015

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