Interconnections: Robust broadband connectivity and government initiatives buoy IT sector growth

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In April 2013, newspaper headlines in Ghana fêted the distribution of 50,000 laptops by the government to teachers. The effort marked part of a push to make the internet and IT services more accessible to millions of Ghanaians. The country’s stable investment framework, combined with a strong education system, rising per capita income levels and increasing bandwidth capacity mean the nation offers sizable opportunities in the information and communications technology (ICT) sector. These characteristics have helped cultivate one of Africa’s more dynamic start-up cultures and support the introduction of large-scale capital-intensive projects, such as the $10bn HOPE City project and the $100m Ghana Cyber City, both of which aim to encourage ICT activity over the long term. The country has also benefitted from improved networking infrastructure, by both the public and private sector. Most recently, for example, President John Dramani Mahama announced the Eastern Corridor Fibre Optic Project in February 2013. The Eastern Corridor project will see 800 km of fibre-optic cable laid in rural areas to greatly expand broadband access. The €38m project is expected to be completed in April 2014. These sorts of investments will have significant knockon effects beyond increasing access. According to projections from the International Telecommunications Union (ITU), a 10% increase in broadband penetration generates a 1% rise in annual GDP; a 2012 World Bank estimate suggested that mass broadband development creates between 2.5 and four additional jobs per job created in the ICT sector. Given Ghana’s push to increase employment rates in the tertiary sector, and the need for the country to diversify outside of its traditional dependency on commodities, this sort of growth could be extremely beneficial in both the short and long term.

INDICATORS: As with many African markets, gaining a clear sense of the current level of development in the ICT sector can be challenging. Even for an indicator as straightforward as internet penetration, finding an agreed-upon number can be difficult due to the large number of individuals who share subscriptions or use internet cafés to access the web. The variations are sizable: an ITU report released in the fourth quarter of 2012 estimated that 14% of the population had access to the internet, while according to BuddeComm, an Australian research firm, internet penetration stood at 36% in 2012. Either way, the growth is noticeable from the country’s 2010 figures, when the ITU estimated it at 5.3%. Ghana’s figures tend to be higher than most countries in the Sub-Saharan region, but lower than the 11% average rate for Africa as a whole.

The UN’s “e-Government Survey 2012” ranked the country 145th in the world in e-government competitiveness, up from 147th in 2010, but still low. However, Ghana did have the second-highest e-government development index score in West Africa, and it also drew praise from the UN survey as one of the few SubSaharan states to offer feedback from its residents on the provisions of e-government services via an online poll; it joins Côte d’Ivoire and Guinea-Bissau as the only ECOWAS members whose e-government efforts include a social media presence. According to the survey, Ghana ranked 28th in the world in the survey’s “e-participation” index, which measures the quality of information and services provided by the government to citizens though e-government programmes.

CABLES: Increased bandwidth capacity has helped underwrite some of the growth in subscription rates. The number of submarine cables supplying the market has grown rapidly to five in 2012, up from just one cable in 2009. This has made average internet speeds in Ghana among the fastest on the continent. In 2012, the Net Index of Ookla, a Seattle-based broadband testing firm, ranked Ghana as having the fastest internet download speeds in Africa, after Mauritius, Madagascar and Cape Verde. Recent results for August 2013, based on consumer download speeds, suggest Ghana’s average download speeds have risen to 6.94MB/second, 81st in the world. Its average upload speeds rank even more competitively on a global scale: Ghana’s 3.43 MB/second average upload speed is 68th in the world out of the 184 countries and territories ranked in the survey. However, daily access is often slower and in reality fixed-line outages and power outages, in addition to peak traffic on 3G networks, can limit capacity.

NEW SERVICE: As recently as 2009, SAT-3 was the only submarine fibre-optic cable with a landing station in Ghana and had a virtual monopoly on the provision of upstream broadband service. The most recent cable to reach the market is the African Coast to Europe (ACE) Consortium submarine cable, which made landfall in December 2012. The $700m project is jointly owned by a consortium of 19 companies, including a share owned by Expresso, the parent firm of the country’s only CDMA mobile provider. The cable provides Ghana with additional capacity of 5.12 TB/second of speed. An equal amount of capacity was brought to the country by the West African Cable System (WACS), in which South African mobile operator MTN is an investor, and which arrived in Ghana in 2011. Nigerian telecom firm Glo has also connected its proprietary cable to the country’s networks: Glo 1 made landfall in Ghana in 2011 offering speeds of 2.5 TB/second. Prior to that, Main One Cable arrived in 2010 with a 1.92 TB/second speed, part of a larger network that stretches from Nigeria to Portugal. The combined capacity of these five submarine cables gives Ghana access to 12.3 TB/second as of May 2013, providing Ghana with an excess of bandwidth at present. This large capacity will likely encourage new business opportunities and also position the country as a mid-stream telecom hub for populous landlocked countries such as Burkina Faso, Niger, and Mali, as well as to other neighbouring ECOWAS states. The plethora of cables has reduced the price of internet services in the last decade. In 2003, a T1-speed internet connection cost around $15,000 for a 12-month subscription, while today a T1 connection is $800 a year.

That being said, challenges have been created by this burst of connectivity. These five submarine cables lie in areas where Ghana is pursuing offshore oil and gas developments. Telecoms firms would thus like to see the government enact new rules to expand the protected zone around each cable. According to regulations enacted in 2013, vessels must stay 50 metres away from both sides of a cable for anchoring. But following the damage caused by a Togolese vessel to the submarine West African Gas Pipeline in 2012, the industry is pushing to expand the protection zone for cables to a kilometre, or a distance equivalent to three times the water depth, as well as introduce stiffer penalties for violators that drop anchor in the protected zone.

Fibre-optic cables operating in Ghana FIBRE OPTIC: In 2013, the National Communications Authority (NCA), Ghana’s chief telecoms regulator, formalised the procedures for companies to expand fibreoptic cabling from onshore landing sites. The new rules will allow providers to expand their fibre-optic connections to the interior. Glo Ghana, for example, is developing a fibre-optic ring cable connected to the landing site of the Glo 1 submarine cable, spreading in a ring across 3100 km and improving connectivity.

Huawei, a Chinese firm, is working on the development of a 600-km, rural-urban fibre-optic cable as part of efforts to expand the national broadband infrastructure. The cable will connect the community of Ho in the Volta Region to Bawku in the Upper East region, connecting 27 other rural communities along the way. The completed project will provide both northern and southern parts of the country with equal access to the nation’s international submarine cables. This new fibreoptic cable backbone will help provide high-speed data connections between centralised government authorities and the remotest regions. When completed, this network infrastructure will reach 1050 sites around the country – 550 locations via wireless networks and an additional 500 locations via other means. The next stage of the project includes WiMAX networks supported by long-term-evolution (LTE) technology.

SATELLITE EXPANSION: In September 2012, Altobrige, a wireless network solutions provider, completed the first phase of a project to provide expanded voice and broadband access to rural areas. The initiative is to develop a satellite-backhauled network operated by Tigo Ghana, one of the nation’s six telecoms firms. One of this programme’s key innovations will be that the system will be energy efficient and solar powered.

4G LTE BROADBAND: In February of 2013, the NCA awarded three broadband wireless access (BWA) licences, each worth $6m and valid for 10 years. Two of these licenses were in the 2500- to 2690-MHz bandwidth range and were issued to GoldKey Properties and Surfline. Finally, an unpaired configuration licence was awarded to G-Kwiknet. These 2.5 GHz spectrum licences are to be used solely for the development of new broadband services in Ghana. Though each winning bid was made for just $5m, Ghana’s six domestic providers were not allowed to take part in this auction.

While these bandwidth licences are compatible with the provision of 4G LTE services, the NCA has no current plans to license such technology in Ghana. Under the terms of the licence agreement, each company has the right to roll out mobile telephony services if certain conditions are met. If the coverage area of a 4G broadband provider extends to the majority of the country by 2016 and an additional fee of $1m is paid, licences can be upgraded to include the full provision of mobile telephony services. Should this occur, Ghana’s six mobile telephony companies could be joined by one to three new entrants in the medium term. However, raising capital and developing tower infrastructure would pose daunting challenges to any firm looking to challenge the six current market incumbents. Under the terms of the original award, these licences cannot be resold to other companies, though Ghana’s telecoms players and Alltel, a local technology manufacturer, have all expressed interest in developing 4G networks.

The NCA has given flexibility to entrepreneurs interested in developing broadband to provide fixed, nomadic or mobile broadband services as they see fit. Despite some critics, George Anti Ohene, Ghana Hewlett Packard’s (HP) managing director for West Africa, believes the policy is well suited to present conditions: “The advantage of emerging markets like Ghana is the ability to ‘leapfrog’ technologies like 3G. In the medium-term, if Ghana can begin using 4G LTE broadband, this would create new spectrum opportunities for communication and related business.“ E-GOVERNMENT PLANS: The new Eastern Corridor project is just one of several ongoing initiatives in Ghana which fall under the supervision of the National Information Technology Agency (NITA). The government agency is designed to oversee the roll-out of a wide range of e-government services, including the ICT for Accelerated Development and Millennium Village projects, pilot development programmes in rural Ghana.

NITA is also tasked with overseeing the development of the $42m “e-Ghana” initiative, along with assistance from the World Bank, which is scheduled for completion in June 2014. The project has been funded primarily by the government’s Ghana Investment Fund for Electronic Communications (GIFEC), which began operation in 2005 with the goal of expanding access to mobile telephony services. 2013 has also seen a push by NITA to ensure that a greater percentage of Ghana’s internet traffic is handled domestically. According to the Ghana Internet Service Providers Association ( GISPA), only 45% of the internet traffic is handled via local internet system exchange points. NITA is undertaking a host of projects to make the use of local internet exchange points more common, such as the construction of WiMAX base stations throughout the nation in collaboration with China’s Huawei technologies.

A large component of the new public sector programmes is focused on increasing access to services through online portals, and improving user interfaces to ensure that citizens can conduct a variety of transactions online. GIFEC, for example, began funding both e-health (a remote doctor/patient interface scheme) and e-learning (distance education) programmes in conjunction with the Ghana Health Service and the University of Ghana in 2011. Further development of the e-Ghana initiative calls for the unveiling of new e-justice, e-service, and e-parliament initiatives, which will leverage broadband access to provide citizens access to official documents and government services. Some of these services generated by the e-Ghana initiative will be developed in conjunction with HP, which won a tender for these projects in 2011.

SOPHISTICATION: The first phase of the e-Ghana plan, the digitisation of various services, was completed in 2012. Official public records such as death certificates and birth certificates can now be accessed online. Additionally, a nominal service for electronic finger printing was completed nation-wide as well as application for driver’s licences, in 2013. Later in 2013, the government is also slated to unveil, in conjunction with the Ghana Tourism Authority and the NITA, a system allowing businesses to apply for hotel licences online.

Phase II of the programme will aim to promote closer collaboration between different government bodies, such as the digitisation of medical records between hospitals. Additional cost-savings measures are built into the programme including efforts to reduce the usage Fibre-optic National Backbone capacity, 2012 of paper, as well as an initiative to develop a Voice over Internet Protocol (VoIP) technologies solution to reduce phone calls between different government agencies. However, not all projects are as ambitious; some projects are designed to meet the needs of specific constituencies. For example, Ghana’s fishing industry received 400 fish-finders in 2011 and 2012 to be used in conjunction with ICT retrofitted landing sites, allowing access to satellite communication and relevant data by those in the artisanal fishing industry.

NETWORKING & SOFTWARE: The new initiatives, together with the improved accessibility of IT solutions, has led to more contract and consulting work by business solution providers. International consulting firms with the capacity to solve IT issues are beginning to focus more on the market. Several IT consulting firms are present already, including Infosys, Huawei and Webpro. The government will begin a programme with Oracle to upgrade software and business solutions platforms, which will likely be completed in early 2014.

HP is also working on a number of projects for the government, including helping establish workstations for the Ghana National Petroleum Corporation. Alcatel-Lucent has been working with NITA since the fourth quarter of 2012 to make a range of online services accessible to government offices in remote areas of the country as part of the eGhana scheme.

Other initiatives will give a boost to local government. In 2012, an executive service team from IBM spent a month in Accra advising its municipal government and suggesting the country unveil an automated multichannel direct payment system to improve electronic transactions and transfers, which could also lay the groundwork for improved payment transparency.

The country also has the potential to serve as an outsourcing and call centre destination for English-speaking markets, particularly given that English is the sole language of instruction and the country’s time zone is closer to the UK than other call centre destinations in Asia. Ghana was the first country in West Africa to develop an international call centre in 2003, although other emerging markets in Africa (like Morocco) have developed outsourcing activity at a far more rapid pace.

IT HUBS: The government and the private sector are looking to capitalise on what is expected to be a steady increase in activity. The Ministry of Trade and the Ministry of Communication, for example, have jointly sought to develop two IT parks: one in the Cape Coast region and the other in Tema. In the private sector, the Ghana Cyber City project has sought to attract investors for a $100m IT service and business centre, which is to be built on property owned by the University of Ghana.

HOPE CITY: Perhaps the most ambitious development is the HOPE City project. HOPE, which stands for “Home, Office, People and Environment”, aims to provide a $10bn set of commercial and residential facilities targeting ICT firms and their employees. The development has been proposed by RLG Communication, a Ghanaian technology manufacturer, and envisions six towers, the tallest of which will be 75 storeys, making it Africa’s tallest commercial building.

Although similar developments have often been introduced and subsequently shelved in other emerging markets, there is certainly a need for appropriate real estate in Ghana. For example, the sort of property necessary to develop a commercial call centre locally is often rented at prices averaging $12 per month per sq ft, while the price for similar property averages $1 per sq ft a month in urban areas of India.

EDUCATION: Key to encouraging more activity in the IT sector is education, and Ghana has put emphasis on developing the skills of future graduates, both for direct application in ICT services and for improved ICT familiarity among the broader populace. The initiatives range from the micro – such as GIFEC’s “Connect School Initiative,” which connects 38 teacher training colleges to the internet, and plans by the Ministry of Communications to improve online usage at 26 technical institutes and 37 vocational training institutes – to the macro, such as RLG’s plans to establish a new ICT-focused university for 5000 students.

The country already has a number of ICT-dedicated campuses, including the Kofi Annan Information Technology Centre (a collaboration with the government of India) as well as the Ghana Technology University College and Meltwater Entrepreneurial School of Technology (MEST). MEST is playing a key role in the training of Ghanaian IT entrepreneurs, having also invested $1.5m in tech start-ups in Accra since its set up in 2008.

START-UP GROWTH: Ghana continues to earn a reputation across Africa as a solid destination for start-up capital and entrepreneurs. In 2012, Forbes Africa listed two Ghanaian start-ups as being among the top 20 most promising in Africa. These were Dropifi, a corporate communications management system founded in 2011, and SMSGH, an eight-year-old SMS handling service which manages over 28m texts per day. In May 2013, Google Ghana unveiled its “Innovative Ghana” programme that recognised six businesses as “Innovation Heroes”: Ghana Trade, FashionistaGh, Ghana Decides, Leti Games, Roots by Naa and Dream Oval.

According to Joseph Odoi, country manager of Main One Cable, the environment for new ventures has also improved in recent years due to the expansion of internet bandwidth from new submarine cables. The primary benefactor of the country’s expanded bandwidth will be entrepreneurs starting small and medium-sized enterprises (SMEs): “Currently many SME start-ups struggle to afford the bandwidth necessary for the development of high-speed IT business services, but in the short term prices are continuing to become more affordable. This will lower the operating costs of the SME sector in Ghana significantly,” Odoi said.

“Demand for IT solutions to increase efficiencies is growing steadily,” Herman Chinery-Hesse, chairman of SOFT tribe, told OBG. “We expect to see a lot of growth from SMEs in the upcoming years.”

Other sector players, including Praveen Sadalage, managing director for local operator BusyInternet, echo this need to provide better internet support for SMEs.

CYBER SECURITY: In 2012, during Ghana’s involvement in a court case between a US hedge fund and the government of Argentina over the impounding of a naval ship, its Ministry of Justice was briefly hacked. This issue has raised the profile of cyber-security issues, salient even in a country where the highest estimates of internet penetration only touch 30%. “Traditionally, cybersecurity has been the last thing many companies in Ghana would consider paying for, but there is increased emphasis and awareness of the need to deal with cybersecurity and cyber-fraud within Ghana,” Ohene explained. However, the private sector is taking note. In May 2013, the Ghana-India Kofi Annan Centre of Excellence in Accra hosted a forum on cyber-security. At the event, the Bank of Ghana unveiled public documents related to its public security strategy in an effort to encourage other local financial institutions in Ghana to standardise cyber-security policies across Africa.

The NCA and NITA have successfully developed a Computer Emergency Response Team (NITACERT) to deal with extraordinary situations and, more broadly, to assist in coordinating information security polices between government agencies. Under Article 141 of the Electronic Transaction Act (ACT 2008), Ghanaian security agencies have the right to confiscate the access points of those engaged in various types of cybercrimes, including cyber fraud, among others.

NITA’s cyber security goals include the relocation of as much inter-Ghanaian web traffic to within the country’s borders. According to the GISPA, 45% of the nation’s web traffic is already entirely domestic. In the past, some ministry websites were even hosted on servers outside of Ghana, which limits the government’s ability to respond to threats or illegal activity.

As a response, the NITA has sought to develop the National Data and Intelligence Centre. This GHS35m ($18m) project will allow for the storage of national data as well as the preservation of official documents, local and foreign. HP is tasked with providing all the server and storage infrastructure, while Alcatel-Lucent will manage the facility for three years after work on the project is completed. Under the terms of the contract, HP is committed to training NITA personnel in the management and maintenance of the facility. The sevenstorey building, located in Accra, will be backed up with a fill-over site in Kumasi. The Kumasi location will come on-line in the second half of 2013, and the primary data recovery site is expected to be complete by end-2013.

OUTLOOK: At present, Ghana’s IT sector will be driven by state spending on its e-government programmes such as the Eastern Corridor project. In the medium term, as it grows, the private sector will begin to play a larger role in the development of the IT industry as more of the nation’s businesses begin to follow the government’s lead and move online. According to a recent survey by US-headquartered consulting firm Dalberg, 80% of Ghana’s SMEs were optimistic about the potential of IT solutions for their businesses.

Infrastructure has improved dramatically in recent years, offering a surplus of capacity, which should help pave the way for growth in the medium term, although additional upgrades will be necessary in the coming years to improve last-mile connections and ensure that more advanced services are feasible for end-users.

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The Report: Ghana 2013

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