The trend towards knowledge- and service-based economies is increasingly widespread among emerging and frontier markets, whether they are resource-rich or resource-poor. The benefits of driving growth in the tertiary sector are well known, but the recipes for success are not. However, Ghana’s economic and political stability, combined with its status as a regional standout in IT development, are positive indicators that its efforts will pay off. The country is among the leaders in Africa when it comes to IT penetration, while broadband connectivity has increased dramatically over the past three years, thanks to three new undersea links: the West Africa Cable System (WACS), Main One and Glo-1. Yet, while the new landings have had an impact in Accra and several other urban centres, fixed connectivity is still limited, and the national fibre-optic backbone has yet to have a measurable effect. The development of 3G and 3.5G networks by telecoms operators has helped to fill in some of the gaps, but pricing is still an issue for the majority of the population. This has not stopped the IT service and content industries, particularly the nascent business process outsourcing (BPO) and software segments, from playing an increasingly active role.

QUANTIFYING PROGRESS: “The pace of IT development in Ghana is strong, however, it is perhaps not as strong as it could or should be,” Ernest Brown, the president of the Ghana Internet Service Providers Association (GISPA) and executive director of local internet service provider (ISP) Zipnet, told OBG. Indeed, while mobile penetration in Ghana is well above the averages for both Africa and the developing world, internet penetration falls far below both.

The majority of individual users in Ghana frequent internet cafes and as such the penetration rate is much higher for internet usage, compared to the number of internet subscriptions. During the first decade of the new millennium, internet usage increased from just 0.15 users per 100 inhabitants in 2000 to 9.55 users in 2010, according to data from the UN’s information and communications technology (ICT) development arm, the International Telecommunications Union. The average for the developing world was 24.4 users per 100 inhabitants. Broadband penetration in Ghana remained at 0.21 lines per 100 inhabitants in 2010. A National Broadband Strategy (NBS) was drafted by Ghana Connect (GC) – a multilateral body consisting of organisations from the public, private and academic sectors – in 2009 to provide a framework for the development of broadband throughout the country. It aims to achieve a 10% annual increase in broadband penetration and a bandwidth boost to 2 MB, from 256 KB, between 2010 and 2015. It also seeks to reduce the cost of broadband by 80% while driving penetration to 50%.

GOING ONLINE: Ghana first connected to the internet in 1989 and by 1995 it had registered the “.gh” domain name with the Internet Assigned Numbers Authority, the international organisation responsible for top-level internet domain registries. Up until 2001 when the first undersea cable, SAT-3, was brought into the country, ISPs were reliant on dial-up and satellites for connectivity. The landing of the SAT-3 in 2001 was followed rather quickly by the creation of the ICT for Accelerated Development (ICT4AD) programme, the government’s broad strategy for developing the ICT sector and expanding its role in the wider economy. The arrival of mobile broadband networks, satellite-based very small aperture terminals, and, most recently, WiMAX technology have helped drive penetration over the past decade. However, the recent arrival of several additional undersea cables will help propel the extension of Ghana’s terrestrial fibre-optic network in the long term.

OVERSIGHT: The number of ICT-related government agencies has increased over the part 10 years. The Ministry of Communications (MoC) is responsible for setting the broader agenda and policy. Within the MoC, the National ICT Policy Plan and Development Committee was formed in August 2002 specifically to oversee the MoC’s ICT-related policy. In 2008 a decision was taken to create a separate entity to act as the ICT policy implementing arm of the MoC, and following the passing of Act 771, the National Information Technology Agency (NITA) was established. Since its inception NITA has, among other things, developed e-governance services (see analysis).

The National Communications Authority (NCA) licenses and regulates all communications-related businesses and is well known as one of the more liberal regulators in the region. It was established by the parliament in 1996 under Act 524, though its powers were slightly altered in 2008 under Act 769. In 2011 the parliament began considering a bill expanding the NCA’s power, granting it the ability to approve the purchase of shares of any firm under its jurisdiction, though the bill has yet to be passed.

ICT4AD: Ghana’s ICT4AD initiative is the government’s long-term strategy for expanding the sector. Created in 2003, the ultimate goal is to “transform Ghana into a middle-income, information-rich, knowledge-based and technologically driven economy and society”. Many of the programme’s objectives focus on the implementation of ICT for the betterment of individuals, and as such call for the inclusion of ICT assets in human resource development, education, health and the country’s largest employer – the agriculture sector. The initiative also seeks to develop the BPO segment as well as a technology-driven, light modern industrial sector. To meet these aims budgetary and tax incentives are being used to encourage private sector investment in human resource development and community-based ICT initiatives. The programme, which runs from 2003-22, is broken up into five four-year phases, known as “rolling plans”. Currently, the third phase (2011-14) is under way.

CONNECTIVITY: In 2001 a consortium of international telecoms operators, led by South Africa’s Telkom Group, linked much of West Africa to Europe via Portugal and Spain, with the SAT-3 undersea cable bringing fibre-optic connectivity to Ghana for the first time. For much of the following decade, the 120-GB-per-second capacity of the SAT-3 (now upgraded to 340 GB) was the entirety of the country’s fibre-optic capacity and the resulting bottleneck kept prices out of reach for the overwhelming majority of homes and businesses. The SAT-3 connection is managed by the National Communication Backbone Company, a wholly owned subsidiary of Vodafone Ghana.

The SAT-3 monopoly over terrestrial bandwidth in the country ended when the Main One cable arrived in 2010. The $240m Main One, which also connects Portugal to South Africa with several landing points in West Africa, has a capacity of 1.92 TB per second, over five times that of SAT-3. Following the Main One cable, the $250m Glo-1 submarine cable was installed in 2011 by the Nigerian firm Globacom, which also started offering mobile voice and data services in the country in May 2012. Glo-1’s initial capacity of 640 GB per second has already been upgraded to 2.5 TB.

The country’s fourth undersea cable connection, known as WACS, became operational in Accra in May 2012. WACS, which cost an estimated $650m, has twice the capacity of the Glo-1 cable – 5.12 TB. WACS was funded mainly by African telecoms operators, with South Africa’s MTN the largest single investor.

“Landlocked countries are requesting bandwidth and cannot be ignored. Laying cable across Ghana is a challenge, but the potential is endless,” Josef Odoi, the country manager of Main One Cable, told OBG. Another 5.12-TB cable system – the Africa Coast to Europe (ACE-2) – is due to arrive in Ghana towards the end of 2012. The $700m, 17,000-km cable system will connect France with South Africa.

These landings will combine to give Ghana a bandwidth capacity of 15 TB by the end of 2012, an enormous increase from the 340 GB available just three years ago. While this will certainly increase speed and capacity in Ghana, it will more importantly slash prices. The WACS cable alone has been predicted to cut broadband costs in the country by a third. The arrival of the Main One cable in 2010 brought down prices of an E1 connection (2 MB of connectivity) from $6000-7000 prior to its landing to $3000. Today, E1 connections cost roughly $1000. Similarly, the cost of STM-1 connections (155 MB), which were over $80,000 three years ago, have decreased from $52,000 in 2011 to $30,000 in 2012.

HARDWARE: Lower broadband prices are just part of the equation and alone will not be enough to meet the GC’s goal of increasing the penetration rate to 50%. Hardware prices for laptops, smartphones and even most netbooks are still well out of the average citizen’s reach. Third-party vendors used to dominate the computer and handset market, with many customers unsure as to the authenticity of goods. However, since the government reformed its value-added tax on imported computer components in 2003 and import duties on mobile phones in 2008, several large international retailers, including Samsung, Nokia and LG, have entered the market.

The result of these entries to the market has been a significant drop in handset prices, a decrease in black market copies and a shift to more sophisticated smartphones, most of which offer GPRS and Wi-Fi capability. However, according to Roland Agambire, the CEO of rlg Communications, industry needs to play a more proactive role. “The ICT sector is vibrant and ready to move, but for Ghana is to become an ICT producing country, the initiatives must be implemented by the private sector,” Agambire told OBG.

THE EXCHANGE: Efforts to maximise the efficiency of available bandwidth have been under way for some time. The Ghana Internet eXchange (GIX) was launched in 2005 by the GIX Association, a private venture established by the Ghana Internet Service Providers Association (GISPA). GIX allows users to exchange traffic locally. This is especially useful as there is very little local content produced within the country, meaning a visit to a Western news site or mail service often results in data arriving from Europe or other far off destinations eating up vital bandwidth. GIX pulls data down from outside the exchange, allowing users inside the country more direct access.

Zipnet reported average bandwidth savings of 20-30% per month thanks to GIX. In addition to saving bandwidth, the exchange reduces network latency and transit time, as more data stays on the local network. Currently, all ISPs and telecoms operators are connected to GIX, pushing the system to capacity, so funding for its expansion is currently being lined up.

THE LAST MILE: Internet access outside of Ghana’s major urban centres is very hard to come by. With economic development typically arriving to the country’s rural areas at a slower pace, it will likely be some time before ISPs consider many rural towns and villages commercially viable. In the meantime, several “last-mile” initiatives are under way to bring connectivity to the countryside. As part of the e-government network infrastructure being developed by Huawei Technologies for NITA, 29 WiMAX towers have been deployed across the country (see analysis). The WiMAX stations that have already been installed are due to receive an upgrade to long-term evolution technology during 2012. Though intended to be specifically established for local district government offices at first, the towers have also been providing connectivity to rural schools, hospitals, post offices, police stations and community centres.

THE PLAYERS: Vodafone’s purchase of Ghana Telecom in 2008 has given it ownership of the National Communications Backbone Company (NCBC), a functionally independent firm responsible for developing the country’s fibre-optic network. ISPs lease their bandwidth from the NCBC. Ghana is home to 24 major ISPs, though the NCA has authorised 167 firms to provide services. Vodafone Broadband, MTN’s EasyNet, Zipnet, Africa Online, IS Internet Solutions and K-Net are among the 20 members of GISPA. Lobbying groups and industry bodies have sprung up to cater to the proliferation of new players both in terms of service delivery (such as GISPA), content innovation and development (the Ghana Association of Software and IT Services), as well as infrastructure operations (such as the Ghana Network Operators Group).

BPO: According to a study commissioned by the government and conducted by Hewitt Associates in 2008, the BPO sector in Ghana could potentially generate 37,000 direct jobs, 150,000 indirect jobs and $750m in revenue between 2009 and 2014. According to Tony Dadzie, managing director of the Computer Warehouse Group, ““Managed services are becoming more and more popular due to high costs and lack of know-how in certain industries in Ghana. Data centre provisioning and positioning in order to provide hosting services is much more sought after now.”

However, despite a great deal of talk surrounding the potential of the budding BPO industry, there are still obstacles preventing its maturation. Chief among them is a lack of qualified personnel, in part due to a shortage of training capacity, though strides have been made in recent years. The IT Enabled Services Secretariat of Ghana (ITES-GH), which was set up to act as an “incubator” for the industry, estimated that in 2009 direct employment in the BPO sector totalled just 3000, spread among 20 known firms.

Yvette Adounvo Atekpe, the regional managing director of IS Internet Solutions, however, told OBG that the problem was not the lack of skills, but the difficulty faced by companies in getting funding. “There is big potential for BPO and we have the correct skills locally. However, there are not a lot of companies here focusing on it, the main reason being the difficulty in getting financing,” she said. The price of bandwidth used to present an obstacle, but recent and future decreases should be sufficient to bring overhead costs to a reasonable level. Ghana does have significant advantages over competitors with regards to BPO services, such as low costs and a large English-speaking population, and the country generally receives high marks as a BPO destination.

Indeed, in the 2009 AT Kearney Global Services Location Index Ghana was placed 15th globally and second in Africa, behind only Egypt, in terms of overall attractiveness. It was ranked the number one country in the world in terms of financial attractiveness, largely due to the work of ITES-GH. Several incentives have been created to stimulate growth in the BPO sector, including various free zones that offer full tax breaks for 10 years, followed by an 8% rate thereafter, as well as full exemption on Customs duties for equipment imported for research and development. Despite ranking high in AT Kearney’s survey for BPO desirability and attractiveness, Ghana is still behind rival South Africa in terms of size. The country is trying to emulate South Africa’s successful cluster model, implemented in Cape Town, by creating IT-specific business parks; however, its primary challenge remains providing a steady supply of talent for the industry. Indeed, significant efforts have been put into reforming Ghana’s tertiary education system and creating IT and BPO training facilities to better do this, but there is still a long way to go.

HUMAN RESOURCES: The human element remains a key challenge for Ghana’s ICT industries. Zipnet’s Brown told OBG, “General ICT illiteracy is hindering growth in the industry,” and added that the academic curriculum was also not strong enough to provide the necessary skills required by the industry.

As part of efforts to attract more students to the field of ICT, both the private sector and the government have offered free training seminars and established institutes, such as the Ghana-India Kofi Annan Centre of Excellence in ICT. The centre was established in 2002 and aims to accelerate the development of ICT not just in Ghana, but also in the whole of West Africa. In addition, the Internet Society, together with the Ghana Network Operators Group, provides workshops with training applications for IT network engineers. At a more grassroots level from 2010-12, the government is funding basic ICT training programmes for more than 12,000 people to promote digital inclusion at the community level.

However, Ghana’s software engineers, graphic designers and other IT service workers are rated highly. “We have never had a problem with the quality of IT resources in Ghana. In fact, for the most part, they are as good as you will find in a developed economy. The issue has always been quantity,” Alan Triggs, the former vice-president and head of operations for Ericsson sub-Saharan Africa, told OBG.

Efforts are under way to boost the numbers. Better Ghana ICT is a government scheme designed to make ICT more accessible to students. Under the initiative, 100,000 laptops are being distributed to students across Ghana, along with 5000 government scholarships. Indeed, increasing ICT’s overall role in education, and particularly the number of tertiary students enrolled in ICT-related programmes, is a vital part of the government’s overall ICT4AD programme.

ICT INFRASTRUCTURE: Although their replicability is unproven, creating IT-specific business parks is an oft-mimicked model for stimulating private sector innovation and growth, with Silicon Valley in California generally cited as the inspiration. Countries from Egypt to Morocco, Nigeria to South Africa and Kenya have all established technology “clusters”, and in May 2012 Ghana began construction of its very own National Information Communication Technology Park outside of Accra. The park, expected to be completed in 2015, will cover 20 ha, with $15m worth of funding provided by the World Bank’s International Development Association and the remainder provided by the Ghanaian government. The park is expected to generate 10,000 jobs and host a variety of IT services and BPO firms. It was also announced that the MoC had secured $5m worth of financing to start construction of a second ICT park located on land provided by the University of Cape Coast. Work on the second park is slated to begin in September 2012.

Meanwhile, another initiative to increase the availability of infrastructure for IT start-ups will convert 360 dormant post offices into ICT centres nationwide. The scheme is sponsored by the Ghana Investment Fund for Electronic Communications (GIFEC), and has connected 13 pilot centres to the internet. GIFEC is also creating 230 community information centres to bring ICT services closer to rural markets, with the long-term goal of increasing awareness and availability of ICT for rural towns and villages.

OUTLOOK: Ghana’s ICT sector is relatively sophisticated by regional standards, but has yet to contribute significantly to the country’s overall economic development. However, the pace of progress is expected to accelerate as the country builds its IT capacity from the ground up. “We are striving to take a holistic approach to ICT development, working simultaneously on the development of infrastructure, human resources, e-governance and all other facets of ICT,” William Tevie, the director-general of NITA, told OBG.

ICT4AD is comprehensive, but its scope is difficult to implement. The bandwidth boost with undersea connectivity has enabled the development of a national fibre-optic network. Thus, despite the challenges, the sector can continue to grow, elevating its effects and influence on Ghana’s economic development.