Ghana – land of Gold, land of technology-Overview of ICT Sector

Kwami Ahiabenu,II

Introduction

Ghana can be counted among leading countries in West Africa's information and communication technology (ICT) space; its industry is growing with new developments being recorded each passing day. In recognising the potential of ICTs as an important tool, the government and industry stakeholders are aggressively pushing to accelerate the growth and development of the country in all sectors. Ghana's Extractive Economy with weak Industrial Base

At independence, the Ghanaian economy was relatively robust and well supplied with natural resources, skills and finance with an average per capita income of US $600.(1957). Over time, however, the structure of the economy has not seen any significant change, it is still an extractive-based economy with gold, timber and cocoa constituting its main sources of foreign exchange.

Another key characteristic of its economy is a heavy dependence on international financial and technical assistance in all sectors, which has inevitably resulted in an enormous external debt portfolio. In order to tackle its mounting external debts, 2002 saw Ghana opting for debt relief under the Heavily Indebted Poor Country (HIPC) scheme, a World Bank and International Monetary Fund (IMF) debt relief initiative. As a result of the HIPC programme, Ghana will save a total of US$230 million annually in debt service costs over 2004-2013, according to IMF estimates. To deal with the growing levels of poverty, Ghana has also developed Poverty Reduction Strategy (GPRS) which chronicles its "agenda for growth and prosperity.

KEY ICT SECTORS IN GHANA AND INVESTMENT OPPORTUNITIES

If the performance of a stock exchange is a strong indication of a country's investment climate, then Ghana is an attractive prospect for those seeking a good return on investment. The Ghana Stock Exchange (GSE) is among the best performing markets in the world. In 2003, it outperformed the effective yield of the benchmarked 91 and 182 day Treasury bills with market capitalisation rising by 104% while market turnover in value terms was up 335%.

Furthermore there a rising number of entrepreneurs running a number of successful ICT and ICT-enabled businesses, a strong indication of the significant potential for growth of ICT enterprises in Ghana.

The ICT sector is enjoying sustained growth in key areas such as ICT training, internet service provision, business outsourcing processing, telecommunications and software.

Telecommunications
Telecommunications remains the top growth area both in the area of fixed and mobile telephony, though mobile telephony is the leader in this sector; currently there are two national fixed line operators in Ghana – Ghana Telecom (GT) and Westel.

Westel has not been able to meet its rollout obligations as a second national operator and the National Communication Authority (NCA) initially imposed a fine of a little over US $71 million on the company. While through government intervention the figure has being reduced to US$25milion, Westel continues to mount a court battle to avoid paying the fine.

Generally, GT remains the biggest ICT player in Ghana by the virtue of its combined fixed lines; mobile telephony, international bandwidth wholesaling and ISP service offerings.

Mobile Telephony
Long waiting periods for fixed telephony – in some cases up to a year - plus limited availability in most areas of the country, has fueled the rapid growth of the mobile telephony business in Ghana. With four mobile operators, namely GT (One Touch) Milicom (Mobitel), Scancom (Spacefon) and Cell Tel (Kasapa) servicing the needs of an estimated one and half million mobile phone subscribers. Spacefon remains the market leader with 800,000 plus subscribers. Furthermore, with the recent introduction of advanced mobile communications technology such as General Packet Radio Service (GPRS), the operator is able to offer multimedia services including Internet browsing.

Kasapa prides itself on being the most inexpensive provider of cellular calls. Its business model has to date proven to be highly successfully, cost effectively offering cheap call rates by avoiding the use of fancy technology. It remains the only non-GSM cellphone provider to date, relying rather on analogue technology, and offers free activation and starter packs.

Mobitel is Ghana's first cellphone company, and initially dominated the industry as a leader for some time prior to the introduction of competing operators. Unfortunately, it did not recognise that GSM was the driving force of mobile telephony, and thus it did not rush to implement the technology. Failure to capitalise on this market current cost it dearly as competitor Spacefon introduced GSM and subsequently took a very significant share of the market. In the interim, however, Mobitel has successful implemented its GSM system and it is working hard to gain market share.

With a strong sales drive, One Touch was dominant for some time, but the company has taken a decision to stop selling services to new subscribers due to lack of capacity on its switches. It recently expanded its network significantly and it is poised to take a healthy proportion of the growing Ghanaian cellular market.

Developing human capital for ICTs
Ghana has adequate human resources to drive ICT growth and development, but faces the well documented issue of the significant skills gap that persists in Africa, especially in the high level ICT skills area. This situation is compounded by a brain drain effect, where top professionals - including ICT-trained individuals – are lured away to First World countries. Currently there is enormous demand for ICT training, which presents a host of investment opportunities for entrepreneurs.

The ICT human resource landscape is characterised by four types of ICT training opportunities. At the upper level, tertiary institutions - mostly universities - are focused on producing computer science, engineering and information system graduates. In recent times, an increasing number of private universities have initiated operations in Ghana, with most providing ICT-based training, filling the training gap resulting from the lack of capacity of public sector universities.

The second type of training is competence-based instruction, which is aimed at producing specific ICT skills as required by industry verticals. This level of training is a niche market with few institutions offering services in this area; there is therefore a significant level of opportunity that can be tapped by appropriate providers.

The next level of training is end user training at the mass market level. There are a number of training schools providing service in this area; at this level the market is somewhat saturated.

A growing phenomenon is teaching computer literacy in schools. This opportunity carose as most formal schools in Ghana do not provide computer literacy. With many schools now outsourcing their training needs to third parties instead of developing their own computer centres, opportunities exist for providers of such facilities and equipment to address the market need for basic computer literacy at the school-learner level. The Ministry of Education is encouraging and working with such training schools, but it is constrained by lack of a policy to guide the process, as well as the absence of predefined ICT curriculum for the schools.

Internet Service provision
Internet service provision is also another area of considerable growth and opportunity in Ghana. There are a number of ISPs working under an industry body, Ghana Internet Service Providers (GISPA) which is working to regulate the provision of Internet connectivity on the country. The success of the body in regulating the industry has been demonstrated in a recent case where Ghana Telecom was offering cheap bandwidth through its ISP division, while selling at a higher price to other ISPs - GISPA successful negotiated price reduction to create a fair environment in which the ISPs could conduct their business.

Though a considerable number of end users make use of dial up Internet access, most Ghanaians tend to use the Internet at public access cyber cafes, which are dotted all over the country. However, due to high costs including that of bandwidth, most cyber cafes in Ghana are struggling to break even.

Outsourcing in Ghana and Software Development
There are a number of outsource service provider companies in Ghana, including Affiliated Computer Services, Rising Data Solutions, AQ Solutions and Supra Telecom.

However, Supra Telecom has closed shop, since its parent company in the US filed for bankruptcy.

Ghana is positioned to benefit from outsourcing business opportunities, but it must establish an enabling environment including a pool of high quality yet affordable English-speaking computer literate workers as well as an inexpensive telecommunication infrastructure. Generally, Ghana has a long way to go before it can call itself a true outsourcing location.

Local development of software is becoming popular with a number of software companies and consultancies providing solutions in this area; some are already exporting their products. Local software development, however, remains an industry in its infancy and therefore presents an area of potential growth.

Government ICT
The Ministry of Communication is the leading government organ responsible for ICT in Ghana and is charged with the responsibility of coordinating government use of ICTs. In 2002, it developed an ICT for Accelerated Development (ICT4D) policy which articulates the vision of transforming Ghana into an information-rich knowledge-based society and economy through the development, deployment and exploitation of ICTs within the economy and society. The key focus of the government is to create enabling environment to nurture the development of the ICT industry in the country.

Challenges facing ICT development in Ghana
Perhaps the most significant issue facing development in Ghana is a reality that confronts many African countries – it has a cash-based economy with limited development of its financial services infrastructure. With over 80% of money in circulation outside the banking system, finding affordable loans and credit is very difficult if not impossible. This situation has lead to the small scale nature of most ICT businesses since they are constrained in their capacity to expand. Furthermore, the size of the ICT market is relatively small since most organisations which can benefit from ICTs products and services are slow to invest in this area.

Lack of policy implementation, lack of telecommunications infrastructure and poor regulatory environments are also affecting the growth and development of the industry.

Ghana's ICTs industry is highy visible internationally with a lot of opportunities yet to be leveraged. It has chalked up many successes but there is a long way to go for ICTs to contribute significant to growth and development of the country and overtake the traditional resources exports which include gold, cocoa and timber.