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Unlocking North Africa\ s ICT market [ITP.net (United Arab Emirates)](ITP.net (United Arab Emirates) Via Acquire Media NewsEdge) The North Africa ICT market continues to be a tonic for any palate jaded by the precarious regional political instability. Despite the tough economic conditions and political instability that have characterised North Africa in recent years, the ICT market has been more resilient than certain other sectors like real estate and banking. And although the Arab Spring dented the short-term economic growth outlook for the region, Business Monitor International (BMI) is forecasting growth to come in at an average of 4.2% over the decade to 2022. Research firm IDC is predicting the ICT market in North Africa will face radical changes in terms of adoption for new technologies such as cloud computing, mobility and big data. IDC said it expects Morocco to lead the change, with the market seeing major investment around cloud computing and big data. Ouafa Kathir, country manager – North and French speaking Africa at IDC, said the growing North African ICT market is set for further expansion in the coming years. Kathir said the market's previous growth was primarily driven by large-scale government, telecommunications and banking infrastructure projects. However, said Kathir, it is anticipated that next-generation integrated ICT services that utilise the large-scale installed infrastructure will grow in order to meet increasing demand from businesses that prioritise quality and efficiency of services. Khwaja Saifuddin, senior sales director, India, Middle East, Africa and Turkey at WD, agreed and said the biggest technology effect that is emerging in the region is that IT utilisation and reach rates are increasing and readily available through multiple channels, which encourages IT use to solve different challenges and satisfy business and personal needs on all levels. Saifuddin said the IT market is picking, even though it hasn't come back to the pre-Arab Spring levels. "As the political situation settles down, we are seeing an increased number of IT investments from both governments and businesses," Saifuddin said. The political stability is what Santosh Varghese, general manager, Digital Products and Services at Toshiba Gulf FZE believes is behind the consumer confidence and demand for electronics, IT products and services in North Africa. Varghese said as political stability is slowly returning to countries impacted by the Arab Spring, the markets are witnessing a return of strong consumer confidence and demand for IT solutions. "Libya, Egypt and Algeria are showing signs of consumer confidence and IT demand across various segments of the industry," he added. He added that while many vendors, retailers and resellers see the growth in the region, they should not use these markets as dumping grounds to compensate for loss of sales in bigger and more mature markets in the region. While there is no denying that North Africa is not as mature as other regions in the Middle East, the IT sector is catching up with the rest of the markets and is also a hungry consumer of new technology. Manish Punjabi, channel marketing manager (MEA) at Alcatel-Lucent Enterprise, said North Africa is a region in transition, with urbanisation and the rise of the middle-class consumer fuelling IT growth. Punjabi said evidence of what is to come can already be seen in North Africa's major cities, where consumers have disposable income, more than half have Internet-capable devices and 3G networks are up and running. "There is a growing wave of innovation as entrepreneurs and large corporations alike launch Web-based ventures, from e-commerce sites and digital entertainment platforms to mobile health technologies and online educational content," Punjabi said. He explained that governments have placed Internet-driven growth firmly on the agenda: Rwanda, Morocco, and Nigeria, for example, have ambitious plans to expand high-speed Internet access to most of their populations. "Algeria has one of the highest rates of urbanisation in Africa, which further contributes to growth potential in the consumer goods industries," he said. Adel Elnaggar, country manager – Egypt, Libya and East Africa, at security appliances vendor Fortinet, agreed and said the IT landscape in North Africa is yet to reach a maturity level that is on par with other developing countries in the region. Elnaggar said investment priorities have shifted as a result of the Arab Spring and there has been a freeze on government IT spending over the last three years. However, Elnaggar said there is constant growth in the telecommunications sector, which is witnessing a steady rise and driving investment in large IT projects. A large part of the renewed IT spending and growth has been brought about by governments as they increase investments in modernisation projects in order to better tackle challenges around skills, cost of delivering services to citizens and the increasingly complex IT threat landscape in the region. IDC's Kathir pointed out that over the last few years, the ICT market in North Africa has been characterised by a growing awareness on the importance of IT investments among all market players especially CIOs. She said the market has seen the emergence of several national distributors commonly known as "local champions" and also the installation of major global IT distributors. "Since, the ecosystem of ICT has been changed by these new entries, major brands have been brought to review their channel strategy and recruit new ones to meet the consumer's expectations," Kathir said. Consequently, added Kathir, the role of distributors and resellers has become crucial to address the specific needs. Toshiba's Varghese reiterated that the role of local distributors and channel partners shouldn't be overlooked as the market moves to unlock potential for growth. Will Liu, general manager – Africa at TP-LINK Middle East, concurred and said there is always a challenge when building a brand and business in a new region and North Africa is no different. Liu said having partners and a local team in-country across the region has more advantages. "We have been able to solve problems with our partners because we have feet on the ground," he said. Liu said TP-LINK is aiming to gain success with partners with the traditional strong product lines in North Africa. Mark Zhao, country manager, KSA at TP-LINK Middle East, added that although North Africa has passed through a tough period over the last few years, there are many developments that are underway and will lead to most countries in the region having better networking and telecommunications infrastructure. For example, said Zhao, Casablanca in Morocco is upgrading its city's networking infrastructure. "3G network coverage is getting rolled out across Algeria, while at the same time, the region as a whole has rapidly grown and is expected to see further growth in ICT spending," Zhao said. Kathir agreed and pointed out that a number of international providers such as Capgemini, Atos, CGI (Logica), IBM, HP, Ericcson and Dell have set up large presence in North Africa mainly in Morocco, which is seen as an ICT hub and an entry point to North and French African markets. Pundits says that as the competition becomes very strong, the quality of services has increased significantly within the market. According to IDC, that will be sufficient in covering the big gap between market needs and the available workforce. At WD, Saifuddin added that the geo-political situation and currency fluctuation remains a top concern and challenge for sustainability for pretty much all of the region. This, he said, is followed by limiting customs and financial transaction regulations which are present several countries in the North African region. That aside, Saifuddin pointed out that the biggest trend emerging in North Africa is the desire to be connected to the Internet and this is increasing at both speed personal and household level. "Unlike in other parts of Africa where people have embraced mobile devices such as tablets and smartphones for Internet connectivity, in North Africa, this is happening predominantly through desktops and notebooks," he noted. Alcatel-Lucent's Punjabi observed that in many African countries like South Africa and Kenya, mobile Internet has leapfrogged access by PC, but not so in North Africa, where the majority of daily Internet users connect using either a desktop PC or laptop. "However, things are rapidly evolving and mobility is catching up," he said. Punjabi said the Algerian government has ambitious e-government goals, including the creation of 100,000 jobs. This strategy includes increasing ICT usage in public services, companies, and households, he said. Punjabi said the Internet is creating new jobs in fields such as data and records management, customer service and IT support, areas where the channel can render its expertise. Toshiba's Varghese agreed and explained that some of the challenges for a sustainable IT channel business include low bandwidth in communication, administrative bureaucracy, credit issues, security and safety, high cost of insurance and secured credit. Although the North Africa IT market has several hurdles that differ from country to country, deman for IT products and services has been growing steadily, putting the region on top of the agenda for vendors, regional distributors, solution providers, systems integrators and retailers. IDC Kathir said the North African market continues to massively adopt new technologies across all verticals, which will boost the need for higher levels of IT expertise. "CIOs across the region will face IT staffing issues (in relation to the recruitment, retention, and development of qualified IT staff)," she said. WD's Saifuddin said the channel is evolving, but there is still room for a faster evolution which will enable increased value addition and profitability for the channel. "There are a couple of key opportunities that are coming with the increased number of connected households such as NAS or personal clouds, which we see untapped potential for partners to fulfil and," he said. (c) 2014 ITP Business Publishing Ltd. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |