Infrastructure, digitalisation set pace for ICT sector growth in Cote d'Ivoire

The development of the ICT sector in Côte d’Ivoire has been led mostly by the fast expansion of telecoms services — and mobile activity in particular — over recent years. As with many frontier markets, the IT segment of the sector, which includes hardware and software development, cloud computing and networking, has lagged somewhat behind.

Although this reality is equally visible in many other West African economies, consumer and business usage in the country continue to evolve at a slower pace, hampered by the lack of sufficient human resources and the still incipient emergence of a domestic IT cluster. Progress in this segment is something the government is hoping to achieve through an aggressive infrastructure programme, new regulatory frameworks and proposals for e-commerce and e-government services.

Size & Scope

When telecoms activity is included, the ICT sector has become an important contributor to the country’s economy, accounting for some 8% of Côte d’Ivoire’s GDP, according to government figures. In its 2016 “Global Information Technology” report, the World Economic Forum’s annual networked readiness index ranked Côte d’Ivoire 106th out of 139 countries for the development of its IT sector, a considerable improvement on its previous ranking of 115th.

Although the country still fared better than some regional players like Nigeria (119th), Senegal (107th) and Gabon (125th), Côte d’Ivoire is nonetheless ranked behind neighbouring Ghana, at 102nd.

In 2016 the country’s efforts to improve connectivity have started to see significant process. The total number of connections in the country reached 7.6m in the third quarter of 2016, according to figures from the Telecommunications/ICT Regulation Authority of Côte d’Ivoire (Autorité de Regulation des Télécommunications/TIC de Côte d’Ivoire, ARTCI). Sector authorities hope that by 2020 some 90% of the population will have internet access and that 50% of Ivorians will utilise a high-speed broadband connection.

The report does, however, point to considerable improvements in some specific categories. The political and regulatory environment was ranked 51th, while the level of business usage and governmental usage of IT reached the 65th and 80th positions, respectively, underlining the positive results from government efforts to align the sector with the country’s economic expansion since 2011.

“Globally, sector performance has improved considerably over the past five years, thanks to all the measures that were implemented by sector authorities to boost the sector. This has happened both in the legal and regulatory sphere, but also in the overall environment for IT companies to emerge,” Patrick M’Bengue, president of the Group of ICT Sector Operators (Groupement des Opérateurs du Secteur des Technologies de l’Information et de la Communication, GOTIC), a sector association of private operators, told OBG.

One of the key challenges confronting the sector — and a common problem throughout the region — is the affordability of IT access, for which Côte d’Ivoire was ranked 127th. In terms of overall IT skills, the country was in the 123rd position, while for infrastructure and digital content it was ranked 110th. These segments are also considered important barriers to the sector’s expansion.

Funding

Additionally, authorities have been aiming to channel private and public money into the ICT sector. In April 2015 the government was able to establish a credit facility to help finance sector initiatives. The syndicated loan of €152m, supported by BNP Paribas, Société Générale, Ecobank and Bank of Africa, will have a repayment period of seven years at a rate of 5.75%, according to international media reports. The money will be channelled towards a handful of critical sector projects. Besides helping to finance the establishment of the country’s 7000-km fibre-optic broadband network, authorities also plan to use the money to set up over 5000 internet access points in rural areas of the country, as well help support the “One Ivorian, One Computer” programme, which will distribute 500,000 computers to increase IT usage among the population.

Regulatory Changes

The government has been able to strengthen its role in the sector’s development in recent years, especially after the establishment of the National Agency of the Universal Service of Telecommunications (Agence Nationale du Service Universel des Télécommunications, ANSUT) in 2012. Working under the Ministry of Post and ICT, ANSUT is tasked with steering the public digitalisation efforts, as well as regulating sector operators. A series of legal measures were implemented In order to accelerate the integration of the country’s private and public sectors with the digitalisation efforts. In July 2013 the National Assembly adopted new laws to govern electronic transactions and e-commerce activities. The law also validated the use of digital signatures, a necessary founding step for the establishment of a digitalised public administration. The same year saw the approval of a law to strengthen the protection of personal data, setting-out the legal privacy guidelines for online users in the country.

E-Commerce

These regulatory reforms provided a framework for the emergence of e-commerce operations, several of which popped up in the following months. In 2013 international media and emerging markets-focused telecoms firm Millicom launched several online commerce platforms, including Hellofood, a food delivery service.

Furthermore, Nigeria-based online retailer Jumia, owned by Rocket, sells mobile phones, perfumes, jewellery and home goods to Ivorian consumers. Several other local brick-and-mortar retailers have since created their own online platforms. In 2016 regional retailing group CFAO launched Africashop, offering Ivorians online access to several brands. Prosuma, a local supermarket firm, also announced the establishment of Yatoo, its own online market, scheduled for 2016.

Fraud & Cybercrime

Another important regulatory step for the sector taken in 2013 was the establishment of a law to reduce the threat of cybercrime. The new law followed the previous establishment of the Platform for Fighting Cybercrime (Plateforme de Lutte Contre le Cybercriminalité, PLCC), which, since 2012, has acted as a task force to collect information and prosecute online crime offenders.

According to government figures, financial losses from cybercrime between 2009 and 2015 totalled CFA30bn (€45m), and authorities are aware of the negative impact that online crime has on IT adoption within the country as well as its image abroad. The number of individuals prosecuted as a result of PLCC investigations rose from 63 in 2014 to 159 in 2015.

Infrastructure Drive

Expanding internet connections in the country has been a central priority of the of government’s programmes. Completion of the nationwide broadband network will be an essential step to create the necessary conditions for sector expansion and to improve internet speeds. The project began to take shape in 2012, and will lay down almost 7000 km of fibre optic infrastructure over the course of three separate phases, with end result being coverage for the whole country.

The National Broadband Project is expected to cost CFA106.8bn (€160.2m). A 622-km link, to cover the eastern part of the country between Bouna and Grand Bassam, was completed in late 2015. The second section, which extends 1400 km between Ferkessédougou in the north to the port city of San Pedro, is scheduled for completion before the end of 2017. Work on the construction of the third section of the network, extending for 5000 km along central Côte d’Ivoire, began in April 2016 and is expected to be completed in 2018.

However, the project has faced a series of obstacles. In early 2016 the government had requested that Chinese contractor Huawei perform work on about 1000 km of previously installed fibre-optic cables, on a section linking San Pedro to the economic capital Abidjan. The infrastructure had been laid down between 2012 and 2015, but did not fulfil some of the contracted quality criteria.

It Usage

Bolstering ICT’s impact on the economy will be dependent on expanding its use across businesses. In this regard, similar to neighbouring markets in West Africa, IT use is more prevalent in foreign operators than domestic ones. “Obviously the multinational companies are fully implicated with their IT strategies, because they come from their head offices. The bigger national companies of the Ivorian capital have started to develop and digitalise their processes. However, the smaller and medium-sized companies operating in the country are behind in this aspect,” M’Bengue told OBG.

A recent study by Deloitte, measuring the digital maturity of Ivorian businesses, found that most domestic companies’ IT usage remains largely dominated by basic tools such as email and internal network, and that more advanced IT instruments such as cloud computing, big data or customer relationship management systems are only marginally used.

“The concept of infrastructure sharing is in its infancy in Côte d’Ivoire, hence a limited use of data centres and cloud computing,” Serge Kouakou, director of Orange Business, told OBG. “Because of their advantages with regards to cost saving, efficiency, security and so on, uptake is just a matter of time.”

The Deloitte study also found that the level of IT usage was more relevant in specific sectors, such as telecoms, media, communications and retail. Overall, 58% of Ivorian firms spend between 1% and 10% of their annual budgets on IT, according to the study, while the volume of companies that had an expenditure level of 31% to 50% of their annual budget on IT amounted to a mere 10% of surveyed firms. This relatively limited level of IT spending illustrates the need for greater investment.

In hand with the promotion of digital technologies within domestic firms, the current economic environment is also an opportunity to galvanise Ivorian IT providers to establish themselves in the market. To accelerate the process, sector operators point to the need to raise the level of involvement of domestic firms in governmental projects. “Once the fibre-optic cable network is operational, the government will seek to create IT centres to help propagate the use of new technologies outside of Abidjan. Access to electricity outside of the city will need to be developed, however,” Brice Landry Dally, CEO of Valsch Consulting, an Ivorian firm that specialises in telecoms and ICT, told OBG.

E-Government

In parallel with the establishment of the national broadband network, the bulk of governmental IT projects over the coming years are set to come from the implementation of the country’s ambitious e-government programme. Digitalisation of government services is specifically important for Côte d’Ivoire, where the political capital, Yamoussoukro, and the main economic hub, Abidjan, are some 230 km apart. Oversight of the e-government programme’s implementation falls under ANSUT. However, much remains to be done. In the recently published UN E-Government Survey 2016, Côte d’Ivoire was ranked 175th out of 193 countries and 38th out of 54 African countries. The classification falls below that of the previous report published in 2014, where the country was ranked 171st globally, a result of delays in the implementation of government plans.

Côte d’Ivoire’s national approach to e-governance strategy has been structured around three main steps. The first has been the implementation of legal reform to create the necessary institutional framework to regulate the protection of personal data, digital transactions and improve cybersecurity.

A second axis of development is to set up an intranet system to connect all government offices at a local, regional and national level. The system will allow state agents to exchange digitised documentation, communicate through video conference and integrate public administration systems.

These two initial steps are setting the stage for the third phase of e-government development, which aims to extend connection and digitalisation efforts into the country’s health and educational institutions. By connecting these critical institutions to a larger digital network the government will be able to effectively provide services to areas that have historically received less support than the larger urban areas. “IT integration can provide solutions to some of the most pressing issues in Côte d’Ivoire, particularly in the education and health sectors, by providing access to teachers and doctors to places that require it most,” Kouakou told OBG. The move towards a digital government will likely take several years to complete, with up to 200 modules making up the national e-government strategy. In late 2015 Bruno Nabagné Koné, minister of communications, digital economy and the post, stated that the three main goals of the current e-government efforts for the coming future were: to allocate an identifier number to each citizen; to establish a fully paperless administration; and to set up a database for public servants that allows the centralisation of all documents. “Once the fibre-optic cable is operational, the government will seek to create IT centres to help propagate the use of new technologies outside of Abidjan. Access to electricity outside of the city will need to be developed, however,” Dally told OBG.

Training & Incubation

Success in boosting the country’s IT sector will rely on a well-developed local talent pool. A set of measures to increase training for sector, involving public and private participation, are set to increase availability of human resources. China’s Huawei announced in late 2015 it will invest $1m to develop a training centre to be located at the African University for Information Technology and Communications located in Abidjan.

The university already offers bachelor’s and master’s-level degrees in a host of sector-related disciplines, and will remain a relevant player in the efforts to expand IT literacy.

A growing number of domestic and international instruments to support innovation are also expected to positively impact the ICT sector in the medium term. In July 2016 the Ivorian government, in partnership with the African Development Bank, launched a new Ivorian Fund for Innovation. The fund expects to channel $200m to support start-ups and firms focusing on technological innovation.

Outlook

Ongoing economic growth, combined with governmental measures to promote the sector, are setting the stage for the continued expansion of ICT over the coming years. One critical component for structuring the sector for the long term, however, will be securing an adequate volume of IT-savvy workers. This will depend, to a large degree, on government-led programmes to both train public administration workers to adapt to the ongoing e-government programme and expand the education and training possibilities for Ivorian graduates. However, as the private sector moves to adopt increasingly advanced IT solutions, in-house training within Ivorian firms will also make the difference in accelerating the adoption of IT.

Given the patterns of growth experienced by Côte d’Ivoire’s economy, the ICT sector is set to follow the development pattern in other sectors. However, improving conditions for domestic IT companies to thrive, as well as calling on them to participate on the government-led programmes taking place, will help ensure that the expansion taking place in the IT sector can be maintained for the coming years.