New opportunities for ICT start-ups in Côte d'Ivoire

Côte d’Ivoire has seen some significant developments in its ICT sector in recent years. As the number of internet users continues to increase, so have the opportunities for digital service providers. E-commerce platforms and other tech start-ups have also emerged, which serves as a testament to the country’s robust digital ecosystem. Moving forward, demand for ICT services is set to rise, particularly as the Covid-19 pandemic in early 2020 has led businesses, schools and government bodies to switch to remote working in response to travel restrictions. However, the sector still has some challenges to overcome. “The main challenges related to the ICT sector are the development of a wide security network to minimise the increasing risk of cyberattacks on public and private entities, the reinforcement of local data centres and investment in human resources in the field of new technologies,” Nongolougo Soro, director-general of SNDI, an Abidjan-based IT services firm operating in West Africa, told OBG.

Performance

According to the most recent quarterly report published by the Telecommunications/ ICT Regulation Authority of Côte d’Ivoire (Autorité de Régulation des Télécommunications/TIC de Côte d’Ivoire, ARTCI), the country’s telecoms regulator, sector revenue totalled CFA270bn ($464.1m) in the last quarter of 2019, compared to CFA300bn ($515.7m) in the same period of 2018. This was attributed to an 11% fall in revenue from voice and SMS plans due to discounts on these services. Despite a decline in industry turnover, the number of mobile phone subscriptions and call minutes increased by 10.6% and 10%, respectively, over the same period. Revenue from internet and mobile money services also rose by 28.8% and 8%, respectively.

A study published by the ARTCI estimated that the digital economy represented 7.2% of GDP in 2017 and 9.8% in 2018, and the authority forecast that this would increase to around 11% by 2020. The performance of the digital economy has led Côte d’Ivoire to be ranked among the most technologically competitive countries in Africa. According to the World Economic Forum’s “Global Competitiveness Report 2019”, Côte d’Ivoire maintained its rank of 104th out of 140 countries in terms of ICT adoption. The country ranked third among ECOWAS members and seventh in sub-Saharan Africa.

Structure 

There are three mobile network operators (MNOs) in Côte d’Ivoire. France-headquartered Orange, which merged with the previously stateowned monopoly operator Côte d’Ivoire Telecom in 2010, maintains a dominant positions in key markets such as internet and mobile money services. MTN, a subsidiary of South-African MTN Group, operates both fixed-line and mobile telecoms services, while MOOV Telecom, which was acquired by Maroc Telecom in 2014, competes only in mobile services. Additionally, local firm VipNet specialises in fixedline internet services. In 2019 Orange accounted for 52% of mobile broadband subscriptions, while MTN and MOOV represented 30% and 18%, respectively.

The country’s telecoms providers have helped to establish the infrastructure and conditions necessary to grow a digital economy. International companies such as Spanish on-demand courier service Glovo, African e-commerce giant Jumia and global ride-hailing app Uber have ongoing operations in the country. Meanwhile, there are many other local companies providing a range of digital services such as data management and cybersecurity protection.

Internet

Most Ivorians access the internet using mobile devices. According to the ARTCI, there were 17m mobile broadband subscriptions in 2019, up from 13m in 2018, representing a penetration rate of 65%. At 0.8%, the rate was much lower for fixedline internet, although the number of subscriptions increased from 170,000 in 2018 to 219,000 in 2019. The popularity of mobile internet over fixed-line services can largely be attributed to the relatively high cost attached to the latter, which makes it inaccessible to some of the population.

Notably, the use of fibre-optic technology – which allows for more secure and efficient data transmission – expanded in 2019. Although around 90% of internet connections still use ADSL or WiMAX networks, the share of fibre-optic internet users in Côte d’Ivoire increased from 5% in 2018 to 10% in 2019.

Voice & SMS

Mobile voice and SMS services are widely used in Côte d’Ivoire. According to the ARTCI, the mobile penetration rate – which is based on the number of issued SIM cards – reached 143% in 2019, up from 133% in 2018. This is a significant increase compared to 80% in 2013, the earliest year for which relevant statistics are available. The mobile penetration rate has continued to rise above 100% as individuals use two or more SIM cards in order to take advantage of promotional offers, particularly for voice and SMS services.

Ivorians have consistently shown a preference for pre-paid mobile subscriptions, which typically give customers more control over their spending on telecoms services. Pre-paid subscriptions represented 99% of all mobile subscriptions in 2019, a slight increase from 95% in 2013. This change reflects the decrease in high-income and corporate users – who generally prefer post-paid subscriptions – rather than a shift in preference among subscribers.

At the same time, fixed-line telephone use is diminishing. The number of subscribers fell from 302,000 in 2018 to 272,000 in 2019, representing a penetration rate of 1%. Orange accounted for 97% of fixed telephone subscribers, while the remaining 3% of customers used MTN.

Mobile Money

The use of mobile money services continues to expand in Côte d’Ivoire. According to the ARTCI, the number of mobile money users reached almost 18m in 2019, representing a penetration rate of 67%, up from 13m users in 2018 and 6m in 2014. In terms of subscribers, Orange held a 50% share of the mobile money market in 2019, down from 53% in 2018. The second-largest operator was MTN with a 40% share, up from 36% the previous year, followed by MOOV with 10%, down from 11% in 2018. The remaining market share was held by a number of other organisations that are authorised by the Central Bank of West African States (Banque Centrale des États de l’Afrique de l’Ouest, BCEAO) to issue electronic money, including banks, and Abidjan-based companies Celpaid, Cash Services and Compagnie Financières de Paiements.

According to the most recent BCEAO figures, Côte d’Ivoire accounted for around 37% of electronic money accounts in UEMOA in 2018, making it the zone’s largest electronic money market, followed by Burkina Faso with 15% and Benin with 14%. That year 560m mobile transactions were processed in Côte d’Ivoire, at a total value of CFA9.7trn ($16.7bn). This represented 30% of all transactions in UEMOA in terms of volume and 41% in terms of value.

Like many other countries in sub-Saharan Africa, Côte d’Ivoire has started to use mobile money as a means of bolstering government funding. GSMA Intelligence, a UK-based trade body representing operators around the world, reported in March 2020 that approximately 77% of mobile money service providers pay taxes on fees, transaction values, or total revenues related to mobile money services.

In February 2019 Orange, MTN and MOOV announced a 7.2% rise in fees for mobile payments following a tax increase of the same amount put in place the previous month under the 2019 Fiscal Law. Although some industry stakeholders opposed the tax rise and argued that it goes against state initiatives to promote financial inclusion, the government extended the tax in January 2020 to cover not only MNOs but also any other organisations that provide mobile money services, such as banks.

After several years of consistent growth in consumer uptake, the use of mobile money is likely to accelerate as a result of the global outbreak of Covid-19 in early 2020. The government announced that it would allocate CFA13.3bn ($22.9m) to distributing a total of CFA75,000 ($128.90) in mobile payments per quarter to around 177,000 particularly vulnerable households beginning on April 23, 2020. In the same month the BCEAO passed temporary measures to eliminate fees on certain mobile money transfers as part of efforts to limit physical contact by encouraging digital payments. The efforts of the Ivorian government and the BCEAO reflected a larger trend as government authorities and mobile money providers across the continent lowered or eliminated mobile transaction fees to discourage person-to-person contact and reduce the spread of the virus.

Telecoms Operators

For many years telecoms operators in Côte d’Ivoire have reduced mobile services fees and promoted special offers in order to gain and maintain their share of the market – a strategy that has led to a reduction in overall turnover. Orange, MTN and MOOV have introduced various promotional offers, including bonus credit when customers top-up by a certain amount or use the company’s mobile money platform.

Nevertheless, Orange has consistently held the dominant share of the mobile market. The operator’s share of mobile subscribers remained steady at 41% in 2019 and 2018. MTN was the second-largest provider with 35% of subscribers, up from 33% in 2018, while MOOV held the remaining 24% of the market in 2019, down from 26% in 2018. In 2019 Orange also maintained a dominant market share in the mobile money (50%), mobile internet (52%), fixedline internet (99%) and fixed-line telephone (97%) segments. To maintain its position as market leader, the company plans to invest heavily in expanding coverage and developing telecoms infrastructure. In September 2019 Orange obtained a CFA70bn ($120.3m) loan with a renewable five-year maturity from a banking pool composed of France’s Société Générale South Indian Bank, Morocco’s Attijariwafa, US-headquartered Citibank, and local lenders NSIA Banque and BICI (a subsidiary of BNP Paribas). The telecoms operator told regional media in October 2019 that it would use the funds primarily to strengthen its fibre-optic network. Orange also plans to replace its ADSL fixed-line internet network with fibre-optic cables to reduce the theft of copper used in ADSL cables and resolve the challenges associated with using saturated radio waves for internet access. Additionally, Orange announced in June 2019 that it plans to invest CFA180bn ($309.4m) in 2020 and 2021 to extend its 4G network – which covered 55.3% of the country as of December 2019 – and expand into banking and energy services. According to the ARTCI, Côte d’Ivoire’s telecoms operators invested around CFA142bn ($244.1m) altogether in upgrading and maintaining mobile and fixed-line services in 2019, down from CFA175bn ($300.8m) in 2018.

Submarine Cable

In December 2019 Nigerian broadband infrastructure company MainOne announced that its submarine cable in Côte d’Ivoire had come on-line and was ready for service. The cable – which lands at a station in Grand-Bassam and enables spectrum and infrastructure sharing – will reduce the cost of broadband services throughout West Africa. The cable system also has landing stations in Portugal, Ghana and Senegal. The project was co-financed by Orange in partnership with MainOne, and also included the construction of a landing station in Dakar, Senegal. MainOne’s cable system spans a total of 7000 km, and can provide an average speed of 1.96 TB per second (TB ps) and a maximum speed of 4.96 TB ps.

Start-Ups

As the quality and availability of mobile services continues to increase, consumers are becoming increasingly accustomed to web-based services, which has paved the way for the success of tech and e-commerce start-ups in recent years.

Mobile apps that allow for peer-to-peer transactions are increasingly popular. In December 2019 Côte d’Ivoire became Uber’s first francophone African market when the global ride-hailing firm began operations in Abidjan. According to Reuters, 50,000 people in the capital city had attempted to use the app in 2019 prior to its launch. Uber’s arrival in Côte d’Ivoire placed it in competition with local ride-hailing apps TaxiJet and Africab, which were both founded in 2015. Additionally, Spanish start-up Glovo, which offers on-demand courier services, began operating in Abidjan in April 2019.

Start-ups are also taking advantage of opportunities within the e-commerce segment. In its 2019 annual report, Nigerian company Jumia, which offers e-commerce services throughout Africa, identified Côte d’Ivoire as one of its four largest markets along with Nigeria, Morocco and Kenya. West Africa represented Jumia’s largest market, generating about 50% of the company’s total revenue in 2018 and 43% in 2019. Notably, Jumia emerged as Côte d’Ivoire’s leading e-commerce service provider in the wake of its listing on the New York Stock Exchange in April 2019, when the company was valued at $1.1bn.

Meanwhile, local start-ups have also seen considerable success in recent years. In February 2020 Abidjan-based e-commerce company Afrikrea raised $1m as the result of a funding round from venture capital firms Saviu Ventures and Id4. This brought the start-up’s total funding to $2.1m since its establishment in 2016. According to industry media reports in February 2020, Afrikrea had made over $5m in sales in 101 countries. The start-up maintains a marketplace on which individuals can buy and sell fashion, and arts and crafts made in Africa.

The government has taken steps to further strengthen the business environment for local and international e-commerce companies. In February 2020 the Ivorian government partnered with the UN Conference on Trade and Development, and the German government to assess Côte d’Ivoire’s readiness for e-commerce and identify opportunities, challenges and actions required to improve the e-commerce ecosystem in the country.

Outlook

Côte d’Ivoire’s digital economy is set to continue to expand in the coming years. Socio-economic development – alongside the increasing use of online platforms amid the global outbreak of Covid-19 – will ensure that demand for telecoms and other digital services will continue to rise. As the country’s middle class expands and the population becomes increasingly digitally literate, consumer preferences are likely to shift further towards webbased services, as they have in other more advanced economies. While this shift was already under way prior to the outbreak of Covid-19, the pandemic is likely to accelerate the development of the country’s digital economy. Although new technologies are enabling the measures necessary to contain the spread of Covid-19, the growing reliance on these technologies should far outlast the pandemic.