Unlocking the Potential of the Internet A Scoping Study in the Mozambique Regional Corridors of Beira and Nacala

Study Commissioned By Executive Summary

Mozambique, located in the Southern Machipanda border and to Malawi and people) and is again concentrated in Internet penetration, with market support the Universal Access Fund to African region, attained its independence Zambia via the Villa Fronteira border with large urban areas like Maputo. stakeholders reporting critical challenges effectively deploy its resources to provide from Portugal in 1975. A 16-year civil Malawi and from Malawi to Zambia via the in speed, lack of common Internet affordable internet access in rural areas. war, which ended with the signing of Mchinji border post. The Nacala corridor As one considers approaches to application standards and poor service Awareness the Rome Peace Accord in October 1992, is linking the port of Nacala to Malawi stimulating and promoting Internet quality. This has hampered business There is a significant gap in skills to left Mozambique one of the poorest through the Chiponde border post and the development, we need to recognise the operations to effectively expand outside of operate internet-enabled devices. countries in the world with virtually no Mchinji border post to Zambia. This scoping full scope of the challenges that must be major cities like Maputo, Beira and Nacala. Online commerce is limited and there is infrastructure, including roads, schools study is focused on the Mozambican addressed from both a demand and supply general mistrust of using the Internet for and health facilities. Communication components of these two corridors from the side. Given that these challenges tend We recommend investing in a research commerce due to the lack of adequate networks were systematically targeted in ports of Mozambique to the borders with to be multi-layered, improving Internet programme to understand the internet laws and regulations to protect online the fighting. Zimbabwe and Malawi. access only addresses one impediment quality needs of small and medium consumers. linked to Internet development. Even businesses in each of the provinces and Now, two decades of peace and radical Based on the significant investments from with networks in place and accessible, use this as an input for new service We recommend investing in the existing reforms have transformed Mozambique the private, public and NGO sector, the barriers remain due to insufficient quality regulations, in addition low cost Community Media Centre infrastructure into one of the fastest and most future of the region is potentially bright. demand. This study has found the technologies like “TV White Space” has and utilise them as ICT labs to train and consistently growing economies in the Yet the question remains what investment following key challenges and opportunities shown significant potential to provide build awareness among the population, world. Yet, despite its positive economic in Internet infrastructure is required to across the supply and demand landscape quality connections in rural areas, we investigate innovative Internet fundamentals, there are several areas— support this future growth potential, what in Mozambique; and specifically the recommend to test this technology with applications that can improve SME specifically lack of ICT infrastructure—that are the specific needs and demand areas for Mozambique sections of the Nacala and the existing Community Media Centre productivity and how it can be tailored for will critically hamper its future growth. Internet, what are the specific challenges Beira corridors: (CMC) network in the Beira and Nacala use in Mozambique and finally work with preventing internet development, and what corridors. government to ensure there is adequate Significant investment has been made actions are required from government, Availability Affordability laws/ regulation in place to protect over the years to improve infrastructure, private sector organisations and donor The ICT sector has undergone significant Although service costs have gone down, users of online commerce (e.g. computer the Mozambique Regional Getaway agencies. In this Point of View, we explore sector reforms and is currently in the rates still remain high. Mobile Internet emergency response teams). Programme (MRGP) being a prime these important questions. process of revising the telecoms law, access costs around $30-50 a month example. The MRGP objective is to but it lacks a clear vision and roadmap while fixed broadband average between While there is no overall solution to contribute to the improvement of the Recognising the importance of ICT to align sub-sectors in Mozambique, the $100-$300 depending on bandwidth. Internet connectivity, individual efforts Southern African transport (roads, rail, in the development of the country, industry is faced with high entry barriers Mozambique is ranked 162 out of 169 by various stakeholders do compound to and ports), energy and ICT regional the Mozambican Government has due to the high cost of infrastructure and countries on the ITU broadband index in make a significant contribution. These infrastructure network that uses made significant reforms to support requires enforceable regulation to improve terms of Internet cost, making it one of stakeholder groups have converging Mozambique as a transit route for the development of the Internet. But downstream competition in the market. the most expensive countries globally. interests and the potential to collaborate international trade. The programme Mozambique is still lagging the rest of to reach viable solutions. Capturing these aims to positively impact regional and continent in terms of connectivity. We recommend investing in the We recommend promoting the entry and opportunities will require the combined international trade, increase employment development of a clear broadband strategy setup of local production facilities of efforts of government, business and and reduce poverty along the main At the end of 2012 there were around that will align the efforts of each sub- low cost computers, establish a scheme broader society. corridors leading to Mozambique. 8 million mobile subscribers in the sector, foster greater competition locally to provide subsidies or tax credits to country, which brings its mobile through improved infrastructure sharing small and medium enterprise’s to help By seizing these opportunities The two main corridors linking the penetration rate to just 33 percent, a regulation and lastly reduce the cost of them access the needed internet enabled Mozambique can set itself on the path landlocked countries of Zambia, Zimbabwe, very low figure against the average 76.4 entry for new competitors through easier equipment and finally look at how to for growth and solidify its position on the Malawi and Southern DRC to the sea ports percent mobile penetration rate across rights of way access to civil infrastructure. Africa growth agenda. of Mozambique are the Beira and Nacala the rest of Africa. Additionally, it is corridors. The Beira corridor extends from estimated that between 60-70 percent Quality the Port of Beira to Zimbabwe via the of mobile subscribers in Mozambique are Quality and stability of Internet concentrated in the capital city, Maputo. connection is a critical hurdle to improve Internet penetration is even lower at only 5 percent of the population (1m

1 2 Methodology Methodology Study Objective

This report sets out a critical gap analysis The prioritisation mapping helped in relied upon as such. Neither Accenture nor and delivers recommendations on how the identifying six sectors, namely Agriculture, its employees accept responsibility for any Mozambique Regional Gateway Programme Financial Services, Government, Health, loss or damage arising from reliance on the (MRGP) can face the challenge of inclusive Education, SME/Retail & Transport, where information contained in this publication. growth and development in both strategic the largest economic and social impact of regional corridors through Internet connectivity the Internet is likely to be concentrated. This study has been funded by UK aid from solutions. The project aims to understand the the UK Government, however the views potential of the Internet in Mozambique for Study Limitations expressed do not necessarily reflect the UK social and economic development, specifically Government’s official policies. in the Mozambique sections of the Nacala and This report offers a rapid assessment of Beira corridors. the Mozambique ICT landscape and is not Acknowledgements meant to act as a detailed academic study. The report has the following The report was developed over a 10-week This report has benefitted greatly from components: period and the authors recognise key the valuable inputs from stakeholders • Demand and Potential of the Internet limitations to the outcomes of the study. operating in Mozambique. We would like Assess the needs and demands for Very few studies exist to provide detailed thank the following organisations for their Internet connectivity by sector (e.g. coverage of the Beira and Nacala corridors contribution to this research: health, education, agriculture, SMEs, in Mozambique as well as sector demand. transport etc.). The research team focussed on interviewing • Aga Khan Foundation (AKDN) large representative stakeholder groups • Alliance for Affordable Internet (A4IA) • Current Landscape and Supply of Internet with headquarters in Maputo and • Council for Scientific and Industrial Assess the current internet value chain, conducted telephone interviews for Research (CSIR) key players, network infrastructure, locations not physically accessible and • Confederation of Business Associations technologies, and coverage in the Beira recognise that certain key stakeholder (CTA) and Nacala corridors. groups could not be consulted. The study • Electricidade de Moçambique (EDM) is not meant to act as a comprehensive • First National Bank (FNB) • Internet Connectivity Solutions review of the landscape, but rather provide • Instituto Nacional das Comunicações de Develop a list of high-impact solutions and a snapshot view of the key elements that Moçambique (INCM) initiatives that can drive increased Internet require further attention. The authors • International Finance Corporation (IFC) connectivity in he Mozambique sections of recommend that each recommendation • Institute of Social and Economic Studies the Beira and Nacala corridors and compare requires further research and further (IESE) against Internet solutions leveraged in other scoping before implementation. • Institute for the Promotion of Small and emerging markets in Africa. Medium Enterprises (IPEME) About this Study • J&J Transport • Japan International Cooperation Agency This study was prepared from sources (JICA) Scope and data which Accenture believes to be • Mozambique Ministry of Science and reliable but it makes no representation Technology (MCT) Geographic Scope or warranty, express or implied, as to • Microsoft The geographic focus of this study is the their accuracy or completeness. Any • mcel Mozambique sections of the Beira and figures and statistics used in this study • Movitel Nacala Corridors with a focus on key ports, were up to date at time of writing and • Portos e Caminhos de Ferro de towns and border posts in the corridors. are subject to change without notice. Mocambique (CFM) The views and opinions expressed in this • Socremo Bank Mozambique Sector Scope publication are those of Accenture only • Soico Focus sectors have been identified for and do not necessarily reflect those of any • Telecomunicações de Moçambique (TDM) this study based on their potential impact of the companies researched or surveyed • Technoserve on, and contribution to, MRGP goals. or any other third party referenced in • Tvcabo Specifically, sectors have been prioritised the report. Such opinions should not be • UNICEF based on the number of people impacted, construed as providing professional advice, • Vodacom Mozambique along with the impact of the Internet on recommendations or endorsements, or • World Bank those sectors. • World Health Organisation (WHO) 3 4 Mozambique Development Corridors Chapter 1: Introduction Mozambique Development Mozambique, located in the Southern promote increased trade and investment. sector, particularly sugar and cotton; and in African region, attained its independence Mozambique has three main development part by investments in coal. Corridors from Portugal in 1975. A 16-year civil corridors including the Maputo, Beira and war, which ended with the signing of the Nacala corridors. Beira, the provincial capital, is the second Rome Peace Accord in October 1992, left largest city in Mozambique and its second Mozambique one of the poorest countries The Beira corridor extends from the Port largest port, with a population of 430,000. in the world with virtually no infrastructure, of Beira to Zimbabwe via the Machipanda Regionally important, it’s the gateway for including roads, schools and health border and to Malawi and Zambia via the landlocked Malawi, Zambia, and Zimbabwe facilities. Communication networks were Villa Fronteira border with Malawi and from and the closest port to the industrial city systematically targeted in the fighting. Malawi to Zambia via the Mchinji border of Lubumbashi in the Democratic Republic post. The Nacala corridor is linking the port of Congo (DRC). It also connects the Now, two decades of peace and radical of Nacala to Malawi through the Chiponde coal mining regions in Tete with the sea reforms have transformed Mozambique into border post and the Mchinji border post to through the Beira Corridor. Its positioning one of the fastest and most consistently Zambia. as one of Southern Africa‘s main transport growing economies in the world. The entire Beira Corridor contains some routes, combined with its proven of the country‘s most productive land, agricultural potential, also gives the Beira Development corridors are being established including the grain basket surrounding Corridor good potential as an agricultural across the Southern African region as Chimoio. The renewed interest in the Beira production zone. a tool to support economic integration, Corridor is being driven in part by large- as they serve to open up markets and scale anchor investments in the agriculture

Figure 1: GDP Growth (Constant 2000 Prices) Source: IMF Economic Database

14%

12%

10% Asia Mozambique 8% SSA Mozambique Fast Facts1 6% LATAM • Population in 2013: 25m 4% MENA

• GDP in 2012: $15.6bn 2% Advanced • Forecasted GDP growth rate: 7.6% Economies 0% • Average estimated inflation for 2013: 4.7% 2000 2002 2004 2006 2008 2010 2012 2014 • Estimated lending rate in 2013: 10% -2% -4%

Legend: Highest point from year 2000 to 2014 1Business Monitor International; Mozambique Business Forecast; 2013 5 6 The other key area of focus is the Nacala of forests in six reserves covering an area this—and the zone‘s ultimate success—will Mozambique’s raw growth potential Political and Economic Stability Power Infrastructure Corridor. The Nacala corridor links the port of 316 km², the province is rich in natural depend on the implementation of upgrades is significant with abundant natural Effective legal, security and political Twenty years after the devastating civil of Nacala to Malawi through the Chiponde endowments. Nacala’s widespread mineral at Nacala Port and in the rail lines running resources, particularly coal and natural systems are required for business to thrive. war that left the country without a proper border post and the Mchinji border post to reserves—mostly aquamarine, tourmaline, between Nacala and Malawi, as well as the gas, both of which are receiving increased Mozambique has regressed on this front power infrastructure, only 10 percent of Zambia. Its provincial capital, Nampula, is topaz, and corundum—have attracted large- development of the Nacala Airport. investment attention, with Foreign Direct over the last year with increased security households are electrified, with most of the third biggest city in Mozambique, and scale investments in recent years. Investment (FDI) reaching nearly $5.2bn in threats in threats in parts of the Beira the population still relying on kerosene and its port city, Nacala, is one of the best deep This scoping study is focused on the 2012, equating to over 36 percent of GDP.2 Corridor and central region.. wood as energy.8 water ports in East Africa. Served by 29 The Government also aims to attract Mozambican components of these two The majority of the FDI is being driven by river basins, with more than 7 million ha logistics companies to the zone; however, corridors from the ports of Mozambique to key developments in the areas of natural Corruption Against this background, the Internet the borders with Zimbabwe and Malawi. gas, oil, coal and hydro, with explorers In Transparency International’s 2012 index, is seen as a key enabler that will drive finding more than 100 trillion cubic feet Mozambique was placed 119th out 175 economic regeneration and growth, and of gas3, enough fuel to build the world’s countries, indicating that corruption is go a long way in addressing the key second largest liquefied natural gas plant. perceived to be a key issue.5 development challenges that stubbornly A recent study found a small oil deposit persist in the country, despite 22 years of Figure 2: Mozambique Development Corridors (Beira and Nacala Develoment Corridors) next to the Temane gas field in Inhambane Skills Shortages relative peace. Source: MRGP province that will allow Sasol to launch Out of a total population of 25m, the oil production this year. The country’s coal labour force is estimated to be in the region reserves are estimated at more than 20 of 8.5-9m with a literacy rate of less than billion tonnes4, with the largest known 50 percent—of whom only 16.4 percent are reserves in Tete province. In addition, in salaried employment. Mozambique is building significant hydro capacity in the Zambezi Valley by building Social Development a power transmission line between Tete and Mozambique remains one of the world’s the country’s south. poorest countries, with the United Nations Development Programme Human Yet, despite Mozambique’s positive Development Index (UNDP HDI) placing it at economic fundamentals, there are several 185th position in a total of 187 countries, areas—specifically lack of infrastructure— the lowest in SADC.6 that will critically hamper its future growth. As Standard Bank infrastructure ICT Development specialist David Humphrey notes: “Without ICT investment is largely dependent on infrastructure, the Mozambique economy donor and private sector. Mobile penetration will not grow as fast as it should.” is estimated at 33 percent at the end of 2012 and Internet usage is low, with just 5 percent of the population online.7

2IMF; Data and Statistics; 2014 3Bloomberg Online; Natural Gas Reserves Almost Triple on New Finds; 2012 4KPMG; Mozambique Snapshot; 2013 5Transparency International; Corruption Index; 2013 6United Nations Development Programme,; Human Development Index; 2013 7Buddecomm; Broadband Forecasts, 2013 8AICD; Mozambique’s Infrastructure: A Continental Perspective; AICD 2011 7 8 Chapter 2: Demand for Internet Impact of internet

The Internet is a tremendous, undisputed to compete in the global market as well to markets and strengthening the overall Figure 4: Examples of Internet Effects on Economic Growth force for economic growth and social change as foster growth in the local market. The efficiency of service delivery in areas Source: World Bank – Broadband Strategies Handbook and if cultivated could be a key driver Internet has proven a dynamic tool for such as health, education, livelihoods and of growth in Mozambique. As Christine stimulating economic growth in developing financial inclusion, as well as creating Zhen-Wei Qiang of the World Bank’s Global countries, with the World Bank reporting access to government services for the most ICT Department observes, “the Internet is that a 10 percent increase in broadband marginalised populations. not just an Infrastructure, it is a general- correlates to a 1.38 percent increase in GDP 62 percent of business owners reported that broadband increased purpose technology that can fundamentally growth.10 The following examples highlight how Productivity improvements because of the use of mobile broadband solutions across the U.S. health productivity, with a majority stating that broadband increased restructure an economy.”9 broadband has improved economic and care industry were estimated to be worth $6.9 billion productivity by over 10 percent Beyond firm level growth, the Internet social outcomes in countries at all levels of As Mozambique and its landlocked also provides opportunities to pursue development: 11 neighbors grow, they will need to be able social and developmental objectives. to easily connect to the outside world as Throughout the developing world, the well as connect regionally to enable them Internet is connecting remote populations Dial-up and broadband Internet together is expected to Figure 3: Growth Effects of ICT contribute a combined Source: World Bank 2.5 percent to GDP growth for every 10 percent increase in 1.6 penetration. 1.4 1.38 A study involving 1,200 1.21 companies showed that 1.2 broadband deployment Each percentage point 1.12 was associated increase in mobile 1 with considerable broadband penetration improvements in business expected to increase 0.8 0.81 0.77 organization. In Brazil, India’s GDP by 0.11 0.73 broadband was found to percent by 2015, 0.6 0.6 add up to 1.4 percent to Wireless broadband is expected to increase the country’s GDP by 1.8 which would yield Rs the employment growth percent—over R 72 billion (US$9.4 billion)—by 2015. In addition, wireless 162 billion (US$3.8 0.43 0.4 rate broadband is expected to create about 28,000 new jobs billion). Advanced 0.2 Economies Source: Broadband Strategies Handbook, World bank Developing 0 Economies Fixed Mobile Wireline Internet Wireless Internet

9World Bank, Economic Impacts of Broadband, 2012 10World Bank. “IC4D: Extending Reach and Increasing Impact; 2012 11World Bank; Broadband Strategies Handbook; 2012

9 10 Current Internet Demand Future Internet Demand

Mozambique is currently lagging the rest they have not been exposed to internet- Key developments and investments committed $65m towards the upgrading countries19. Transport companies struggle of the world in terms of Internet maturity, enabled devices nor do they see the Sectors that have shown a high and in each of the sectors will drive and maintenance of various road projects with frequent breakdowns and repairs. The providing a significant opportunity for potential benefits of using one. The core immediate demand for internet include significant demand for increased in the Manica and Tete provinces, while Internet enables the remote monitoring of future growth. According to recent research focus of this sector over the next few years Small and Medium Enterprises in the the E18 and EU have recently lent $94m technical performance for early problem connectivity. They include the 17 from the Mckinsey Research Institute, is to test innovative SMS based technology Retail Sector, Transport, and Government. towards the Sena Railway. detection, provides real-time information Mozambique’s iGDP is estimated at $220 to help connect farmers. Almost 98% of enterprises in Mozambique following: for customers and facilitates trade million, or 1.6 percent of GDP—which, while is considered to be small or medium Government information at borders. Agriculture it is relatively in line with other developing Sectors that have shown moderate to and our interviews in market reveal a The Austrian Development Agency (ADA) A $177m expansion to Mafambisse mill countries, is low in absolute terms. Most of high demand for internet at the moment key demand to leverage internet based is focusing on strengthening the capacity Marketing will increase production by 80,000 tons, the iGDP contribution is driven by hardware include Health, Education and Finance. technologies to help them connect to new of district and municipal authorities in the The growth of SME (which represents 98 12 while USAID and the Millennium Challenge sales of PCs and phones. The Health sector faces a critical challenge markets to sell and procure goods; using provinces, while the World Bank is working percent of enterprises) is hampered by Corporation (MCC) are both supporting with the shortage of staff, with less than internet technologies for training on basic with government to connect departments their poor integration with larger firms. Until recently, ICT investments were 1 doctor for every 40,000 patients the commercial agriculture in Nacala with a and roll-out eGovernment services.18 eCommerce is non-existent, and online business skills like inventory management; total investment of $127 million.13 concentrated around Maputo, Beira, and sector is looking for innovative tools to and to help them connect to larger firms contracts have no legal value. Internet other urban areas driving significant help train new nurses and to leverage the in Mozambique. The Transport sector is Sector Demand Profiles solutions can facilitate transactions through demand for internet in these metropolitan available doctors in the sector though the Health & Education e-commerce solutions (e.g. Nigeria Jumia) heavily reliant on internet technologies Having focussed on a high-level view of the areas, but demand for internet has been use of tele-centres to reach rural areas. The GSK/Vodafone has formed a partnership and help SME integrate with larger firms by for effective operations ranging from fleet macro-economic factors driving Internet low to moderate outside these areas due Education sector faces a similar challenge to use mobile Internet technology to registering online as formal suppliers. management; document processing; and penetration and usage, we now turn our to low education and incomes of the with basic education at less than 50% and help vaccinate more children, while the data transfers at the border posts and ports. attention to demand drivers by sector in population. This is evident by the fact that limited educators to effectively run the building of a $6 million state-owned drug Training The country has already made investment more detail. less than 5% of the population is currently current school infrastructure. The sector production plant, Sociedade Moçambicana Literacy levels are very low at only 50 percent in this area through the deployment of 14 connected to the internet in 2012. is looking for an innovative mechanism to de Medicamentos, is also planned. of the population. Organisations lack basic “Single Window” that allows operators Interviews across sectors reveal key train educators as well internet enabled management skills to improve productivity. to submit applications online to ease the themes of areas where the Internet can The largest economic and social impact of tools that increase the quality of education SMEs In addition, the health sector faces a critical processing at border posts. The Government play a significant role to improve trade the Internet is likely to be concentrated in at schools. On both of these sectors the The Germany Technical Cooperation shortage of health care professionals. and productivity in the Beira and Nacala seven sectors. These sectors face specific limitations of available infrastructure and of Mozambique has also shown a critical Agency-funded Rural Development Internet applications can support access to corridors. service delivery challenges that can technical capacity hampers demand for the demand for internet to help them connect Programme, GTZ, is supporting business educational information and allow for remote be bridged through the use of Internet Internet and these sectors’ focus remains on different departments and ministries in environment reforms in the Beira Corridor training of pupils and health professionals— technologies. They also stand out because addressing basic needs first. In the Finance Mozambique as evident by the recent to simplify rules for business registration, Service Delivery the African Medical and Research Foundation Although Mozambique has formalised a of the size of the population that stands sector the key focus is to help connect the Govnet project as well as investments licensing, and inspections, while the World (AMREF)’s nurses training programme in policy around eGovernment, the rollout to benefit from the efficiencies they could unbanked through basic mobile technology, in several online tools like the land Bank’s International Finance Corporation Kenya being a prime example. of services has been minimal. Rural achieve. Despite the future potential of the sector is investing heavily in management system. (IFC) is investing in business edge training 15 populations in the two corridors lack access these sectors, the current demand for applications like M-Pesa and mKesh which to up-skill SMEs. Finance to basic government services. The Internet Internet in the corridors varies significantly can operate on basic Nokia phones, while Despite the varied demand for internet Almost 80 percent of the Mozambique has the capacity to bridge this divide by across each of these sectors. the extensive adoption of internet banking across sectors, with the recent Finance population is financially excluded, powering the development of smart cities on home PCs is considered to be a medium exploration of natural gas and significant Recent launches of Internet banking from with less than 12 percent of the adult in Africa, resulting in better service delivery Our market interviews revealed low to to long term goal. The financial institutions infrastructure investment, we believe the large banks, coupled with Carteira Móvel population formally banked and less for its citizens (e.g. the South African moderate current demand for Internet in on the other hand did indicate a need for Mozambique is on the brink of significant launch of its Mkesh mobile money platform in than five percent having any form of Revenue Services’ eFiling). 20 the Agriculture sector. The Agriculture increased connectivity to effectively run economic growth that will drive Internet 2011 and Vodacom’s launch of mPesa services insurance . The Internet provides financial sector is dominated by small holder farmers their branches, especially deeper into the demand across sectors. in 2013 to improve access to finance, are access through Internet banking and 16 Distribution operating with basic Nokia texting phones, Nacala and Beira corridors. driving investments in this sector. digital payment platforms, M-Pesa, the At nearly 10 cents (USD) per tonne innovative mobile payment solution Transport kilometre, transport costs in Mozambique developed in Kenya being a prime example. The African Development Bank (ADB) has are significantly higher than in other

13Beira Agricultural Growth Corridor; Delivering the Potential; 2012 14http://www.gsk.com/media/press-releases/2012/GSK-forms-partnership-with-Vodafone-to-help-increase-childhood-vaccination-in-Mozambique.html 15http://www.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa 16http://www.telegeography.com/products/commsupdate/articles/2013/05/22/vodacom-extends-m-pesa-to-mozambique/ 17http://www.iol.co.za/business/international/bottleneck-for-mozambique-s-coal-rush-1.1501290 18http://www.entwicklung.at/en/countries-and-regions/southern-africa/mozambique/ 19Beira Agricultural Growth Corridor, Deliver the Potential; 2012 12Mckinsey, Lions go digital – The internet’s transformative potential in Africa; 2013 20Finscope, Mozambique Survey, 2012 11 12 Health

Agriculture Education

This sector is vital to national well-being, employing Beira and Nacala regions particularly well suited In 1978, the illiteracy rate in Mozambique was 97 over 300,000 young people enter the labour market around 80 percent of the working population and to agricultural development. Yet less than 0.3 percent, but by 1982 it had dropped to 72 percent annually, the difficulty of responding to the complex contributing to around 30 percent of Mozambique’s percent of the arable land in the two corridors through large-scale literacy campaigns, although needs of this group is likely to be immense25. GDP in 201221. Mozambique has a large amount is farmed commercially, with 95 percent of its these effectively ended with the beginning of the Internet-enabled solutions can play a critical role to of arable land with huge agricultural potential; rural households depending on mostly subsistence civil war, which also destroyed about 50 percent improve literacy penetration in the two corridors. soil quality, climate and access to water make the agriculture for their livelihoods.22 of the national school infrastructure. Given that

Level of Internet Enablement Need Rationale for Internet Need Priorities Level of Internet Enablement Need Rationale for Internet Need Priorities

At nearly 10 cents (USD) per tonne kilometre, transport costs in 1 Service Delivery 1 Service Delivery Although many children enrol in school, the dropout rate remains Service Delivery Distribution Mozambique are significantly higher than in other parts of the startlingly high, with almost half of children dropping out before world. Internet solutions can play a critical role to reduce shrinkage, they reach fifth grade. This high drop-out rate can be reduced Distribution improve delivery timing and the speed of collections. Distribution through innovative Internet-enabled solutions like Virtual learning or e-reader programmes. Marketing 2 Marketing/ Sales Farmers struggle to access larger markets, lack links with larger firms Marketing and have limited transparency in terms of prices. Internet applica- 2 Training A study by the Southern Africa Consortium for Monitoring tions can play a key role to link farmers to markets and into larger Training Educational Quality (SACMEQ) found that Mozambique was the only Training corporations. country reviewed to have shown a substantial deterioration in both reading and mathematics between 2007–201226. Internet-enabled Financing 3 Financing The commercial lending rate in Mozambique is above 15 percent, Financing solutions to train educators are essential to alleviate this issue. on top of which banks typically charge a 3–5 percent margin for agricultural loans due to its risk profile. The Internet can enable improved financial literacy and links with banks. High Low High Source BAGC Status Report 2012 1 Source Unicef: Building Schools in Mozambique; http://www.osisa.org/ 21World Bank Data and Statistics, 2014 25Unicef: Building Schools in Mozambique; http://www.osisa.org/ 22BAGC, Status Report, 2012 26SACMEQ, Primary School Performance in Botswana, Mozambique, 23Business Monitor International, Mozambique Healthcare Report, 2013 Namibia and South Africa, 2011 24https://www.amrefuk.org/what-we-do/projects/item/143-e-learning 27http://www.gnbo.com.ng/ Health Finance

Healthcare expenditure in Mozambique is forecast As exploitation of natural gas increases, demand to increase from MZN20.282n (US$729mn) in 2012 for additional facilities will grow, demonstrated by With 78 percent of its adult population being a commercial bank product—and 4 percent using to MZN39.12bn (US$1.12bn) in 201723. African Medical Investment’s private clinic in the financially excluded, Mozambique ranks the lowest financial products provided by formal financial Tete region in 2012. The Internet can enable greater in terms of financial inclusion compared to other institutions. Only 5 percent of adult Mozambicans use of remote diagnosis, treatment and education. African countries, with just 12 percent of the have insurance products—of which 45 percent have adult population banked—in other words, using formal products and 55percent informal products27.

Level of Internet Enablement Need Rationale for Internet Need Priorities Level of Internet Enablement Need Rationale for Internet Need Priorities

Service Delivery 1 Training For every doctor in Mozambique, there is an average of 40,000 Service Delivery 1 Access to Less than 20 percent of the population is banked, with the majority patients—eLearning models such as AMREF’s in Kenya enable health concentrated in Maputo. Internet-enabled services like mobile workers to improve their skills.24 Financing and Internet banking can play a significant role to increase access Distribution Distribution especially in the rural areas within the Beira and Nacala corridors. A lack of regulatory guidelines means counterfeit drugs are com- Marketing 2 Marketing/ Sales monplace. Internet applications to check the validity of medicine can Marketing 2 Service Delivery Internet-enabled financial services can play a significant role across make a significant impact to reduce illegal trade of medicine. sectors, a key example being Kenya’s National Health Information Training Training System (NHIS) which electronically links with banks to manage Distribution problems mean drug scarcity is commonplace, even for payment processing. essential medicines. Internet applications to monitor stock levels and FinancingLow 3 Distribution distribution have been very successful to improve the visibility and Financing 3 Distribution In an environment where the rural population can travel up to flow of medicine to regional stores. 300km to access a branch for transactions, e-commerce solutions can play a significant role in distributing financial services more evenly. 22Business Monitor International, Mozambique HealthcareHigh Report, 2013 Low High 23https://www.amrefuk.org/what-we-do/projects/item/143-e-learning 1 Source BMI Health Care Report 2013 1 Source: Finscope Mozambique Survey 13 14 Small and Medium Enterprises Government

Small and medium enterprises (SMEs) form the funded by a $1.5mn Meticals Banco Comercial de The initial deployment of GovNet took place System, e-SISTAFE. The Internet could facilitate backbone of the Mozambique economy, with an Investimtno (BCI) donation. However, despite the between 2006 and 2007 with the aim of digitally better governance, including strengthening estimated 98 percent (30,000) of enterprises in introduction of IPEME, focus on enabling e-commerce connecting Government institutions in all 10 electoral and legislative systems, improving access Mozambique classified as small to medium. To for SMEs has been non-existent. Online business provinces. The Mozambique Government generally to justice and expanding capacity to deliver services support development in this sector, the Mozambican contracts still have no legal value and there are no performs its operations manually, although there to marginalized populations. Government has launched the Institute for the commercial laws in place to accommodate requirements are some isolated automated online pockets such Promotion of Small & Medium Enterprises (IPEME), for e-commerce. as the State Financial Management Information

Level of Internet Enablement Need Rationale for Internet Need Priorities Level of Internet Enablement Need Rationale for Internet Need Priorities Mobile/Internet-enabled payment solutions are transforming the Service Delivery 1 Service Delivery Although Mozambique has formalised a policy around eGovernment, 1 Service Delivery Service Delivery retail SME landscape across Africa. Innovative online solutions ena- the rollout of services has been minimal. Expanding the country’s bling online trade is enabling SME access to larger markets and link Distribution Internet footprint will enable the rural population outside of major Distribution their services into larger corporations. towns to access government services. Marketing 2 Marketing/ Systems can reduce administrative tasks and enable information- Marketing 2 Marketing/ Sales The Internet can provide huge opportunities for SME to market their product/service. A good example is Get Nigerian Businesses Online Awareness sharing between different government agencies, including public (GNBO), a Google-led initiative that has brought over 25,000 SME Training information portals such as the Senegal online portal which enables Training online in Nigeria.28 users to view legislation updates. Financing 3 Financing Financing 3 Training With new entrepreneurs lacking basic management and financial Administrating systems like tax is a daunting task in Mozambique. skills, online applications, such as the International Finance Corpora- Online solutions like SARS eFiling can help government administer tax tion (IFC)’s online SME toolkit has significant potential to up-skill with high levels of transparency, facilitate fund transfers and other and enhance SME productivity. 29 key transactions between departments, and help government manage Low High its budgets appropriately. 1 Source www.Ipeme.gov.mz Low High

28http://www.gnbo.com.ng/ 29http://www.businessedge-africa.com/ 30African Development Bank, Country Transport Strategy Paper, 2011

The transport sector has regional potential and is roads—of which only 5,005 km (19.8 percent) undergoing major restructuring. The Government are paved; 3,000 km of railway lines: of which has put into place an ambitious programme about half are operational; and five international aimed at rebuilding and expanding the system airports30. Transport is the key growth sector in the and strengthening capacity. The transport sector Beira and Nacala corridor transporting goods from currently comprises 26,235 km of classified the ports to towns and partnering countries.

Level of Internet Enablement Need Rationale for Internet Need Priorities

Service Delivery 1 Service Delivery With poor rail and road infrastructure, maintenance of a fleet is expensive. Online solutions that track service breakdowns and early warning systems can significantly reduce costs and reduce the barri- Distribution ers of entry for new transport operators.

Marketing 2 Distribution The transport value chain is vast with numerous suppliers that need to be connected, and border posts require online systems to process Training information. The Internet can play a key role in easing this adminis- tration burden.

Financing 3 Marketing/ Sales Online solutions that facilitate customer ordering, payment and delivery is a critical enabler to drive growth in the transport sector. Low High

15 16 Supply of Internet Chapter 3: Mozambique Telecommunications History Supply of Internet Having provided an overview of current Recognising the importance of ICT in the Internet demand, we now look at how this development of the country, the Mozambican demand is being supported through the Government has made significant reforms current Internet landscape. to support the development of the Internet. The figure below highlights some of the key milestones that have been achieved to date.31

Figure 5: Mozambique Telecommunications History Source: INCM and Accenture Research

Establishment of TDM Telecom Sector Reform TDM Monopoly End Telecomunicações De Moçambique In 1999 the government began drafting In early 2003 the government approved (TDM) was established in 1981 following telecom sector reform legislation which a new draft Telecommunications Bill. the termination of the Posts, Telegraph would partially open the market to Published in mid-2004, the new law and Telephones (PTT) government greater private investment and competi- defined the various areas of operation, agency, which held a monopoly on the tion. A preliminary privatisation study particularly in the mobile, fixed-line country’s telecommunications sector. for TDM was completed which called for telephony and Internet access sectors, the sale of shares to a strategic investor. with the aim of ending TDM’s monopoly

1981 1992 1999 2001 2003 2010

Telecommunications Law Enacted Mobile Entrants Third Mobile Licence In 1992 enactment of the Telecom- The regulatory body, the National Mozambique’s third mobile licence was munications Law established Telecomu- Telecommunications Institute of awarded in November 2010 to Movi- nicações De Moçambique (TDM) as an Mozambique (INCM), issued a tender tel. The announcement triggered the independent company and created the for mobile licneces in early 2002, with beginning of a price war between the Instituto Nacional das Comunicações de Vodacom and mCel emerging as winners two existing operators, with Vodacom Moçambique (INCM) as an independent from 12 companies that expressed an announcing a 10 percent cut, followed regulatory authority. original interest. by a 20 percent cut by mCel.

The Internet in Mozambique was initially At the end of 2012, there were around 8 60-70 percent of mobile subscribers in introduced in 1993 by the Eduardo million mobile subscribers in the country, Mozambique are concentrated in the capital Mondlane University through its Informatics which brings its mobile penetration rate city, Maputo. Internet penetration is even Center (CIUEM). Although the Mozambique to just 33 percent, a very low figure lower at only 5 percent of the population ICT sector is gaining traction, it still faces against the average 76.4 percent mobile (1m people) and is again concentrated in key challenges that will hamper its growth penetration rate across the rest of Africa. large urban areas like Maputo.32 going forward. Additionally, it is estimated that between (See Figure 6)

31INCM Website and Accenture Analysis 32Accenture Research 17 18 Technology Overview

According to the World Bank, the overall The Internet value chain in Mozambique for transmitting Internet data across Fibre and ADSL are the primary improving accessibility, particularly for been shown to provide an additional boost telecommunications sector in Mozambique consists of three key layers, each managed the country, while the last mile (Mobile technologies for Internet use in the large sparsely populated and rural areas. to business productivity, strengthening the requires between $150 - $170m million per by a different set of firms and institutions. Operators and Internet Solution Providers) cities, while wireless technologies are value proposition for potential adopters. year in infrastructure investment through The first mile (Seacom and East African provides the wirelines’ and wireless paving the way forward for the majority of The primary advantages of wireless Although maximum download speeds are 2016 to be considered a competitive market Submarine System or EASSy) provides connections to end consumers. the population in rural areas. In view of the broadband are its lower construction costs, lower, relative to fixed line technologies, in Africa33. Internet access continues to be links to broadband networks in other constraints of a fixed-line network, wireless shorter rollout timelines, and lower costs they are constantly improving, and should a luxury for the majority of potential users countries usually visa satellite and fibre broadband could play an essential role in for end-users. Wireless broadband has also be sufficient for most user needs. (schools, universities, and Government and optic cables. The middle mile (TDM and research institutions, etc.). Mobile Operators) provides pathways Figure 7: Mozambique Internet Technology Evaluation Source: Accenture Analysis and BCG

Figure 6: Internet Maturity indicators Fixed Internet Technologies Wireless Internet Source: Accenture Analysis, BuddeComm and Mckinsey Technologies Broadband Fibre to the ADSL Wireless Broad- TV White Space Internet Mobile High Speed Government Evaluation Criteria Penetration Penetration Internet Access Dept. online via cable TV home (FTTH) band (3G etc) (% of pop) (% of pop) (%) Cost of network Moderate High Cost High Cost Low Cost Low Cost 1 Cost Zimbabwe 64 128 - - Rollout Investment Implementation Slow Slow Slow Fast Rollout Fast Rollout 2 Morocco 51 120 1.6 17 time Rollout Rollout Rollout 3 Egypt 36 115 1.8 53 End User High Cost Medium Medium Low Cost Low Cost 4 28 72 0 24 Kenya Customer Affordability Cost Cost 5 Nigeria 28 68 0.1 10 experience Quality of Moderate High High Moderate Quality Moderate Quality 6 Senegal 18 88 0.6 18 Service Quality Quality Quality 7 South Africa 17 135 1.5 31 Overall adequacy for 8 Zambia 16 91 - - Mozambique Environment 9 Angola 15 49 0.1 34

10 Ghana 14 100 0.2 15 l Cable TV has l Technology l TDM launched l 3G services launched in l No investment yet on been available owned by TDM ADSL services 2009 by most operators this solution 11 Algeria 14 103 2.5 10 in Maputo network covers in early 2006 l TDM also offering CDMA l Ministry of Science 12 Tanzania 12 57 0 17 Development in since 1999 10 provincial l By 2008 the service from its fibre in discussions with l TvCabo a capital cities, service was backbone government 13 Cameroon 5 64 0 15 Mozambique subsidiary 43 district available in all 14 Malawi 6 33 - - offer TDM centres and 31 ten provincial 15 Mozambique 5 33 0.1 17 currently has villages capitals a monopoly l Offers service 16 Ethiopia 1 24 0.8 20 on this through its ISP technology Teledata

Legend: Good Moderate Minimal Unknown

33World Bank, Mozambique Infrastructure – A Continental Perspective, 2011 19 20 Fixed Line Network

The existing fixed network infrastructure is To reduce the reliance on satellite Mozambique boasts of having fibre Latest estimates indicate some 65 percent of $25m (USD)37. In addition TDM is also and business in the specific urban areas. owned by Telecomunicações de Moçambique communications, work on a national coverage in most provinces, but in most of fixed lines are concentrated in Maputo investing in redundancy networks through This investment is expected to significantly (TDM), whose investments over the last fibre optic backbone began in early 2006 cases this is restricted to within a 5km and other major towns, leaving the network radio infrastructure as well microwave links alleviate connectivity issues in the Beira 10 years total more than $160 million34. which will connect all of Mozambique’s radius of the main district town. outside the major cities limited.36 to South Africa and Malawi. and Nacala corridors, where anecdotal Because much of its infrastructure was 10 provincial capitals. The few fibre links evidence from in-market interviews indicate destroyed during the war, TDM’s backbone within the urban areas mainly interconnect TDM has not made significant progress in A new fibre optic backbone is being deployed TDM is also deploying metropolitan rings the fibre network can be down by up to 180 network has traditionally relied on a TDM’s telephone switches and a number of terms of building fixed-line penetration, in the south and central areas (See Figure in the 10 provincial capitals, this new hours each month in the Nacala corridor. domestic satellite system for connecting the corporate users, such as banks and other mainly due to the significant cost and 9) of Mozambique which is being financed infrastructure will expand the current single 10 regional centres in the country. large business companies. logistical challenges of deploying a network by the Chinese corporation ZTE at a cost fibre access points to connect to homes at scale. It is estimated that fixed-line connections have grown by less than 0.3 percent compound annual growth rate Figure 9: Mozambique Fibre Research since 2000.35 Source: TDM and Accenture Analysis INDICATIVE Figure 8: Fixed Line Connection Source: Research ICT Africa and Accenture Analysis

Palma

Auasse Mocimboa Negomano da Praia Mueda Muidumbe 140 000 Macomia Metoro Pemba Lichinga Marrupa Montepuez Chiúre 120 000 0.29% Majune Compound annual growth ZAMBIA Massangulo Namapa Mandinba Nacaroa Cuamba 100 000 rate (CAGR) Cassacatiza Nacala Lapala Namialo Monapo Nampula 80 000 Manje Zóbuè Guruè Songo Moatize Alto Tete lle Molócuè Milange Luenha Dôa Nampevo Angoche 60 000 Mugebe Mocuba Guro Mutarara Morrumbala Lua Lua Nicoadala Quelimane 40 000 Catandice Caia Gorongosa Chimoio Inhaminga Manica Muanza 20 000 Machipanda Gondola Sussundenga Inchope Savane Nhamatanda Dombe Dondo Beira 0 Espungabera Muxungue Chitobe 2000 2002 2004 2006 2008 2010 2012 Posto Save Save Massangena Legend Mabote Zimane Vilankulo Mapinhane Funhalouro Massinga Existing Fibre Coverage Mavume Fibre Link In Progress Homoine Maxixe Massingir Chókwe Panda Planned Fibre Links Chibuto Inhambane Mandlakazi International Magude Chizavane Microwave Links link Xai-Xai Macia Mbamba Cross Border Links SOUTH Maputo VSAT Stations AFRICA SWAZILAND

34ResearchICTAfrica, Mozambique ICT Sector Performance Review, 2010 36Interview findings 35Accenture Analysis 37Interview findings 21 223 The table below provides an overview of fixed line connectivity by town Wireless/Mobile Network in each corridor:

Figure 10: Quality of Fibre Connections in the Mozambique segments of the Beira and Nacala Corridors Figure 11: Wireless Internet Connections Source: TDM Source: GSM Wireless Inteligence and Accenture Analysis

Area Type Priority of Area Extent of Coverage Technology

Nacala Corridor (Mozambique Section) Nacala Port Maximum Medium Fibre, Radio, CDMA 12 000 000 Namialo Town High Low Fibre, Radio, CDMA 10 000 000 Nampula Town Maximum Medium Fibre, Radio, CDMA 56% Cuamba Town High Medium Fibre, CDMA 8 000 000 Compound annual Mandimba Town Medium Low Fibre, CDMA growth rate Chiponde/ Mandimba Border Post Medium Low Fibre, CDMA Entre Lagos Border Post Low Very low 1 antenna CDMA 6 000 000 Dedza/ Colubue Border Post Low Very low 1 antenna CDMA Beira Corridor (Mozambique Section) 4 000 000 Beira Port/ Town Maximum Medium Fibre, Radio, CDMA Dondo Town High Medium Fibre, CDMA 2 000 000 Inchope Town Medium Medium/Low Fibre Manica Town Maximum Medium Fibre + CDMA 0 Catandica Town Medium Medium Fibre + CDMA 2000 2002 2004 2006 2008 2010 2012 Caia Town Medium Medium Fibre + CDMA Mutarara Town Low Medium Fibre + CDMA Luenha Town Low Medium Fibre Tete Town Maximum Medium Fibre + CDMA Wireless coverage has seen dramatic broadband Internet subscribers.39 Wireless coverage in Mozambique is Forbes/ Machipande Border Post Maximum Very low Radio + Fibre growth of over 56 percent Compounded However, in recent years, mCel has provided through a network of base Annual Growth Rate (CAGR) since experienced service quality issues resulting stations, and mostly through a radio Nyampanda/ Chuchamano Border Post High None Fibre 2000.38 This growth is being driven by its in market share loss to Vodacom and transmission network. However, due Villa Fronteira/ Marka Border Post High None Fibre lower construction costs, shorter rollout Movitel. to unreliable electricity supplies across Zobue/ Mwanza Border Post High Medium Fibre timeframes, and lower costs for end-users. Mozambique, base stations are primarily Dedze/ Colubue Border Post Low Very low 1 antenna CDMA This trend is in line with other developing Through significant investment from the powered by diesel generators Mwami/ Mchinji Border Post Low Very low 1 antenna CDMA countries in Africa where mobile is proving three mobile operators, it’s estimated to be the most efficient mechanism to that almost 72 percent of the population While competing telecom service providers deploy coverage in areas that lack adequate in Mozambique now has wireless mobile prefer to focus on urban areas, Movitel has infrastructure. coverage. Regionally, Southern Africa built 2,500 2G/3G base stations41 enabling There are three major competitors in the Established in 2001, Intra Lta was one of Cable TV has been available in Maputo has the highest mobile coverage with 81 it to cover most of Mozambique’s districts Internet Service Provider (ISP) category, the first wireless ISPs in Maputo, delivering since 1999. The operator, TVcabo, a 50/50 Mozambique has three mobile operators percent of the population covered, followed and highways providing significantly namely, TDM/Teledata, Internet Solutions broadband connectivity to consumers and joint venture between TDM and Visabeira, (mCel, Vodacom, and new entrant Movitel). by Eastern Africa at 77 percent. Coverage is increased access to rural areas. and TVcabo. Teledata Mozambique, a SMEs through licensed frequency spectrum. also provides high-speed Internet access via As the largest operator in the country, lowest in Western and Middle Africa, at 74 subsidiary of TDM, was established in 1989. In September 2009, Internet Solutions (IS) the cable network under the name NetCabo mCel, has the most extensive network percent and 72 percent respectively.40 The company offers a wide range of data and Convergence Wireless Networks (CWN) and has announced plans to establish local coverage. As of 2012, it had the most communications, Internet connectivity, acquired a 68.5 percent stake. networks in Quelimane, Nampula, Nacala, subscribers at 4.5 million and 522,000 domain registration, e-mail solutions, web Tete and Pemba. hosting and more, based on a MPLS/IP network and two VSAT hubs on a Ku-Band and WiMAX network.

38Accenture Analysis 39GSM Wireless Intelligence, 2013 40GSM Wireless Intelligence, 2012 41http://www.frost.com/prod/servlet/press-release.pag?docid=287756927 23 24 Figure 12: Mozambique Wireless Mobile Coverage Source: INCM and Accenture Analysis Public Internet Access Locations

INDICATIVE Beira Corridor Wireless Internet Coverage Due to the widespread poverty and high cost Community Multimedia Centres (CMCs) in In 2010, the CMC program was taken over Main City/ Ports of access, most Internet users in the two Mozambique have been setup for a decade and by the Mozambican Ministry of Science High The main city of Beira has Coverage corridors access the Internet through one of represent the most common model of public and Technology (MCT), with the goal of advanced Internet technology the many cybercafés or public media centres. access to ICT venues across the country. providing ICT access to all 128 districts installed, with main business of the country within five years. In total, connecting primarily through The number of people in Mozambique who Community multimedia centers (CMCs) are these public access facilities amount to 42 a fibre connection from TDM access the Internet through mobile phones community-based organisations providing venues countrywide, including 34 CMCs, 6 with back-up links to multiple is very limited compared to fixed access access to information and communication Millennium Villages, and 2 Telecentres.43 operators as a redundancy. when compared to other countries. It is technology venues that combine a In addition operators have estimated that less than 25 percent of all community radio and telecentre. Besides Yet, despite the roll-out of these venues, established 3G base stations to Internet traffic generated flows through computers and the Internet, benefits recent surveys reveal issues with poor connect users. mobile devices in Mozambique, compared offered by telecentres include technologies management of the facilities, lack of to Nigeria that handles almost 57 percent such as a fax, a printer, and a phone. equipment, and lack of Internet coverage 42 Towns of its traffic through smartphones. at these locations. A recent survey of 10 Moderate With the introduction of Coverage Since they provide access to information, centres revealed just two—or 20 percent— 44 Movitel and rollout of over telecentres promote knowledge on critical had access to the Internet. 2,500 base stations, most towns sectors of socio-economic developments. in the Beira corridor are covered for broadband, but stakeholders Figure 13: Community Media Centres complain about quality of Source: New Mine Lab

speed, which forces them to Lindi TANZANIA head to a high point (tree or Mtwara Northern Ruvuma hill) to get better speeds. Northern

NAMBIA Nassa Cabo Delgade Border Posts Low to Interviews with transport Moderate Coverage Eastern Cetral operators reveal low connection MALAWI Legend: speeds at most borders. Most Nampula Tute Mobile Operator 1 border posts utilise 3G due to lack of fixed networks, and are Southern Mobile Operator 2 prone to breakdowns due to Zambezia Population Centres electricity cuts. Legend:

Sofaia Quelimane Nacala Corridor Wireless Internet Coverage 16 16 Centres in Masvingo Nacala Corridor Main City/ Ports Towns Border Posts Connectivity at the Nacala port/ Qualify wireless Internet With the exception of town has improved significant connections is limited to the Chiponde/ Mandimba, stable Manica over the past years. The port major towns. Our interviews internet connections at the 6 Centres in Inhambene 6 has dedicated VSAT, Fibre and revealed very poor Internet borders are limited and mainly Beira Corridor 3G links. Nacala port is highly speeds and frequent breakdowns use 3G modems to connect. dependant on the stability of resulting in people using multiple Most border posts lack access Gaza Moderate Moderate Low to NO the rest of countries backbone, to High modems from different operators to low to critical infrastructure to ICT Coverage with a breakdown in the central Coverage to switch network to improve Coverage as well the necessary power 12 Centres in and south causing lengthy availability infrastructure to operate 12 outages effectively Maputo Corridor SWAZILAND Connection Strength: Low High 42GSM, Wireless Intelligence, 2012 43Community Multimedia Centres in Mozambique, New Mine Lab 44http://developmentinformatics.org/conferences/2013/papers/Vannini-Rega-Sala-Cantoni.pdf 25 26 Chapter 4: Barriers and Solutions

Figure 14: Internet Research Framework Source: Accenture Analysis

As one considers approaches to stimulating research methodology will take a critical look and promoting internet development, we at the issues and opportunities from both a need to recognise the full scope of the supply and demand perspective, defining a challenges that must be addressed. Given that conceptual framework that reviews both sides 1 2 these challenges tend to be multi-layered, to assess Internet needs, barriers and potential improving Internet access only addresses one solutions. impediment linked to Internet development. Supply Even with networks in place and accessible, From this, we have mapped this supply and Availability Quality barriers remain due to insufficient demand. demand matrix into four defining quadrants: Availability, Quality, Affordability, and Those countries most successful in Internet Awareness. development have focused on developing holistic policies to support both sides of the Internet supply and demand equation. Our Affordability Awareness

Demand 3 4

Summary Findings

Availability creating an ongoing, multiyear, broadband- unbundling) as well as a framework to allow This measures the extent to which a specific strategy board that can work with mobile virtual network operators to enter the population is exposed to the necessary government on how to define its future market to stimulate downstream demand in infrastructure to engage in the Internet strategy as well as a broadband research the Nacala and Beira Corridor. economy and looks at three key components programme. Physical Network Infrastructure namely: The regulatory environment and As a result of low Internet penetration, fewer policies that govern and promote internet Business Environment users mean that networks correspondingly development; the business environment and There are several initiatives running at the operate at higher cost or that their costs the key factors that promote competition and moment to improve the general business are spread over a smaller user base, making ease of doing business; and lastly, we look at environment, but there are still high them more expensive to build. In addition, the physical network and the infrastructure entry barriers for new mobile operators. operators lack an efficient and cost-effective available to support internet development. Mozambique struggles with lack of stable mechanism to work with Government and electricity due to the poor quality and other private sector players to build on Regulation availability transmission lines increasing the existing infrastructure. We recommend the The ICT sector has undergone significant cost of operation due to the need for diesel private sector work with Government to reforms in the past years and is currently generators. simplify the ‘rights of way’ regulation and in the process of introducing a revised open access to its existing infrastructure to telecommunications law, but Mozambique Competition in the Internet market is limited more cost effectively deploy new connections. still lacks a single clear broadband/Internet with only three licenced mobile operators vision. The current ICT policy is more and lack of infrastructure-sharing regulations Quality than 10 years old and there is a lack of creating significant cost barriers for new This factor measures the quality and stability understanding and clarity around the roles entrants. We recommend investing in the of services, along with the ability of existing for each of the ministries and sub-sectors development of effective infrastructure- internet technologies to support the needs of within Mozambique. We recommend sharing regulations (e.g. local loop organisations. The factor looks at three key

27 28 components: Internet Technologies, Common major cities don’t have adequate connection $800, while smart phones generally range critical lack of ICT focussed development Ultimately, what motivates people to buy Privacy and Security Sector Platforms and Quality of Service. to homes or are operated over copper cables. from $100 to $400 depending on capability programmes at primary school level. One way broadband services and devices is that Threats to privacy and data protection must In addition the wireless networks outside and brand. We recommend investment and to expand access to broadband and ICTs in the they believe broadband will enrich their be addressed to foster demand and promote Internet Technologies major cities are unreliable and are not capable lobbying of the government to establish two corridors is through the deployment of lives. Despite developments in mobile and broadband take-up in Mozambique. Currently, Internet usage in the country has been of supporting broadband speeds and services a subsidy programme to lower the costs training units at the existing community media online payment platforms, penetration of there is very little enforceable law around cyber hampered by inadequate fixed-line due to existing network overcrowding. In an of Internet-enabled devices to allow more centre (CMC) infrastructure and extending internet applications to improve business transactions and it lacks the required legal and infrastructure and the high cost of bandwidth, effort to alleviate consumer concerns about affordable access to users—specifically small access to rural areas through mobile education productivity has been limited. As a regulatory tools to ensure efficient prosecution but this market sector is now accelerating service quality and help define a common businesses across the entire transpiration labs and broadband carnivals. starting point we recommend investing and consumer protection. We recommend the following the introduction of new broadband understanding of what is expected from (transport and trade) value chain in Nacala in a programme to look for potential development of programme that can work with services, including ADSL, HFC cable modems, operators, governments are monitoring and and Beira. Internet Applications applications developed elsewhere in the Government to define a legal framework WiMAX, 3G mobile and even Fibre to compiling reports on service quality. We One of the critical requirements for Africa that can potentially be applied for that may include criminal codes, procedures the Home (FttH). But even with these recommend to conduct a consumer research Internet Connection Costs business to use the Internet is the the Mozambique environment, such as and enforcement, privacy laws, commercial introductions, the rural populations outside of study on the needs of businesses relating High expectations created around SEACOM availability of locally relevant applications. those generated from organisations like transactions, and electronic communications. major towns still lack access to cost effective to Internet service quality to support the that it would lead to the reduction in Kenya I-Hub. and quality connections. We recommend INCM to update Mozambique’s ‘Quality of consumer bandwidth prices are yet to Figure 15: Internet Connectivity Solutions developing a research programme to test Service’ regulations with a specific focus on materialise. Mozambique is currently ranked Source: Accenture Analysis and pilot the potential of low cost Internet addressing the quality needs of small and 162 out of 169 on the ITU broadband cost technologies to connect SME in the transport medium enterprises in the Nacala and Beira index, making it one of the most expensive sector, as well border posts and key logistics corridors. countries globally for Internet. The Universal 1 Broadband Strategy Refresh Downstream Competition Rights of Way Access towns along the two corridors. Although Access Fund was established in late 2006 there are various solutions available in the to support network rollout in rural areas to Create an ongoing, multiyear, Invest in the development of effective Support network expansion and internet Affordability broadband - specific strategy board infrastructure sharing regulation as well a connections through working with existing market, TV white space has shown significant provide affordable access to masses and in This factor measures the level of cost- that can work with government on framework to allow Mobile Virtual Network transport infrastructure projects in Nacala potential through trails in various African effectiveness of acquiring an Internet-enabled 2009 developed a robust strategy to guide countries. how to define its future strategy as Operators to enter the market with focus and Beira to reduce the cost of access to civil devise, cost of installation and ongoing its efforts, but so far very few projects well as research programme with a to increase competition in the Nacala and infrastructure Internet service costs. Key analysis factors have been implemented. The UAF is faced specific focus on transport sector Beira Corridor Common Sector Platforms include device penetration, device cost and with a long and administratively heavy Availability The telecommunications law was drafted internet connection cost. tendering process and lack of capacity to in 2004, and focused mainly on voice run operational activities. We recommend 2 TV White Space Pilot Transportation Application Cloud Quality of Service Study regulation with limited attention paid to Device Penetration/ Usage that investment is required to develop a Develop a research programme to test Invest in a common cloud Conduct detailed consumer research Internet standards. The Ministry of Science Most handsets in Mozambique lack adequate new operating model for the UAF and to and pilot the potential of TV white infrastructure to foster open on Internet service quality needs for & Technology has been tasked to define Internet capabilities. The sector is dominated implement a sustainable mechanism to train space to connect rural communities, application standards and integration transport organisations and support common sector guidelines, but with limited by basic Nokia texting phones, and mobile local resources. small business in the transport sector of internet technologies to scale Government to update Quality of Service as well border posts along the Nacala development of transport applications regulation with new insights funding and technical capacity, progress has Internet cannot yet be considered an and Beira Corridor been slow. We propose that Government alternative connectivity option. In 2012, Awareness Quality foster open application standards and less than 6 percent of the population had This factor measures how aware a population integration of Internet technologies to scale access to a PC. We recommend investing in a is likely to be of the various ways in which Promote Local Production Establish Tax Credits for SMEs Support UAF Strategy development of transport applications. To programme that works with Government and the Internet can be used and contribute to 3 Promote the entry of local Lobby or invest in a subsidy Support cost effective Internet this end, we recommend the establishment the Confederation of Business Associations their lives. Key analysis factors include digital of a committee to define common and open manufactures of PCs and mobile programme for Internet-enabled connections through more effective (CTA) to help ease the barriers of entry for literacy, locally relevant internet applications devices in the Nacala and Beira devices to allow more affordable use of the Universal Access Fund to standards for online data transmission in global manufactures of computers, laptops and privacy & security. Mozambique that is cloud-enabled to help corridor to increase penetration of access to small businesses in the fund affordable access points for SME and low cost mobiles in the two corridors. transport and trade sector in Nacala in the Nacala and Beira corridors host and integrate new internet applications devices among the population Digital Literacy and Beira for the transport sector. Affordability Device Affordability Interviews in the market reveal that most The cost of mobile Internet-enabled devices small business owners lack the skill to operate Service Levels has come down significantly but they remain a computer or use the Internet effectively, CMC Training Labs SME Application Hub Cyber Protection Law While most urban areas in the Beira and 4 out of reach for most people, limiting their with the lack of digital literacy especially Utilise Community Media Centres and Invest in a programme to look for Assist government to define the Nacala corridors have fixed and wireless use mainly to corporate entities. Computers pronounced in the Beira and Nacala corridor. Broadband Carnivals to help educate relevant internet applications across appropriate cyber protection laws and networks in place, the fixed networks outside produced locally are sold for around $600- Stakeholder interviews revealed there is a the population and small businesses Africa and how it can be adapted for to establish a computer emergency across the two corridors on the use Mozambique to improve productivity response team (CERT) to help protect of ICT and the benefits of the Internet and demand for internet in the transport suppliers and consumers transport sector Awareness

29 30 Detailed Findings Availability

specific strategy board that can work with region, of which 2,075 MW are currently in Competition in broadband supply is also are spread over a smaller user base, making Government on how to define its future operation at Cahora Bassa. However, due to crucial for reducing prices and improving them more expensive to build. In the 1 2 strategy, as well as a research programme poor transmission line infrastructure within quality of service. With wireless networks, absence of mandatory infrastructure-sharing that tracks population use, ongoing barriers, the country, much of Mozambique’s current particularly in low-density areas like Nacala regulation, each operator is establishing its Supply Availability Quality and levels of digital literacy with a specific power capacity is exported to South Africa where the economics may not support own infrastructure, resulting in a waste of focus on how to improve Internet use in the and then re-imported back into the country multiple competing infrastructures, carriers resources and, ultimately, higher service costs. transport sector. at higher prices. An estimated 9-11 percent can share cell towers and some backhaul of the population has access to electricity. facilities as a way of reducing network build- In addition, operators lack an efficient and Setting specific strategy will provide clear In rural areas this is less than 2 percent, out costs.48 cost-effective mechanism to work with Affordability Awareness direction that will encourage investment and with the vast majority of the population still Government and other private sector players provide a blueprint for long-term action to relying on kerosene and wood as energy.47 Nigeria has been a key example of a country to build on existing infrastructure. As a result, improve Internet for trade. Such frameworks promoting competition and infrastructure- new operators like Movitel are laying exposed Demand 3 4 can launch ambitious national broadband “Stable electricity sharing. Operators in Nigeria have entered fibre on the ground and on poles in Nacala to visions, defining service goals and quality, into a variety of network-sharing agreements expand their reach. and education and skills issues.45 supply is a major aimed at reducing costs and improving the quality of supply. In addition, operators are We recommend the private sector work with This measures the extent to which a Regulatory Environment The broadband development process issue: I would rate it required to install multiple fibres in their Government to simplify the ‘rights of way’ population is exposed to the necessary This examines the level of Government will benefit from the broader range of cables, even if they only need one. regulation and open access to its existing infrastructure to engage in the Internet investment and maturity of policies to perspectives that can now be presented to four out of 10, our infrastructure to more cost effectively deploy economy and looks at three key components improve ICT infrastructure. the regulators. One of the early broadband generators run at least These additional “dark” (unused) fibres may new connections. Through the current namely: The regulatory environment and leaders, the Government of the Republic of not be used initially, but may be held in large infrastructure investments in Beira policies that govern and promote internet The Mozambique ICT sector has undergone Korea, has developed six plans since the mid- once or twice a week, reserve for future use by an existing operator and Nacala, we see significant potential development; the business environment and significant reforms in the past decade and 1980s that have helped to shape broadband or new entrant. This may be a very cost- to incorporate ICT infrastructure plans in the key factors that promote competition most recently has partnered with Pyramid policy in the country. resulting in significant efficient way to manage fibre optic networks conjunction with the transport infrastructure and ease of doing business; and lastly, the Research in conjunction with other partners because installation (and the associated civil investments. physical network and the infrastructure to develop a revised telecommunications The Korea example shows that policy communication works costs) only needs to be done once as available to support internet development. law with new regulations for Internet approaches can effectively move beyond opposed to multiple rounds of digging to Most of the cost of constructing fibre optic development, which is expected to come into network rollout and include research, disruptions” - Large install multiple fibres.49 cable network along these alternative effect this year. manufacturing promotion, user awareness, Transportation Company in infrastructure networks lies in the civil and digital literacy. It also highlights the At the same time, the demand created by works. By lowering the cost of access to “The regulator has The World Bank has also been very active possibilities for sector growth based on long- Beira Corridor new downstream operators will improve the these infrastructure networks and reducing made a concerted to support the government to improve term interventions focused predominantly on Competition in the Internet market is limited financial viability of backbone networks, since the risk associated with it, Mozambique can technical capacity and has been providing opportunity generation rather than on direct with only three licenced mobile operators they are the entities on which traffic and significantly increase incentives for private 46 effort to improve support on several programmes to improve public investment. and lack of infrastructure-sharing regulations revenue is generated. investment in backbone networks. eGovernment efforts. creating significant barriers for new entrants. the ICT environment We recommend that several partners within the In towns one often sees two cell tower base Physical Infrastructure One way to reduce costs is to make rights-of- But with these improvements, Mozambique country be included in this committee. With the stations next to each other when this could This looks at the level of infrastructure way readily available to network developers through new cost is still hampered by a lack of a single clear introduction of a revised telecommunications have been deployed to connect a rural town. available at the global first mile, metropolitan by simplifying the legal process and limiting broadband/ internet vision and roadmap: law, the time is right for all sectors to align middle mile, and local last mile. the fees that can be charged by local models, investment the current ICT policy is more than 10 years around a single vision/roadmap. We recommend that parties invests in the authorities. For example, a railway company and technical support old and there is a lack of understanding development of effective infrastructure Coverage of Internet infrastructure is could partner with one or more operators to and clarity around the roles for each of Business Environment sharing regulation (e.g. local loop adequate in major towns, but smaller towns build a fibre optic cable network along railway from the World Bank in the ministries and sub-sectors within This examines the extent to which the business unbundling). As well as a framework to allow and rural areas still face challenges getting lines. In January 2011, for example, Serbian Mozambique. environment (e.g. power supply or level of mobile virtual network operators to enter the access to quality Internet connections. Railways and PTT Srbija agreed to construct past years” – Isabel Neto competition) encourages investment in ICT. market to stimulate downstream demand in telecommunications infrastructure jointly To keep up with this dynamic and ever- the Nacala and Beira Corridor. As a result of low Internet penetration, fewer along Serbian Railway’s corridors, totalling – World Bank Senior ICT 48 changing sector, we recommend the creation Mozambique has one of the largest Allowing competition to flourish will lead users mean that networks correspondingly 2,031 km. Specialist of an ongoing, multi-year, broadband- hydropower generating potentials in the to greater efficiencies in network build-out. operate at higher cost or that their costs

47Mozambique’s Infrastructure: A Continental Perspective, AICD 2011 45World Bank - Broadband Strategies Handbook 48 World Bank - Broadband Strategies Handbook 46Source: http://blogs.cisco.com/news/formal-broadband-plans-spur-economic-and-social-development 49https://itunews.itu.int/En/1449-Nigerian-Communications-CommissionBRDelivering-broadband-for-development-in-Nigeria.note.aspx

31 32 Quality

One of these trials has recently been stages of helping the Ministry define these TV white space completed in South Africa. The trial saw guidelines and the process is expected to be 1 2 technology has Google and partners like the South African concluded in the next few years. The sector Tertiary Education Network (TENET), also lacks a coordinating body to leverage Supply Availability Quality significant potential the Council for Scientific and Industrial disparate applications and ensure a scaling Research, Meraka, and the e-Schools effect for the development community. in Mozambique as Network rolling out broadband access to 10 schools in Cape Town’s northern suburbs, We propose that Government foster open it does not require a giving them a 2.5 mbps service during peak application standards and integration of Affordability Awareness periods from March to September 2013. Internet technologies to scale development large infrastructure The test hoped to prove that TVWS could of transport applications. To this end, investment and due successfully be used to provide wireless we recommend the establishment of a Demand 3 4 internet access to some 9,000 students committee to define common and open to radio frequency without interfering with TV reception in the standards for online data transmission in area, as well as to raise awareness about the Mozambique that is cloud-enabled to help propagation potential of the technology in the country host and integrate new internet applications advantages of TVWS and the broader continent.50 for the transport sector. This factor measures the quality and accelerating following the introduction of Television spectrum is capable of penetrating The traditional, “ownership” model of stability of services, along with the new broadband services, including ADSL, frequency bands, large obstacles such as trees and buildings technology has presented significant ability of existing Internet technologies HFC cable modems, WiMAX, 3G mobile and geographical landscapes much more easily than WiFi spectrum or obstacles for development agencies and to support the needs of organisations. even Fibre to the Home (FttH). WiMax, making it easier to roll out and NGOs to consistently and broadly exploit The factor looks at three key components can be covered with more affordably. Access to this spectrum IT. For enterprises of all sizes in the sector, namely: Internet Technologies, Common The Ministry of Science and Technology could enable more powerful public Internet IT infrastructure costs—including hardware, Sector Platforms and Quality of Service. is in discussion other Ministries and the fewer base stations” connections—with extended range, fewer software, and technical support—can be local cabinetto investigate the use of dead spots, and improved individual speeds. significantly reduced with the adoption of Internet Technologies new technologies like TV white space and - Dr. Fisseha Mekuria - TVWS technology is designed for unlicensed cloud computing technologies. This measures the extent to which the 4G. The APC [Association for Progressive Research Leader, CSIR (but not unregulated) use, enabling it to existing wireline and wireless technology Communications] and its partners gathered be deployed in a similar manner to other One initiative that has been very successful capability is able to support public and government officials and industry regulators Meraka unlicensed wireless technologies such as in the agriculture space is e-choupal. The private needs. from South Africa, Kenya and Mozambique WiFi, resulting in lower entry barriers, more application provides vital information at a recent workshop in Johannesburg to The key barrier to deployment of these competition, and ultimately better consumer on crop prices, weather conditions, and Internet usage in the country has been focus on rolling out television white space in innovative technologies is lack of private service and prices. scientific farming practices to 3.5 million hampered by inadequate fixed-line Africa. All regulators at the event expressed sector and government support in terms farmers across 31,000 villages. The system infrastructure and the high cost of an interest in piloting TV white space of funding and technical capacity to Common Sector Platforms allows them to use an e-trading service to bandwidth, but this market sector is now technology. investigate, lobby and deploy innovative Common sector platforms refer to the get the best prices in selling their crops over internet technologies like TV white space integration of IT platforms from the the Internet.51 to help connect rural populations in beginning of the system design process, “We see the potential of implementing innovative Mozambique. ensuring interoperability. We recommend developing a research The telecommunications law was drafted technologies like TV white space to connect programme to test and pilot the potential in 2004, and focused mainly on voice rural areas. To this end, we have started initial of low cost Internet technologies to connect regulation with limited attention paid to SME in the transport sector, as well border Internet standards. The Ministry of Science discussions in Mozambique” posts and key logistics towns along the & Technology has been tasked to define two corridors. Although there are various common sector guidelines, but with limited - Teemu Seppala - Ministry of Science solutions available in the market, TV white funding and technical capacity, progress has space has shown significant potential been slow. The World Bank, in partnership through trials in various African countries. with Intec Consulting, is in the early

50http://www.tenet.ac.za/tvws 51www.wri.org/sites/default/files/pdf/dd_echoupal.pdf 33 34 Affordability

Service Levels With the increasing reliance on the Internet, medium enterprises is the Nacala and Beira There has been a recent influx of low cost This measures the level of service, latency even brief interruption, degradation, or corridors. 1 2 handsets from Asia, but interviews reveal the and uptime provided by ISPs. compromise of service may have significant quality is poor and often have to be replaced social, economic, and political consequences. One example of this is the within a few months. While most areas have fixed and wireless Telecommunications Regulatory Authority Supply Availability Quality networks in place, the fixed networks Current service availability has improved but (TRA) in Bahrain, which publishes data on We recommend to invest in a programme outside major cities don’t have adequate it is still far away from acceptable standards: wireline broadband performance. Protecting that works with Government and the connection to homes or are operated over fibre interruptions of service are reported the interests of subscribers and consumers Confederation of Business Associations (CTA) copper cables. In addition the wireless frequently, leaving most of the Northern in respect of quality of service is one of to help ease the barriers of entry for global networks outside major cities are unreliable provinces isolated. the major duties of TRA as set out in that Affordability Awareness manufactures of computers, laptops and low and are not capable of supporting broadband country’s Telecommunications Regulatory cost mobiles in the two corridors. speeds and services due to existing network Unlike prices, which users can easily Authority Act of 2011. The TRA measures overcrowding. Most people and businesses compare, the telecommunications industry upload and download speeds for different Demand 3 4 By easing the process of entry one can help subscribe to multiple operators in order to rarely publishes information around broadband packages, domain name system facilitate a programme to produce low cost switch during frequent breakdowns. quality of services. Although there is a (DNS) response (time taken in milliseconds to equipment as well as boost employment and general framework for quality of service translate a domain name to its IP address), trade in the two corridors. in Mozambique, the law is not enforced and ping (an echo request sent to a server to This factor measures the level of cost- due to a dispute between Sahara and the in practice due to a lack of monitoring test latency)53 effectiveness of acquiring an Internet- local government. It is recommended that the programme look “There is general mechanisms and tools. enabled devise, cost of installation and for partners and programme insights from Internet availability, but There are various mechanisms to record ongoing Internet service costs. Key analysis other East African countries like Kenya and There is often a marked difference between this data, but the most effective means has factors include device penetration, device Tanzania that have been focussing on this our key limitation is the advertised and actual speeds achieved been through the user consumer surveys to cost and internet connection cost. We have two informal sector in past years. In collaboration with by users, and our market reviews reveal identify the critical pain points in service markets, one is the ICT incubators at Jomo Kenyatta University speed and stability of significant differences between towns quality, giving network operators a clear Device Penetration of Agriculture and Technology (JKUAT), the within the two corridors. In an effort understanding of expectations. This factor measures the current usage and grey import, where Government of Kenya is implementing a Internet connections. to alleviate consumer concerns about future penetration of smart phones to enable project to assemble low-cost PCs for the service quality and help define a common Internet access. people individually local market which is intended to provide an The networks are understanding of what is expected from incubation environment for local university overloaded and hamper operators, governments are monitoring and Most handsets in Mozambique lack adequate import electronics and students. In addition, it will give Kenyans compiling reports on service quality.52 We Internet capabilities. The sector is dominated access to affordable, robust PCs and create a our expansion of recommend to conduct a consumer research by basic Nokia texting phones, and mobile resell them without market that will not only provide hardware study on the needs of businesses relating Internet cannot yet be considered an any guaranties and and software products, but also create an branches outside of to Internet service quality to support the alternative connectivity option. environment where these products can be INCM to update Mozambique’s ‘Quality of cheaper than the formal developed and manufactured.54 large towns due to their Service’ regulations with a specific focus on Despite the enormous growth of the mobile addressing the quality needs of small and sector in Mozambique, the real contribution resellers, then you have Promoting the entry of local manufactures inability to transfer data of this segment to increase Internet of PCs and mobile devices in the Nacala and effectively” – connectivity remains very low. The number the “second hand” Beira corridor will not only increase device of people who access the Internet through penetration among the local population, Large Financial Institution mobile phones is very limited compared to market, mostly stolen but also foster ICT skills development in fixed access. the country and an ecosystem of new ICT goods, sold at a fraction developments. In 2012, less than 6 percent of the of the real price” – population had access to a PC. In partnership with the Mozambican Government, South Bruno Darsam: ICT officer African company Sahara Computers set up a at Institute for Social and PC manufacturing facility in Maputo, initially producing between 50 and 70 computers a Economic Studies day, but the operations have come to halt

52World Bank - Broadband Strategies Handbook 53https://www.tra.org.bh/EN/marketQuality.aspx 54IST Africa—ICT Initiatives in Africa 35 36 Awareness

Device Affordability programme to lower the costs of Internet- generators at base stations). One way to expand access to broadband This measures the ability of citizens and enabled devices to allow more affordable and ICTs in the two corridors is through 1 2 businesses to access the Internet through access to users—specifically small businesses These business barriers are being the deployment of training units at the Internet-enabled cost-effective devices. The across the entire transpiration (transport addressed various development projects existing community media centre (CMC)

Supply infrastructure and extending access to rural cost of mobile Internet-enabled devices has and trade) value chain in Nacala and Beira. in Mozambique, but one area requiring Availability Quality come down significantly but they remain out of Using subsidies to overcome obstacles attention is the Universal Access Fund areas through mobile education labs and reach for most people, limiting their use mainly to broadband affordability would spur (UAF). A UAF was established in late 2006 broadband carnivals. Countries globally to corporate entities. Computers produced economic growth, and increase the value of to support network rollout in rural areas to have faced this issue and there are powerful locally are sold for around $600-$800, while network services in general, and broadband provide affordable access to masses and in examples of how one can educate the smart phones generally range from $100 to services in particular, as more people 2009 developed a robust strategy to guide Affordability Awareness general population. $400 depending on capability and brand.55 participate. its efforts, but so far very few projects have been implemented. The UAF is held back One of these examples is from Malaysia. The According to recent Gartner reports, a Programmes to subsidise the purchase of by long tendering processes and limited Demand 3 4 Malaysia Broadband Carnival held at Padang $50 smartphone is set to be released later laptops or phones can include tax breaks, capacity to effectively execute operational Merdeka Kuching in Sarawak was aimed at this year, but this is still out of reach for a subsidies, and price reductions. One country activities. raising awareness on the usage of broadband population where the average income is less that has made significant strides on this and Internet applications in Sarawak. Among than $47 per month.56 front is Colombia. Colombia has implemented Private sector–only development may not This factor measures how aware a its objectives was to reach out to students, subsidy measures aimed at lower-income be sufficient to reach the most remote population is likely to be of the various Most farmers in rural folks and small medium enterprises “The cost of Internet inhabitants that have allowed, through areas in Nacala and Beira. In addition, the ways in which the Internet can be used and Mozambique are still in in suburban and rural areas, and to attract public-private actions, the widespread use of private sector may see these markets as less contribute to their lives. Key analysis factors broadband subscriptions to help reach the equipment is out of the Internet. As a consequence, broadband attractive due to low usage factors and focus include digital literacy, locally relevant the basic texting phase government’s target of 50 percent household connections grew by 180 percent in the their efforts on metropolitan areas instead. Internet applications and privacy & security. broadband penetration by the end of 2014. range for most people: country in 2.5 years. Penetration of personal and have not adopted The carnival educated the public on best we have to buy dongles computers (PCs) has also increased recently, One country that has been able to Digital Literacy practices in Internet usage, the implications thanks to this policy which eliminated sales successfully leverage public funds to Despite significant improvements in the Internet. Almost of Internet misuse and exposed them to the and phones for our taxes and duties on computers, making promote affordable access is Brazil. The education over the last few years, even today latest devices for Internet access, application Colombia the country where the cheapest objective of the PIRAÍ–Digital City project in only small percentage of children complete all small business and local creative content.61 suppliers, as there is no computers in the region can be found.57 Pirai, a small city in the Brazilian state of Rio their basic education, barely eight percent are technologically de Janeiro, is to grant democratic affordable complete secondary, and just 136 of every We recommend to first focus on establishing way they can currently Internet Connection Affordability access to existing ICT resources. The Pirai 100,000 go on to university highlighting the illiterate, understanding ICT training units at the community media Internet connection affordability refers Digital Project uses a network based on skills shortage that the country faces.60 centres and, when proven successful, afford this expense” - to the installation and monthly network Wi-Fi technology that covers the entire city. on how to use a leverage broadband carnivals to reach the Large Transportation connection fees (fixed periodic charges). The network serves 39 telecentres with 145 Interviews in the market reveal that most general public. High expectations created around SEACOM computers in public buildings; 20 telecentres small business owners lack the skill to computer or Company - that it would lead to the reduction in in schools, with 188 computers serving over operate a computer or use the Internet Internet Applications consumer bandwidth prices are yet to 6,000 students; and 20 access points in smartphone is low, nor One of the critical requirements for business General Manager effectively, with the lack of digital literacy materialise. Mozambique is currently ranked public libraries and other institutions with 66 especially pronounced in the Beira and do they see the value in to use the Internet is the availability of Due to the high cost of Internet-enabled 162 out of 169 on the ITU broadband cost computers. Each telecentre has an average Nacala corridor. Stakeholder interviews locally relevant applications. Ultimately, 59 mobile phones, the landscape is still index, making it one of the most expensive of 220 users per day. revealed there is a critical lack of ICT- what motivates people to buy broadband 58 the use of the Internet dominated by basic Nokia texting phones, countries globally for Internet. focussed development programmes at services and devices is that they believe limiting Internet access and usage. Large Considering that more than 70 percent of primary school level. in their businesses yet” broadband will enrich their lives, offer companies are supplying dongles and phones Contrary to expectations, the price of the population in Mozambique reside in rural convenience, provide entertainment, and to their workforce, but the majority of small Internet bandwidth for end-users remains areas, efforts to extend network coverage to By educating small business in the - Todd Kirkbride - Director— improve their businesses. Applications add businesses lack access. very high. The cost of bandwidth is driven these areas are critical for economic growth. transportation value chain through digital Public Private Partnerships value to broadband, as they provide tools by numerous factors, including the cost of Enabling a more robust Universal Access literacy programmes, Mozambique can help and services that are tangible and valuable 62 We recommend investment and lobbying international bandwidth and basic business Fund (UAF) through an efficient underlying to drive adoption to a broader user base and TechnoServe for both consumers and businesses. of the government to establish a subsidy operational costs (e.g. running diesel operating model to promote expansion educate them at the same time. projects in the two corridors is a key enabler. 55In-Market Interviews 56World Bank - Data and Statistics 2013 57Colombia’s Digital Agenda: Successes and the Challenges Ahead 60Mozambique EFA Profile, Unesco 2012 58Measuring the Information Society, ITU 2013 61www.intel.com/Assets/PDF/casestudies/WA-322898001.pdf 59http://www.intelligentcommunity.org/clientuploads/PDFs/Pirai.pdf 62Source: World Bank - Broadband Strategies Handbook 37 38 Conclusion Way Forward

Despite developments in mobile and online with universities can promote ICT and privacy laws, commercial transactions, and At the end of 2012, there were around 8 actions that might be undertaken. payment platforms, penetration of these skills development in Mozambique. We electronic communications. million mobile subscribers in the country, services has been limited and only deployed recommend that a centre like this should which brings its mobile penetration rate to The Mozambican Government should act in major cities. There’s a lack of tailored focus on applications that directly improve Computer emergency response teams just 33 percent, a very low figure against the as an enabler and initiator, increasingly solutions to enable online commerce. the ability of business in the two corridors to (CERTs) are new types of cooperative average 76.4 percent mobile penetration rate accountable and with greater commitments However, Government has launched several improve productivity. endeavours among governments, academic across the rest of Africa. Internet penetration to delivering on policies, regulations, projects with mixed results to enable online institutions, and commercial entities aimed is even lower at only 5 percent of the investment and education. Internet operators government services. The implementation of A key example of a centre like this is at identifying cyber vulnerabilities and population (1m people) and is concentrated in Mozambique need to act as partners and the Government Intranet project, commonly from the Netherlands. The Netherlands defending against cyber attacks. In March in large urban areas like Maputo. drivers, focusing on day-to-day business known as GovNet, was launched in 2004, created a centre for the development of 2011, the Sri Lankan computer emergency practices that extend beyond corporate with financial support from the Italian local applications for SMEs which focuses response team (SLCERT) identified several But the news is not all bad. There is a social responsibility initiatives to support and Government and the World Bank. on specific sectors of the economy (for fraudulent websites located in India and wealth of opportunities to increase Internet develop individuals and communities in a bid example, hotels, restaurants, health), but China that were selling fake tickets online penetration in Mozambique, and specifically to become more connected. There is ample As a starting point we recommend also promotes cross-sector applications. to the Cricket World Cup 2011 in order to in the sections of the Nacala and Beira opportunity and reward for those that create investing in a programme to look for The centre is half publicly funded, and steal users’ credit card information. SLCERT corridors located in the country. By seizing innovative solutions leveraging their core potential applications developed elsewhere projects require the participation of private was able to inform the Indian computer these opportunities Mozambique can set capabilities. in Africa that can potentially be applied developers. Examples of applications created emergency response team about these fake itself on path for hyper growth and solidify for the Mozambique environment, such in this centre are SME-specific solutions for websites and is seeking legal action against its position on the Africa growth agenda. Development agencies need to be proactive as those generated from organisations customer relationship management, Internet those responsible.65 in adopting new practices. As supporters like Kenya I-Hub. In addition, investing marketplaces, and applications to manage Moreover, the problems highlighted in this and activators, they should forge ahead with in a local application hub in partnership radio frequency identification (RFID) and report have been acknowledged by key government and business initiatives that integrate personal data assistants in business “People and small stakeholders in the country as well across solve real day-to-day problems at grassroots “The use of online processes.63 the globe. Multi-lateral organisations level. In this way, the combined efforts of businesses have such as the World Bank, the Mozambican all stakeholders will amount to a solution commerce in Privacy and Security Government, corporates and development to Internet connectivity and spur economic As the Mozambique economy grows, critical significant trust agencies are all making commitments development for the benefit of all. Mozambique is almost services in the Beira and Nacala corridors focused on the resolution of the key such as water and electricity supply, issues with using the barriers. While there is no overall solution to It is critical that all parties work collectively non-existent, with just banking, transportation infrastructure, and Internet connectivity, individual efforts by if the challenge of Internet connectivity is public safety, will rely heavily on critical Internet for commerce various stakeholders do compound to make to be overcome and Mozambique - and the a few of the large SMEs information infrastructure.64 in Mozambique. There a significant contribution. The potential region’s - full potential. buying inputs from solutions outlined in this document are by Threats to privacy and data protection is no formally defined no means an exhaustive list of imperatives abroad. We see huge must be addressed to foster demand and but rather provide a broad insight into the promote broadband take-up in Mozambique. online commerce law potential to grow SMEs Currently, there is very little enforceable law around cyber transactions and it lacks and litigations can through a platform the required legal and regulatory tools to ensure efficient prosecution and consumer take up to five months that allows them to protection. Our interviews revealed that to settle”- Eduardo trade and sell online” - businesses feel it’s too risky to settle in court where it can take up to five months to settle Macuácua – CTA Deputy Wilson Chafinya – I a judgement. Managing Director FC Associate Operations We recommend the development of Officer – Farmer and SME programme that can assist the Government to define a legal framework that may include Training criminal codes, procedures and enforcement,

63http://ec.europa.eu/enterprise/sectors/ict/ebsn/national-initiatives/index_en.htm 64World Bank: Broadband Strategies Handbook 65http://www.slcert.gov.lk/

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