opportunities.One of the striking features of the recentboom in mobile communications is that it is largelyAfrican firms—such as MTN,Orascom,and Celtel— that are capitalizing on the new investment opportuni-ties.The boom is as much homegrown as it is based onforeign investment,and is therefore likely to prove moresustainable than previous rounds of investment in thecontinent.The challenge for Africa is not whether to integrateinto the global economy—that is now a given—buthow to become competitive within an integrationprocess that is already taking place.Competitiveness canbest be achieved through public-private partnershipsbetween firms and government to promote the take-upof new technologies and development of new skills.Thischapter provides some insights into how this could beachieved.Intuitively everyone can appreciate the speed,capa-bilities,and power of computers or instant messaging(even if this power is not always realized!).Historically,however,economists have struggled to prove causationbetween the adoption of ICTs and improved productiv-ity and economic growth.As Robert Solow famouslyremarked,“you can see computers everywhere but inthe productivity statistics.”Most studies originating inthe United States on the relationship between ICTs andproductivity have typically used static growth account-ing models to analyze pre- and post-1995 productivitydata relative to the number of computers or mainlines(1995 being an arbitrary cut-off point roughly corre-sponding to more rapid growth of the Internet inOrganisation for Economic Co-operation andDevelopment,or OECD,countries).
Depending onwhether cross-country regressions or case studies areused,on the variables and time period studied,on thedefinition of the ICT sector,and on the way endogene-ity is treated,results can differ widely.There are at least two reasons why the wealth of research in this field has failed to yield a consistentanswer.Regressions have mainly focused on growth inthe
of computers or fixed telephone lines andhave generally failed to take into account the networkeffects from connecting ICT devices together (whichare likely to be sizeable).Furthermore,due to the mas-sive growth in power and speed of ICTs over the lastdecade,there are likely to be not just one,but several,structural discontinuities in the time series data—that is,data for growth and productivity data for the last decadeare being related to “computers”that are fundamentallydifferent from the computers of the early or even mid1990s.Despite these problems,Fuss and Waverman(2005) note that there is broad consensus that technicaladvances in the Information Computer (IC) andTelecommunications (T) sectors have led to large directand indirect benefits to economic growth and produc-tivity.These advances allow for spillover effects and findsome support for modern,high-capacity telecommuni-cations networks and increased deployment of computershaving a positive impact on productivity.
In Africa,mobile phones are the most widely usedform of communications technology (see the later sec-tion of this paper on the private sector),so the debatesurrounding the macroeconomic impact of computersin the United States and Europe may be less relevant.Waverman et al.(2005) examined the specific growthimpact of mobile phones for both developed and devel-oping countries and found a significant growth impactof mobiles that is twice as important for developingcountries as it is for developed ones.
Moreover,theyfound an important “critical mass effect”whereby ICTshave a greater impact on productivity and growth thecloser the economy is to near-universal service.Waverman et al.(2005) suggest that their amplifiedimpact on productivity may be due to synergy and net-work effects.Despite some conflicting results (mainlybecause of the rapidity of technological change),ICTshave been found to improve productivity in severalstudies,and,more specifically,mobile phones have beenfound to have a positive growth impact in some Africancountries.
What role for governments?
Traditionally the role for government in ICTs in Africahas been a very direct one:owner and operator of theincumbent public telecommunications operator.This isnow shifting as African governments seek,instead,topromote competitiveness by establishing a sound policyframework and stable institutions,some of the definingfactors of competitiveness set out in Chapter 1.1.
In the increasingly integrated global economy,manyAfrican governments have committed to open up their domestic telecommunications market and introducecompetition.Half of all Africa’s fixed-line markets arenow subject to competition (Figure 1a) and nearly half have private-sector participation in their ownershipstructure (Figure 1b).The first privatizations of Africanincumbents took place in 1995–97,with a second roundin 2000–01.Today 25 African incumbents have beenwholly or partially privatized.Nevertheless,by compari-son with other regions,Africa remains the continentwith the highest number of monopoly service providersand the lowest proportion of privatized incumbentsworldwide.African mobile markets are more competitive thanfixed markets (Figure 2a) with four-fifths subject tocompetition in 2006 (Figure 2b).Over the last 10 years,
1 . 5 : C o m p e t i t i v e n e s s a n d I C T s i n A f r i c a