Mixed fortunes for telecoms innovation in Cameroon

Cameroon’s Ministry of Telecommunications has drawn up a digital transformation strategy to promote participation in the digital economy through more comprehensive infrastructure and lower-cost access to both phone services and the internet.

While the mobile telecoms sector has boomed, the rollout of fixed line infrastructure remains slow, with the lack of funding for new fibre infrastructure the biggest challenge. The Ministry hopes to counter this by expanding the national fibre backbone from 20,000km to 25,000km but the timetable for the work has not yet been revealed, so the goal appears more an aspiration than a concrete plan.

International Finance Corporation (IFC) figures indicate that investment in the Cameroon telecoms sector fell by 78% between 2016 and 2019, the latest year for which they had figures. Given increasing economic reliance on information and communications technology, including the need to roll out fibre networks, this represents a big shortfall in infrastructural development.

Almost 95% of all investment is made by mobile operators, such as MTN and Orange, so the fall in investment could be the result of high levels of spending on 3G and 4G infrastructure in 2014-16. Fibre network expansion has generally been left up to national telecoms utility Camtel, which lacks the resources to finance rapid development, so it would be helpful if the government or regulators could find ways to attract investment from other sources.

Good connections

In theory, Cameroon is well connected to global telecoms infrastructure through five subsea fibre optic cables that run from the country to other continents, but much of the existing capacity is unused. According to the International Finance Corporation (IFC), just 30% of the WACS cable capacity and 15% of the SAT3 cable are currently used. 

However, MTN Global Connect has signed a memorandum of understanding with Camtel to increase cable uptake, “accelerate digital transformation and allow Cameroon to position itself as a digital hub for the region”, the two partners said in a press release. The key to the strategy will be rolling out fibre networks across Cameroon, as about 14m of the population of 25m currently live in areas that are unconnected.

In November, the governments of Chad and Cameroon signed a memorandum of understanding on connecting their respective fibre optic networks. In a joint statement, they announced that the deal “reflects the two Heads of State’s desire to provide their countries with a secure and interconnected fibre-optic network to increase digital access, boost regional integration and achieve harmonious and integrated development of economies in the sub-region.”

However, no concrete agreement has yet been signed and little progress has been made on earlier deals on cross-border telecoms integration between the two countries.

Lopsided internet penetration

According to the most recent available statistics, Cameroon had 9.15m internet users in January 2021, up from 7.8m in the same month one year earlier. The national penetration rate has increased from 2% in 2011 to 34% in 2021 but the fixed-line broadband market appears to have stagnated, with only very slow growth in the number of subscribers.

By contrast, the number of mobile phone subscribers in the country increased from 10m in 2011 to 24m in 2020, driving internet usage in the process. 

Despite its established position, Camtel has been left behind by the telecoms boom but is now seeking to make up for lost time. In 2020 it secured 2G, 3G and 4G licences and this April concluded a roaming agreement with competitor MTN, allowing it to piggyback on MTN infrastructure in areas of the country that it does not currently cover. This gives it 2G coverage for 97% of the population, 90% with 3G and 70% with 4G.

As of November 2021, Camtel had 1.8m subscribers, just behind Nexttel with 2.3m, although both are a long way behind the market leaders, with Orange Cameroon on 11.9m and MTN 11.1m. Camtel has just begun to market its mobile services under its new Blue brand, with Blue sim cards distributed nationwide.

For its part, MTN Cameroon is preparing to test the 5G technology that will allow it to provide higher value services to consumers, following the established strategy of focusing first on market penetration and then on increasing average revenue per user (ARPU) rates.

Consumer uptake is expected to focus on Yaoundé and Douala in the first instance and there seems little that regulator Agence de Régulation des Télécommunications (ART) can do to spread the benefits more widely geographically. As ever, it will take many years for the benefits of the new technology to trickle down to rural areas and even fairly substantial regional towns.

Taxes on usage

Given the boom in the mobile and internet sectors over the past two decades, it is unsurprising that various governments around the world have suggested taxing activity in order to raise revenue. Such suggestions have usually been met with a storm of outrage and so such plans have usually been abandoned. However, mobile money has proved an easier target and it was here that Yaoundé introduced a 0.2% tax on transfers in January. 

The IMF has warned that the move could be counterproductive. In March it said: “Taxing mobile money can be fiscally inequitable and hinder the current low level of financial inclusion. The poor and unbanked segments of the population, who often live in rural areas and face high transaction costs from the formal banking sector, have been found to be negatively affected by the measure.”

Such taxes could also depress the size of overseas remittances and encourage more people to resort to the less secure method of using hard cash to transfer sizeable sums locally.

The Economic and Monetary Community of Central Africa (CEMAC), of which Cameroon is a member, has also suggested imposing a tax on voice calls of between CFA10 and CFA50 (1.6-8 US cents) per call, that could be spent on community projects. Officials have said that the tax could be designed in such a way that consumers did not pay it.

The only alternative source of payment would be the telecoms operators themselves but any such taxation would surely be passed on to subscribers through higher charges.

Startup incubation

The government of Cameroon is eager to encourage the creation of more internet startups in the country. The number of African IT and mobile banking startups is increasing rapidly but innovation is concentrated in a handful of countries, including Kenya, Nigeria, Ghana, South Africa, Egypt and Morocco, with Francophone sub-Saharan Africa generally lagging behind. Even here, Côte d’Ivoire and to a lesser extent Senegal are leading the way, with far less investment in Central Africa. 

However, a cluster of startups has emerged at so-called Silicon Mountain, centred on Buea in Southwest Cameroon. It is interesting that the cluster has emerged in Anglophone Cameroon, perhaps as the result of influence from other English-speaking countries in the region, like Nigeria. Benefitting from graduates from several nearby universities, developers and designers have set up dozens of new businesses, although as ever, funding remains an issue. 

In March, the Ministry of Posts and Telecommunications offered one year’s free internet access and associated equipment to 35 startups in Silicon Mountain in order to encourage the creation of technology and content specifically for the Cameroon market. The government is also seeking technical and financial support for Silicon Mountain from South Korean giant Samsung.