December 31, 2018

Further Growth Ahead in 2019, but Worrying Risks Loom

According to The Economist Intelligence Unit (The EIU), the research arm of The Economist, "The world's major industries are all set for further growth in 2019, but there are some worrying risks." The EIU's Industries in 2019 report discusses changes that US President Donald Trump's "policies—and other global trends—have already brought to six industry sectors: automotive, consumer goods and retailing, energy, financial services, healthcare, and telecoms. And we look ahead to the challenges facing these businesses in 2019."

The report highlights five major risks that could affect The EIU's industry forecasts for the year ahead.
  • The US-China trade war: The EIU cut its 2019 growth forecasts for the automotive and consumer-goods sectors in particular compared with six months ago.
  • A global slowdown: even those countries not directly affected by growing trade barriers could be vulnerable to a change in business confidence in 2019, with the most likely impact being on emerging markets.
  • Brexit: the UK's exit from the EU in March 2019 will be a drag on sectors including financial services, automotive and healthcare, regardless of any deal that is struck.
  • Sanctions on Iran: the US's decision to backtrack from the international Joint Comprehensive Plan of Action could push up global oil prices in 2019.
  • Cybersecurity and technology risks: a tussle for technological dominance is at the core of the US-China trade dispute, while regulators are also struggling to ensure safe connectivity.
The report importantly notes that "most of these risks are, to some degree, certainties. The UK will officially leave the EU on March 30th 2019, while US sanctions on Iran have already been imposed. It is not yet clear, however, what the full effects of these will be. Brexit's impact in 2019 depends on whether the transition deal that was negotiated in mid-November of this year is finalized, easing the UK's trade problems as it exits. In the case of Iran, much hinges on how successful the US—unsupported by the EU—is in blocking Iran's exports. If global oil supplies tighten sharply, then oil prices could yet soar. As for cybersecurity and technology risks, they are always present but are likely to increase in 2019 as connectivity spreads."

Moreover, "The power struggle between the US and China has already come to a head in 2018. In a three-stage process, the US has imposed additional tariffs of between 10% and 25% on Chinese imports worth about US$200bn a year. China has retaliated with its own trade barriers against the US, while liberalizing terms with some of its other trading partners. However, a further round of retaliation now looks likely in either December 2018 or early 2019, and could cover all of the remaining trade between the two countries."

I concur with The EIU that "how businesses react to rising tariffs will be as important as the tariffs themselves. Faced with increases in their trading costs, they can swallow the extra expense, pass it on to end buyers, or seek out new suppliers and new markets. They may also respond by reducing investment, laying off staff and reducing costs. Should that happen, we would expect global trade to shrink, inflation to rise, consumers' purchasing power to fall and global economic growth to slow."

The EIU expects all six of the industries covered in its "report growth in 2019, and in most cases it will be strong growth."
  • New-car sales in the 60 markets covered by this report will rise by 2.7%, with commercial-vehicle sales rising at the same rate.
  • World retail sales will increase by 2.8%, led by 6.1% growth in China.
  • Global energy consumption will rise by 1.8%, with particularly strong growth for renewables, while oil prices will firm.
  • Total deposits with the global financial industry will increase by 5.8%, while lending will rise by 6%.
  • Healthcare spending will climb by 5.1% worldwide, including 5.7% higher spending on pharmaceuticals.
  • Global mobile subscriptions will increase by 3%, fixed lines by nearly 2% and broadband subscriptions by 6%.
"This overall growth will give companies some breathing space as they maneuver to avoid the risks. Even so, the least adaptable will undoubtedly struggle during the sometimes difficult year ahead."

The Economist presents a list of ten items that will be the biggest stories of the year ahead.

What are your predictions for 2019?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

December 9, 2018

The Mobile Economy Will Generate $200 Billion of Economic Value in the MENA Region by 2022

A report published by PwC says the Middle East and North Africa (MENA) region is young, with over 40% of people under 25. Furthermore, PwC asserts that youth unemployment in the region is among the highest in the world at 28%.

While it does not generate the headlines on the nightly news in the United States, many governments in the MENA region understand it must cut public expenditures by reducing the number of people on the public payroll. Some government officials in the region also recognize the important role a thriving private sector will play in helping young people find jobs. Not only will a growing private sector ease governmental budgetary pressure, but it will produce additional tax revenue.

Therefore, as my colleagues and I seek business and investment opportunities in the MENA region's information and communications technology sector, we read with great interest The Mobile Economy: Middle East and North Africa 2018. Produced by GSMA Intelligence, the research arm of London, England-based GSMA, the report presents four key points.

Subscriber growth slowing, but growth potential remains

"By mid-2018, there were 381 million unique subscribers across the Middle East and North Africa (MENA) region, accounting for 64% of the population. Despite annual subscriber growth of 4% on average over the last four years, MENA remains the second least penetrated region in the world. There is, however, significant variation among countries in the region, from the advanced Gulf Cooperation Council (GCC) Arab States where 77% of the population on average are mobile subscribers, to Other Arab States such as Comoros, Djibouti and Somalia where subscriber penetration is around 30%."

The report importantly points out that "between 2017 and 2025, the MENA region will see the fastest subscriber growth rate of any region except Sub-Saharan Africa, growing above the global average at a CAGR of 2.5% to reach 459 million. By this time, 69% of the population will be mobile subscribers, only slightly behind the global average of 71%."

Mobile contributing to jobs and economic growth

It is the report's second point that I found most valuable with respect to the future potential of the region's ICT sector. According to the GSMA, "In 2017, mobile technologies and services generated 4% of GDP in the MENA region, a contribution that amounted to just under $165 billion of economic value added. By 2022, the mobile economy in the region will generate around $200 billion of economic value added as countries continue to benefit from the improvements in productivity and efficiency brought about by increased take-up of mobile services."

The report crucially explains that "the mobile ecosystem supported more than 1 million jobs in 2017. This includes workers directly employed in the ecosystem and jobs indirectly supported by the economic activity generated by the sector.

"In addition to the impact on the economy and labor market, the mobile sector also makes a substantial contribution to the funding of the public sector, with more than $17 billion raised in 2017 in the form of general taxation."

Advanced MENA markets at the forefront of innovation

With respect to 5G technology, the report notes: "Some mobile operators, particularly those in some of the GCC Arab States, are seeking to be global leaders in 5G deployments, and are pushing ahead with tests and trial launches ahead of commercialization as early as 2019. These markets will exhibit relatively rapid 5G rollout, with adoption reaching 16% of total connections by 2025, slightly above the global average."

"Enhanced mobile broadband will be the key use case in early 5G deployments in the region, while applications and services for enterprises are tested and then introduced. There also exists a significant addressable market for 5G-based fixed wireless services, particularly in those countries with limited fiber penetration. In the enterprise space, there is broad agreement from MENA operators on the key industry verticals where 5G can deliver the greatest long-term value, including smart cities, utilities, mining and tourism."

What is more, "While the potential is clear, long-term monetization may require greater maturity of the 5G ecosystem – particularly for the more innovative and mission-critical services, such as autonomous vehicles and certain smart city applications. Key to this will be industry-wide collaboration and innovation centers, where companies from different sectors can experiment with the 5G ecosystem to develop new products and services."

On the topic of Internet of Things (IoT), the report says "the number of IoT connections across the MENA region will triple between 2017 and 2025, reaching 1.1 billion. Currently, the consumer and industrial IoT segments have equal shares of total IoT connections, but industrial IoT is where most of the growth will take place due to an increase in smart utilities, smart retail and smart city deployments."

Moreover, IoT revenue in the MENA region will increase at an average annual rate of 19% to 2025 to reach $55 billion. Applications, platforms and services account for the largest share of IoT revenue and will grow further as mobile operators continue to deploy different strategies and business models to move beyond offering connectivity only."

The report also discusses the topic of digital identity in that "the MENA region has exhibited rapid uptake of digital trade, driven by growth in mass connectivity and mobile device penetration, and more recently by advances in the provision of digital identity. Consumers are increasingly demanding to access services securely, shielded by robust privacy safeguards and strong data protection delivered by digital identity capabilities. To this end, Mobile Connect is a secure universal log-in solution which, by matching the user to their mobile phone, allows them to log-in to websites and applications quickly without the need to remember passwords and usernames, and with no personal information shared without permission. Turkey is a key market for Mobile Connect: Turkcell, for example, uses the solution for its Fast Login authentication application, and is hoping to develop additional services that will form the basis of new revenue streams."

Realizing the potential of a digital society

I concur with the report's authors that "public policy and regulation are key factors in the spread of mobile-enabled services across the MENA region. By setting the right regulatory context, governments can create incentives for mobile operators to continually upgrade and expand mobile services in the region. The GSMA encourages governments across MENA to review and recalibrate telecoms policy to advance the digital transformation and to reflect new market dynamics. Three key areas require close attention:
  • Fostering a transparent and stable licensing framework that promotes a high quality of service and encourages investment; and
  • Aligning mobile sector taxation with national ICT objectives so as not to create obstacles to investment or consumer adoption; and
  • Creating a spectrum roadmap to meet future demand for mobile services.

What role does the MENA region play in your business or investment strategy?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

November 26, 2018

Is the US-China Trade War Creating Opportunities in Other Asian Countries?

Achieving business success often involves a certain amount of luck in trying to predict the future, which is challenging enough during periods of normal business activity. However, at the time of writing this post, there is nothing 'normal' in the world of international business. Whether I agree or not with U.S. President Donald Trump's allegations that China plays unfairly in the game of international trade, his policies are forcing my colleagues and I to reexamine our business dealings and investment exposure as they relate to the Middle Kingdom. When evaluating our short- and long-term strategy is: Should we shift our focus to business opportunities in other countries, which may benefit from the US-China trade war?

A new report, Creative disruption: Asia's winners in the US-China trade war, by The Economist Intelligence Unit (The EIU) boldly claims "the US and China are rapidly discovering how wrong Donald Trump was when he said that trade wars are good and easy to win. The two countries have so far imposed tariffs covering roughly US$360bn of merchandise trade between them. A breakdown in negotiations suggests that neither side is yet seriously looking for an 'off ramp' in the dispute. The Economist Intelligence Unit expects that by early 2019 tariffs will have been introduced on the vast majority of US-China merchandise trade."

The report examines which countries in Asia will benefit most from the US-China trade war. It focuses on the comparative advantages in the economies of North-east, South-east and South Asia, examining the broader region overall, and discussing the opportunities and disruptions caused by the ongoing trade war. The report also focuses on the impact the US-China trade war may have on three important sectors: information and communications technology (ICT) products; automotives and automotive parts; and apparel and readymade garments (RMGs). This post focuses on the report's discussion on the ICT sector.

The EIU explains that "the ICT industry has been a particular focus for the US government as it has moved to increase tariffs on imports from China. This is partly because it is by far the biggest category of US imports from China, with electronics and related component imports alone amounting to some US$150bn of the total US imports from China of US$526bn in 2017. It is also because one of the aims of the US tariff strategy is to hamper the Chinese government's Made in China 2025 development agenda—an initiative focused on cultivating the country's key high-technology sectors."

The report importantly notes that "Vietnam and Malaysia will benefit the most from the US-China trade war, particularly in low-end manufacturing of ICT products, such as intermediate components and manufacturing of consumer goods like mobile phones and laptops. Major electronics companies have existing operations in these countries. Dell (US), Sony and Panasonic (both Japan) have plants in Malaysia, for example, while Samsung (South Korea) and Intel (US) have a presence in Vietnam. This means that they would be able to re-deploy investment and production relatively smoothly. In addition, both countries have strong road, rail and port infrastructure, which has in turn helped to develop strong local logistics and shipping networks to support merchandise trade."

As reflected in the picture above, "India, Indonesia and Thailand should also be able to secure some benefits from the relocation of export-oriented ICT manufacturing, according to the report. However, this type of export production is more limited in these markets than it is in Vietnam and Malaysia at present, meaning that international trade links in these markets may be underdeveloped."

With respect to the Philippines, the archipelagic country "will see mild disruption stemming from the trade war, owing to the importance of the Chinese market for shipments of ICT intermediate components from that economy." The EIU, however, does "not expect the Philippines to benefit massively from any shift in ICT export supply chains, owing to its weak regulatory and business environment. The country's underdeveloped digital ecosystem will also be a further hindrance to investment, with internet speeds the slowest in Asia."

For those companies engaged in the ICT sector in Japan, Singapore, South Korea and Taiwan, the report alarmingly says these countries "are set to experience even greater disruption from the trade war, particularly in the short term, owing to the importance of the Chinese market to exporters in those economies. China is a major destination for intermediate and final ICT goods from all four economies, meaning that companies in that sector will be heavily exposed to the impact of tariffs on demand for these products."

What is more, "High taxes, limited land and expensive labor will prevent significant reshoring of ICT manufacturing operations from China back to these four markets. However, the impact of the trade war on exports from South Korea, Japan, Taiwan and Singapore will be limited by the fact that all four tend to produce high-end ICT components that are not easily replaceable through import substitution. Thus, although the Chinese operations of companies from these economies may be disrupted, their domestic exports will be less vulnerable."

Having done business in China for several years, I agree with The EIU that "even before the start of the US-China trade war, multinational companies were becoming increasingly wary about the risk of becoming over-dependent on China as a manufacturing base. Such fears have been aggravated by a combination of rising labor and land costs in China. Meanwhile, markets in South and South-east Asia have looked increasingly attractive in their own right, as their consumer markets have developed."

Are you finding new opportunities in the ICT sector in Asian countries outside of China as a result of the US-China trade war?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

September 11, 2018

Mobile Economy Will Generate More Than $150 Billion of Economic Value Added in Sub-Saharan Africa by 2022, Says GSMA Report

Released at its 'Mobile 360 – Africa' event held in Kigali, Rwanda, The Mobile Economy Sub-Saharan Africa 2018 report published by the GSMA says more than half the population of Sub-Saharan Africa will be subscribed to a mobile service by 2025. Authored by GSMA Intelligence, the research arm of the GSMA, the report forecasts that there will be 634 million unique mobile subscribers across Sub-Saharan Africa by 2025, equivalent to 52 percent of the population, up from 444 million (44 percent) at the end of 2017. The report also calculates that the mobile ecosystem will add more than $150 billion in value to Sub-Saharan Africa's economy by 2022, equivalent to almost 8 percent of regional GDP. The report presents five key points.

Slowing subscriber growth, despite low penetration levels

"Subscriber growth in Sub-Saharan Africa has slowed in recent years as the industry confronts the challenges of affordability and a youthful population," the report explains. "Growth rates in the region have fallen well below the double-digit annual rates seen in the first half of the decade, and the compound annual growth rate (CAGR) for the next five years is around half the level recorded over the preceding five years. Future growth opportunities will increasingly be concentrated in rural and low-ARPU markets, as well as younger demographic groups. World Bank data indicates that around 40% of the population in the region are under the age of 16, a demographic segment that has significantly lower levels of mobile ownership than the population as a whole."

Transition to mobile broadband: 5G on the horizon

Encouragingly, "Sub-Saharan Africa is seeing an accelerating migration to mobile broadband capable connections. The next couple of years are a key tipping point as 2G connections become a minority of the region's total connections base. 3G will emerge as the dominant technology in the region over the next few years, accounting for 60% of Sub-Saharan Africa's connections by the end of 2025." Crucially for facilitating entrepreneurship development and attracting much needed financial capital, "GSMA Intelligence forecasts the first commercial 5G services to be launched in the region by 2021, with 5G connections accounting for 2.6% of the total connections base by 2025."

The report adds that "smartphone adoption continues to see rapid growth in the region, albeit from a relatively low base and despite affordability challenges. The total number of smartphone connections stood at 250 million at the end of 2017, equivalent to around a third of the total connections base. Smartphone adoption is helping to drive strong growth in data traffic across the region, although mobile operators will face challenges in monetizing the ongoing data traffic growth amid regulatory moves to reduce out-of-bundle charges and ongoing competitive pressures."

Mobile contributing to economic growth

In addition to the aforementioned economic statistics, the GSMA says Sub-Saharan countries will "continue to benefit from improvements in productivity and efficiency brought about by increased take-up of mobile internet in particular."

Moreover, "The mobile ecosystem supported almost 3 million jobs in 2017. In addition to the impact on the economy and labor market, the mobile sector also makes a substantial contribution to the funding of the public sector, with almost $14 billion raised in 2017, taking into account general taxation as well as sector-specific levies on the consumption of mobile services."

Mobile enabling the digital economy

The report points out that "[f]or many consumers across the region, mobiles are not just a communication device but also the primary channel for getting online and a vital tool to access life-enhancing services. This is particularly true in rural areas, where around half the population live and where the provision of these services by conventional means is constrained by acute funding, skills and infrastructure gaps. Mobile network assets and services, such as APIs, cellular IoT, mobile money and billing platforms, are enabling sustainable business models for key services across verticals in the region."

Furthermore, "The number of mobile internet subscribers in the region has quadrupled since the start of this decade; the technology is the only available platform for the majority of the population to get online. Over the period to 2025, nearly 300 million people will come online, the majority of them connecting via high-speed mobile broadband networks. Across the region, mobile money plays a key role in extending financial services to people with limited access to traditional financial institutions, particularly women and rural populations. There were 135 live mobile money services across the region at the end of 2017, with 122 million active accounts."

Policies supporting mobile ecosystem development

"As mobile operators edge towards full coverage of the more densely populated conurbations within the region," the report importantly notes that "the remaining unconnected populations are primarily located in rural areas where the economics of network rollout are more challenging. To extend connectivity to underserved areas and ensure long-term industry sustainability requires the establishment of relevant regulatory frameworks and investment-friendly policies to facilitate multi-year capex programs."

Lastly, the report notably asserts: "Two key policy enablers that can help support the continued growth of the mobile ecosystem are the implementation of the appropriate spectrum management framework, and tax reform to improve the affordability of mobile technology for consumers, especially those in low-income segments. Spectrum below 1 GHz has strong propagation characteristics and can be key to delivering universal broadband access, bringing socioeconomic benefits to people in cities and remote areas. Similarly, tax reform can enhance digital inclusion in the region, with positive knock-on effects for productivity and the wider economy."

In its press announcement about the report, I support John Giusti's, Chief Regulatory Officer at the GSMA, comment that "[f]or many citizens across the region, particularly those living in rural areas, a mobile phone is not just a communications device but also the primary channel for getting online and a vital tool for improving their lives. More needs to be done to extend connectivity to the remaining unconnected and underserved populations across Sub-Sahara Africa, but this will require a focus on long-term industry sustainability that can only be achieved through investment-friendly policies and supportive regulatory frameworks."

Is there a particular aspect of the report that you find valuable to you personally or to your business?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

August 6, 2018

Program to Use Solar Cookers to Eliminate Breathing Toxins While Cooking Does Not Produce Intended Results

In 2009, I published a post on this blog about solar cookers, which offer a simple, safe, and convenient way to cook food without consuming fuels. Solar cookers provide a number of value propositions including a solution of cooking without breathing toxins that are generated when cooking with fires fueled by wood or dung. For people in developing countries, using solar cookers also eliminate the need to walk long distances to collect wood or spend their limited income on fuel. Having traveled to developing countries in Africa, Asia, Latin America and the Caribbean throughout my career, I have long advocated governments or nongovernmental organizations to financially support programs that help deliver solar cookers to the world's most vulnerable populations.

Given my enthusiasm for this wonderful device that seemed to help millions of people, mostly women and girls, in developing countries worldwide, an article by ProPublica captured my attention. Eight years after the formation of the Global Alliance for Clean Cookstoves, a Washington, DC-based public-private partnership hosted by the UN Foundation, and $75 million spent by the organization that "was formed to help mount a sustained effort at tackling the threats posed by household pollution" including a pledge "to help engineer the distribution of 100 million cookstoves," the article says "the Alliance has fallen well short of its ambitious health and climate goals."

The article's author, Sara Morrison, notes, "An array of studies, including some financed by the Alliance itself, have shown that the millions of biomass cookstoves of the kind sold or distributed in the effort do not perform well enough in the field to reduce users' risk of deadly illnesses like heart disease and pneumonia."

What is more, "The stoves also have not delivered much in the way of climate benefits. It turns out emissions from cooking fires were less of a warming threat than feared, and that — outside of some de-forestation hot spots — the harvesting of wood for cooking fires only modestly reduces the sustainability of forests."

Ms. Morrison importantly explains that "[t]he Alliance's top officials do not dispute that they have met with an array of disappointments. For one thing, they said, some of the countries and companies that pledged tens of millions of dollars early on failed to deliver, which they blamed on shifting priorities and agendas, not the Alliance's struggles."

Going forward, "The Alliance's plans for the future come with something of an ironic twist: It will now make greater efforts to promote and distribute stoves that use propane, a fossil fuel, the same blue-flamed byproduct of gas drilling contained in cylinders under countless American backyard grills. (Outside of the U.S. propane is most commonly called liquefied petroleum gas, or lpg.) These stoves, it turns out, burn much more cleanly and efficiently than nearly all biomass stoves, reducing the harmful smoke given off during cooking while having a negligible impact on the climate."

While I am disappointed by the article's findings that the Alliance's solar cookers program did not produce the intended results, it is encouraging to see a shift take place with the aim to achieve a benefit to those in developing countries whom are tasked with cooking. Initiatives of these nature carry a high risk of failure. The problem of breathing toxins while cooking has not disappeared and it is essential to evaluate lessons learned and proceed with the knowledge gained to creating a long-term sustainable solution that will benefit billions of people worldwide.

What are your thoughts utilizing solar cookers for clean and efficient household cooking solutions?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 29, 2018

Asia Set to Become World's Largest 5G Region by 2025, Says GSMA

Asia Pacific is on track to become the world's largest 5G region by 2025, led by pioneering 5G markets such as Australia, China, Japan and South Korea, according to the latest edition of the GSMA's Mobile Economy report. Authored by GSMA Intelligence, the research arm of the London, England-based GSMA, The Mobile Economy: Asia Pacific 2018 further says Asia's mobile industry added $1.5 trillion in economic value in 2017, equivalent to 5.4 percent of regional GDP, which includes direct ecosystem contribution (1.8%); indirect contribution (0.6%); and productivity improvements (3.0%).

The GSMA report presents the following five findings:

Mobile adoption growth slowing

According to the report, "Asia Pacific has been the biggest contributor to global subscriber growth in recent years and still has room for growth. As of the end of 2017, there were 2.7 billion unique mobile subscribers in Asia Pacific, accounting for two thirds of the region's population. More than half the world's mobile subscribers live in Asia Pacific – mostly in China and India."

In addition, the report explains that "growth has reached its peak and has started to taper out: between 2017 and 2025, the subscriber base is set to increase by a CAGR of 1.8%, down from 6.0% over the previous four years. Three key factors explain this slowdown:
  • The region is home to some of the most penetrated markets in the world, with minimal opportunity for further subscriber growth;
  • The region includes markets with very low penetration levels, where socioeconomic issues such as rapid population growth, poverty and inequality, unplanned urbanization and natural disasters create barriers to mobile adoption; and
  • Some markets have seen their previously strong growth stagnate due to the challenges of connecting those still unconnected, particularly poorer and rural communities.
"Despite reaching its peak in terms of subscriber growth, Asia Pacific will account for just over half of new subscribers globally by 2025. We forecast 424 million new subscribers to be connected across the region by 2025, bringing the total to 3.2 billion, or 73% of the population."

4G takes the lead, while commercial 5G approaches

The report points out that 2017 saw the first year when 4G surpassed 2G in total share of mobile connections. "The region is home to some of the world's most advanced markets in terms of 4G adoption, such as South Korea, Japan and Australia. However, emerging markets (including India, Bangladesh and Indonesia) will be the key drivers of 4G growth over the next few years. Across the region as a whole, 4G is expected to surpass 50% of connections by 2019 and will then dominate to 2025."

What is more, "5G will gain a foothold in the region by the end of the decade. With launches expected from 2019, networks covering 37% of the population by 2025, and increasing availability of 5G-enabled devices, 5G connections will scale rapidly, particularly in markets such as China, South Korea, Australia and Japan. By 2025, we forecast 5G connections to reach 675 million across Asia Pacific, accounting for more than half of the global total for 5G."

Mobile contributing to economic growth and enabling innovation

In addition to the aforementioned GDP growth rate, "the mobile ecosystem supported more than 17 million jobs and made a substantial contribution to the funding of the public sector, with almost $170 billion raised in the form of general taxation. By 2022, the mobile economy in the region will generate more than $1.8 trillion of economic value added as countries continue to benefit from the improvements in productivity and efficiency brought about by increased take-up of mobile services."

Moreover, the Asia Pacific "region has become the world's largest retail e-commerce market, driven by the burgeoning economies in China, Japan and South Korea, where payment platforms such as Alipay, Apple Pay and Samsung Pay are fast becoming ubiquitous. More recently, however, a combination of market and demographic factors has resulted in countries in Southeast Asia, including Indonesia, Thailand and Vietnam, becoming the key drivers of growth. Mobile internet users in these markets are among the most engaged globally on e-commerce platforms such as Lazada, Shopee and Tokopedia, which provide scalable, readily accessible platforms for smaller retailers to transact online with their customers."

As a supporter of startups, I found particular value that "the startup ecosystem in Asia Pacific is growing rapidly, with the number of active tech hubs in the region's emerging markets doubling over the last year and venture funding into South/Southeast Asian countries tripling since 2016. Most emerging markets in the region are benefiting from big deal flows and growing interest from international investors, taking advantage of the optimism to improve their ecosystems and acting as alternative investment destinations to the more established markets."
Mobile essential to addressing social challenges

Having traveled to the Asia Pacific region on a number of occasions over the past few years, I have witnessed how the large-scale societal adoption and use of digital technologies has become "a key driver of measurable economic, social and cultural value, including increased productivity, a rise in employment rates, improved security and greater capacity to tackle social and environmental issues.

"Despite rapid growth in mobile internet penetration in recent years," the report claims "2.4 billion people in Asia Pacific remain offline, mostly in low- and middle-income countries, unable to benefit from the social and economic opportunities of the internet. As challenges around infrastructure, affordability, consumer readiness and content are addressed, an additional 1 billion people will gain access to the mobile internet across the region by 2025, bringing the total to 2.7 billion, or 63% of the population.

The GSMA report encouragingly notes that "[m]obile is also playing a key role in tackling various social and economic challenges as outlined by the UN’s Sustainable Development Goals (SDGs). While the mobile industry's contribution can be seen across all 17 SDGs, there are two areas of particular relevance in Asia Pacific: firstly, leveraging mobile operators' big data capabilities to address humanitarian crises, including epidemics and natural disasters; and secondly, supporting initiatives in low- and middle-income countries to reduce the gender gap in mobile internet and mobile money. Mobile technology provides access to tools and applications that help address these issues, and enables new technologies and innovations to build more efficient and environmentally sustainable societies."

Advancing digital societies in Asia Pacific

"As more countries continue to implement their strategies for digital transformation, proving identity online will become essential to participation and inclusion. To create digital societies, governments worldwide recognize the importance of a digital identity – being able to verify an individual's identity electronically. A digital identity acts as a gateway to enable faster and easier interaction with public institutions, and is essential for individuals to participate in a full digital lifestyle."

I strongly agree that "data privacy and the security of digital identities has assumed greater importance." The report adds: "While mobile operators apply high standards of privacy, data protection and security for their customers' data, the inadequacy of legal frameworks can worsen customer perceptions about operators' use of their data and potentially reduce their willingness to use mobile devices to access identity-linked services. A digital identity system must have a foundation of trust if it is to generate widespread acceptance among users."

Crucially, the report suggests "[c]oncerted action between governments and mobile operators can help reap the benefits that stem from digital identity and address the challenges presented by increasing cross-border data flows and cyber-attacks that affect digital commerce between countries and overall trade. When governments develop a national strategy underpinned by an enabling policy environment, the prospects are much better for mobile-enabled, digital identity services to accelerate a country's digital transformation, support digital and financial inclusion, and offer the benefits of convenience and reach."

What aspects of GSMA's report do you find valuable to your business?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 23, 2018

Looking Beyond Blockchain's Hype for its Strategic Business Value

As mentioned in a previous post on this blog, my colleagues and I are making efforts to better understand the workings of blockchain, which is a distributed ledger, or database, shared across a public or private computing network. Our efforts include reading an increasing number of articles coupled with attending events where we meet people whom are experts in the technology, founders of startups or managers representing investment firms that provide financial support to such startups. Despite the hype and enthusiasm surrounding blockchain, I am concerned about the lack of business model or strategic business value for the emerging technology.

In an article published by McKinsey & Company entitled "Blockchain beyond the hype: What is the strategic business value?" the authors note:
Blockchain was a priority topic at Davos; a World Economic Forum survey suggested that 10 percent of global GDP will be stored on blockchain by 2027. Multiple governments have published reports on the potential implications of blockchain, and the past two years alone have seen more than half a million new publications on and 3.7 million Google search results for blockchain.
Most tellingly, large investments in blockchain are being made. Venture-capital funding for blockchain start-ups consistently grew and were up to $1 billion in 2017. The blockchain-specific investment model of initial coin offerings (ICOs), the sale of cryptocurrency tokens in a new venture, has skyrocketed to $5 billion. Leading technology players are also heavily investing in blockchain: IBM has more than 1,000 staff and $200 million invested in the blockchain-powered Internet of Things (IoT).
However, "Despite the hype, blockchain is still an immature technology, with a market that is still nascent and a clear recipe for success that has not yet emerged. Unstructured experimentation of blockchain solutions without strategic evaluation of the value at stake or the feasibility of capturing it means that many companies will not see a return on their investments. With this in mind, how can companies determine if there is strategic value in blockchain that justifies major investments?"

The article presents results from research that "seeks to answer this question by evaluating not only the strategic importance of blockchain to major industries but also who can capture what type of value through what type of approach. In-depth, industry-by-industry analysis combined with expert and company interviews revealed more than 90 discrete use cases of varying maturity for blockchain across major industries."

McKinsey's analysis suggests the following three key insights on the strategic value of blockchain:
  • Blockchain does not have to be a disintermediator to generate value, a fact that encourages permissioned commercial applications.
  • Blockchain's short-term value will be predominantly in reducing cost before creating transformative business models.
  • Blockchain is still three to five years away from feasibility at scale, primarily because of the difficulty of resolving the "coopetition" paradox to establish common standards.

The article further suggests companies should take the following structured approach in their blockchain strategies:
  • Identify value by pragmatically and skeptically assessing impact and feasibility at a granular level and focusing on addressing true pain points with specific use cases within select industries.
  • Capture value by tailoring strategic approaches to blockchain to their market position, with consideration of measures such as ability to shape the ecosystem, establish standards, and address regulatory barriers.
"With the right strategic approach, companies can start extracting value in the short term. Dominant players who can establish their blockchains as the market solutions should make big bets now."

I am not questioning the value of blockchain in itself or the technology's ability to transform a variety of sectors including agriculture, financial services, healthcare, insurance, manufacturing, retail, and transport and logistics. However, having witnessed the rise of the dot-com bubble in the 1990s and its crash in 2001, I hold reservations about the mad rush to dump money in companies focused on developing solutions around blockchain. Many of the companies I have encountered over the past few years have yet to present a viable business model that addresses the fundamentals every venture should be incorporating including a plan to monetize the technology, a coherent sales and marketing strategy, and a strategy to mitigate various risks that will prevent their business from becoming a successful (i.e., profitable) enterprise.

The McKinsey article begins by noting: "Companies can determine whether they should invest in blockchain by focusing on specific use cases and their market position." Good advice when trying to avoid the business trap of "if you build it, they will come."

Do you have concerns about blockchain's strategic business value?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 20, 2018

Your LinkedIn Profile and Resume Should Not Be Identical

The previous post on this blog focused on four ways job seekers and jump-start their job search. Identifying what kind of jobs you want to search and apply for is one step followed by updating your resume and LinkedIn profile. Based on my experience as an employer, many people mistakenly assume they should copy and paste the content from the former into the latter. Erica Breuer, founder of Cake Resumes, wrote an article for The Muse that presents four differences between the LinkedIn profile and resume.

1. It Should Tell a Bigger Story

Ms. Breuer says "[y]our LinkedIn profile is a place for all that additional color you cut your from your resume to make it one page. But I'm not just talking about including portfolio items, projects, more skills, and so on (although those are great things to incorporate).

"Let's take your professional experiences section, for example. You have the opportunity to give the backstory on interesting twists and turns that can't be explained on your resume. So, instead of sticking with bullets, share a bit about your work."

Similar to the resume, I recommend including milestones or measurements of success as you tell your bigger story on your LinkedIn profile.

2. It Shouldn't Be Tailored

I agree with Ms. Breuer that "[y]our profile should include a few crowd-pleaser items that will appeal to a wider audience." Regularly sharing articles that you find interesting gives people an understanding of the sources that help you make informed decisions, which is a valued-skill to many employers.

Moreover, authoring an article, which provides insights into how you synthesize information or identify a problem and formulate proposed solution(s), is another feature you can utilize to help make your LinkedIn profile standout from the crowd. Publishing an article also provides people within your network with an understanding of your written communication style, which many employers, myself included, find valuable.

Ms. Breuer's second point provides a reminder for job seekers to tailor their resume to the position they are pursuing.

3. It Should Include Back-up

"On your resume," Ms. Breur explains, "information is more or less taken at face value until it's time for your interview. But when you're making statements about your talents or work style on LinkedIn, you have the advantage of backing your claims up."

She adds: "You can say, 'I always go the extra mile' in your summary, but a dazzling recommendation from a former boss proves it. Or, instead of just including that you love to write, keep your profile's publications section up to date with new articles. Are you an expert with Salesforce? Get the skill endorsements to reflect it."

It is important to note, however, that I have endorsements for skills from people whom I have never met. Unfortunately, this diminishes the value of skill endorsements. Nevertheless, I certainly support posting recommendations from your former colleagues, clients or managers to your LinkedIn profile.

4. It Shouldn't Be Too Formal

"Robotic third-person resume language is not going to cut it here," says Ms. Breur. "A summary that reads like a bio on the back of a book is one that no one reads. Instead, draft it by writing the way you speak."

I support her suggestion of using "a conversational tone and pepper in details about your work that humanize you. Don't just talk about what you do; talk about why you love doing it. Instead of focusing on the number of years of experience you have in XYZ industry, explain how you got your start there. Weave in bits about the types of teams you've enjoyed working on, your personal philosophy, or what kinds of projects inspire you the most."

Lastly, the Muse published an article that contains a useful infographic entitled "17 LinkedIn Profile Must-Haves." Below are a few points that I see of particular value in having a strong LinkedIn profile:

Brand Your Professional Headline
"Include information designed to encourage your potential visitor to find out more about you."

Align Your Industry
"Be found by the right people by being specific about your industry(s)."

Be Active!
"Update your status on a regular basis" and "share thoughtful/insightful news within your industry."

Strut Your Stuff!
- "Add items to your profile, such as projects, test scores, courses, patents, certifications, and volunteer/causes."
- Looking for work? 42% of hiring managers surveyed say they view volunteer experience as equivalent to formal work experience."

Join Relevant LinkedIn Groups
- "There are more than 200 conversations happening each minute across LinkedIn Groups."
- "Joining a Group lets other contact you using the Group messaging feature."
- "STATISTIC: 81% of users belong to at least one group."

While not mentioned in the infographic, the value in participating in a LinkedIn Group provides you with the opportunity to demonstrate your knowledge with people whom may be a prospective employer or have knowledge of an available job opening.

What do you think makes for a strong LinkedIn profile?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

July 15, 2018

Have a Clearly Defined Direction, Effective Networking, and Two Other Ways to Jump-Start Your Job Search

As a co-founder of CareerLight, LLC, a company that provides customized career training to international students to help them prepare for job opportunities in the U.S. and abroad, I share articles that may be of interest to our clients. An article that our clients found of particular value was written by Hallie Crawford entitled "4 Ways to Jump-Start Your Job Search."

Ms. Crawford, a certified career coach, speaker, author and freelance blogger for U.S. News & World Report, accurately notes that the reason job seekers give up on job searching, or feel overwhelmed before they begin the search, is because of "a lack of a defined strategy." She adds: "It's important to have a plan, a weekly schedule and to set realistic goals to have a successful search."

Below are Ms. Crawford's four ways a job seeker can jump-start their job search strategy:

"Have a clearly defined direction. Before you can start your job search, it's essential to know what your ideal next job is and what positions you want to apply for. During your search, all of your steps should take you toward that final goal. Otherwise, you won't get anywhere quickly in your job search."

Furthermore, according to Ms. Crawford, "Part of defining your direction is discovering or refining your personal brand. This includes things such as:
  • Your strengths
  • Your experience
  • Your personality type
  • Your values
"Not only will this help you search for the right kind of job, but it will also help you do better in job interviews. You will know yourself better and be able to represent yourself better to a hiring manager."

As an employer, I have a particular appreciation for those job candidates whom understand their strengths (and weaknesses), personality type, and values. The process of creating a personal brand is having a strong sense of self-awareness.

"Once you have identified what kinds of jobs you want to search and apply for, you will want to update your resume and LinkedIn profile. These items, as well as your cover letter, should represent you and communicate your brand. However, the formatting of your resume can detract from your brand, so make sure you are consistent in the font and format you use for your documents. Make sure to include keywords and marketable results in your resume and LinkedIn profile. Finally, ask a friend to proofread your resume, cover letter and LinkedIn profile."

A compelling cover letter should address your desire of wanting to work at the company you are seeking to be hired by (an employer or hiring manager will ask, "Why do you want to work for my company?"), an understanding of the position you are applying for ("Does the candidate understand the job requirements or responsibilities?"), and a summary of your skills and experience on why you are the ideal candidate for the position.

A resume that contains impeccable qualifications and an impressive work history will get lost if the document's format is poor. The ideal resume is one that starts with a strong list of qualifications and followed by experience demonstrating proof of the candidate's qualifications. Providing specific milestones or measurements of success are an added bonus!!

As someone who values technology, I prefer to view a candidate's LinkedIn profile over reading their resume. Therefore, a job seeker should spend time in developing a compelling LinkedIn profile. It is important to note that a resume and LinkedIn have distinctive purposes and should not be identical. I will publish a future post on this blog detailing those differences.

And yes, have a friend proofread everything. Failure to be attentive to details reflects poorly on your brand and hiring you poses a risk a company may not want to undertake. (I will NEVER hire a candidate that had a misspelling on their cover letter, resume or LinkedIn profile despite their impressive credentials.)

"Once your documents are updated, you must start networking, effectively. Networking is a critical element to your search, since 60 to 70 percent of jobs are found through the hidden job market. Try sites such as Twitter, Meetup, Facebook and LinkedIn. It's also helpful to reach out to your alumni or industry associations. Schedule two hours each week to keep in touch with your connections by emailing them an update on your search or an article, setting up a phone or coffee meeting and attending a networking event."

I strongly agree with Ms. Crawford's third point on jump-starting your job search. Networking and better yet, relationship-building, is essential to not just seeking out those hidden jobs, but advancing your career in the future.

"An underutilized tool that is helpful in your job search is the informational interview. This is a meeting or call with someone who works in the specific position or company you are interested in. Informational interviews are great for learning more about what it's actually like to have that job and networking into the organization you are interested in."

While my daily schedule is incredibly busy, I will make time to meet, either in-person or via a telephone call, with just about any job seeker who is interested in learning more about a particular company where I have an active role in its operations.

And Ms. Crawford is correct to explain that "[a]n informational interview is not a job interview, but bring a copy of your resume and business card just in case. Always follow up after an informational interview, thanking the person for their time."

What ideas do you have that will help job seekers jump-start their job search?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

June 21, 2018

Blockchain Can Drive Efficiency and Enable New Business Models in Global Logistics Industry

An online search for 'blockchain' will yield hundreds of articles. While the breadth and depth of these articles are wide-ranging, it is generally agreed that blockchain will become ubiquitous in many sectors including but not limited to financial services, insurance, healthcare, retail, and logistics and supply chain management. My colleagues and I are making significant efforts to better understand how blockchain works and ways it will improve business efficiency.

While many people are hearing the word 'blockchain' more often, very few understand how it works. Arjun Kharpal, a technology correspondent for CNBC, wrote an article on June 18, 2018 entitled "Everything you need to know about the blockchain," Mr. Kharpal begins explaining blockchain by how it "works with bitcoin" and then "see how the technology can be transferred to many other real-world use cases." With respect to supply chain management, Mr. Kharpal says, "Blockchain technology can also be used to track products across a supply chain or route. For example, diamond producer De Beers recently announced that it had trialed the technology to trace the stones from the time they were mined to delivering them to a jeweler. The blockchain can also be used to track ownership of assets such as fine art of even property."

DHL, a global logistics company, through its Customer Solutions & Innovation division, published a report entitled Blockchain in Logistics, which provides perspectives on the upcoming impact of blockchain technology and use cases for the logistics industry. Produced in cooperation with Accenture, a management consulting company, the report aims to answer:
  1. What is blockchain and what are the key challenges?
  2. How is this technology already being applied across industries?
  3. What opportunities could blockchain deliver to your logistics operations?

In addition to the aforementioned article by Mr. Kharpal, the DHL report provides a concise definition of blockchain as "a distributed ledger technology that can record transactions between parties in a secure and permanent way. By 'sharing' databases between multiple parties, blockchain essentially removes the need for intermediaries who were previously required to act as trusted third parties to verify, record and coordinate transactions. By facilitating the move from a centralized to a decentralized and distributed system (see figure 1), blockchain effectively liberates data that was previously kept in safeguarded silos."

Key challenges facing blockchain technology include:

"Gaining industry adoption is the most critical challenge and this will determine the success of blockchain technology in logistics. Being able to accurately and safely exchange information within a community is a key advantage of blockchain and stakeholders benefit the most when their community contains many relevant members. Therefore, similar to Facebook, the value of the community increases when it is adopted by a growing number of relevant stakeholders."

"It is necessary to make progress with blockchain technology itself in order to overcome current technical limitations. This is especially required for companies moving from a pilot implementation to full-scale deployment. For example, some blockchain implementations have been known to scale poorly and suffer from high latency although new innovations are being developed to address these scalability and performance issues."

"Organization and culture play a significant role in the success of digital transformation in any industry. Particularly with blockchain technology, this cannot be overlooked as its adoption will require a collaborative mindset to engage with a large number of stakeholders. Therefore, within
organizations, a culture of embracing new opportunities from blockchain technology should be fostered. Managers, particularly those in IT functions, must gain blockchain expertise to proactively push organizational exploration and, if applicable, adoption of blockchain-based solutions."

The report importantly notes, "While there are many hurdles to overcome, these challenges with blockchain are not insurmountable. Already this technology, despite its relative infancy, is showing promise across a wide range of industries including citizen services, retail, life sciences and healthcare, automotive, manufacturing, energy, and logistics."

Specifically to logistics, the report says "global supply chains are highly complex, with diverse stakeholders, varying interests, and many third-party intermediaries – challenges that blockchain is well suited to address. In the logistics industry, blockchain can be harnessed in two key ways, namely, to drive efficiency and enable new business models:

"Drive efficiency: Blockchain can potentially improve efficiency in global trade by greatly reducing bureaucracy and paperwork. For example, a multi-stakeholder process with a lengthy paper trail could be replaced with an automated process storing information in a tamper-evident digital format.

"Another example is the automation of services that currently require an intermediary such as insurance, legal, brokerage, and settlement services. Blockchain could be used to track a product's lifecycle and ownership transfer from origin to store shelf, even as it changes hands between the manufacturer, logistics service provider, wholesaler, retailer and consumer. It would facilitate and automate each business transaction, enabling a more direct relationship between each participant (e.g., automating payments and transferring legal ownership between parties).

"Enable new business models: Micro payments, digital identities, certificates, tamper-proof documents and much more can be introduced and radically improved using blockchain-based services. For example, driver training organizations could replace easy-to-fake paper-based certificates with tamper-proof digital versions that can then lead to new identity-related services. Just as the Internet began a revolution of communication, blockchain technology could disrupt current business practices and models."

Lastly, the report encouragingly explains, "Blockchain technology is emerging from its first deployments in cryptocurrency and is now likely to have significant impact across almost all industries. Like a pebble dropped into a lake, the ripples from this technology are beginning to expand outwards in all directions including the logistics industry, where blockchain promises to make business processes more efficient and facilitate innovative new services and business models."

How will your organization utilize blockchain technology?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 15, 2018

Report Explores How Digital Technologies Are Shaping the Middle East's Healthcare Ecosystems

According to a report published by The Economist Intelligence Unit (The EIU), "5 out of 14 countries in the Middle East have a well-defined digital transformation plan for healthcare in action. Governments, healthcare providers and companies will have to figure out how to initiate entire healthcare ecosystems to adopt new technology-enabled ways of solving challenges in healthcare."

The EIU's report, Digital Health: Digital Transformation in the Middle East, explores how digital technologies are shaping the Middle East's healthcare ecosystems, activities and stakeholders in significant ways. It is also on this deepened understanding that we examine the opportunities and challenges that lie ahead in the realities of finding digital health solutions for this region. The report is segmented by three chapters.

Scaling up digital health solutions in the Middle East: The seeds of digital transformation 

"Government-led digital transformation efforts in several parts in the Middle East are reshaping how individuals and organisations in the healthcare ecosystem are interacting with each other. There is a stronger need for collaboration and companies will need to engage with other players on new terms."

Key implications:
  • For digital health to take off, there must be a fundamental shift in how stakeholders collaborate. Achieving a vibrant digital health ecosystem often requires government action;
  • Governments and organizations need a strategy not just for itself, but for the entire digital health ecosystem;
  • To scale digital health use, companies need to understand and respond to local challenges and varying levels of readiness for technology adoption in different markets; and
  • Companies can seed change in different markets more effectively and quickly by setting up centers for digital health in strategic locations with high digital density, leading to the formation of digital hubs.
Locating technology's value proposition in different markets

"Digital health instantiates itself uniquely in different countries and markets faced with an exclusive set of healthcare challenges. We examine how quality care can be extended across distances by growing telehealth use in different settings and geographies. We also look at data-driven solutions that are used to create smarter, more efficient and more precise healthcare delivery and patient experiences."

Key implications:
  • New insights will emerge from existing data that will challenge existing strategies and models in healthcare;
  • Recognize and define what healthcare challenges can be addressed by technological solutions;
  • Locate opportunities where technology can be used to enhance core products and value propositions of pharmaceutical and medical device companies, for example enabling more tailored treatments and services through big data insights;
  • Determine how ready are different markets and adopters for the introduction of technologically-enhanced product and service offerings, and tailor a go-to-market strategy accordingly;
  • Figure how incentives for adoption can be better aligned, e.g. initiatives to encourage patients to share their health data; and
  • Healthcare companies will have to think hard how technology can be integrated in their overall growth strategy.
Future care models for the Middle East: Keeping people healthy

"Digital technology is making new care experiences possible by reshuffling delivery nodes of different medical services that will bring opportunities in decentralized and near-patient products and services."

Key implications:
  • Companies need to think about how to offer value in a shifting healthcare delivery landscape as the delivery locus of different medical services gets reshuffled;
  • Anticipate patient and provider needs amid digitization; and
  • Remap patient pathways and journeys. Small preferences in using technology accumulates in broader changes in the patient pathway and journey.
The report further explains that "[w]hile the level of digital maturity is uneven across the region, and sometimes across different areas of healthcare, it is only a matter of time before the full benefits of digital health permeate the region. More than ever, healthcare companies need to respond to that future now."

If you work in the healthcare sector in the Middle East, how will digital health technologies shape healthcare?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 12, 2018

Mobile Broadband Development in Central America Is Lagging Behind the Rest of Latin America, Finds GMSA Study

"Delivering mobile broadband to the whole population is now central to the digital strategy of Central American governments," a study by GSMA explains. "Digital government agendas have recently been launched in Costa Rica, Honduras, Panama and Guatemala. However, the region is lagging behind the rest of Latin America as the delay in 3G deployment and adoption spills over to 4G, where it is even more pronounced."

The study, Assessing the impact of market structure on innovation and quality: Driving mobile broadband in Central America, available in both English and Español, presents the following key points:

Central America is lagging behind in mobile broadband adoption and deployment. Closing this gap requires the promotion of market structures that boost competition in investment and innovation, and public policies that take the entire digital ecosystem into account

"The study examines the role of market structures in the development of the mobile sector in Central America. The market structures of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama are analyzed, exploring their impact on operator performance in investment and 4G networks. A comparative study of public policy in the region shows how policy can foster an environment in which operators acquire greater ability and incentives to compete in investment and innovation, to the benefit of consumers in the region."

Investment in mobile communications in Central America follows an inverted U relationship with the number of operators

"The analysis confirms that operator investment in Central and South America is not necessarily higher in markets with a higher number of players. It reveals the existence of an inverted U, where operator investment is maximized when operators have an EBITDA margin of 32-38%. Operators whose profitability is below these levels invest less."

Operators' 4G speeds in two-player markets are 40% faster than the Central American average and 10% faster in three-player markets

"Analysis of speeds experienced by users of 4G networks in Central and South America consistently show similar results. The study finds (in its most conservative estimates):
  • Operators in two- or three-player markets experience 4G download speeds that are up to 8 Mbps faster due to market structure. This means that users in these markets experience download speeds that can be around 40% faster than the Central American average.
  • Operators in markets with four or more players record 4G speeds that are 2 Mbps slower due to the market structure. This means their users have download speeds that are 10% slower than the Central American average.
These findings were obtained from models of 4G download speeds estimated using Speedtest Intelligence™ data from 52 operators in Central and South America from 2013 to 2016 (based on consumer-initiated tests).

Public authorities in Central America have the opportunity to remedy the delay in 4G by promoting public policy that encourages innovation and investment

"In light of the evidence provided in this study, public policy should promote the ability and incentives to invest, encouraging an environment with greater competition in innovation to deliver better products and services to users. This requires operators to have scale, margins, sufficient expected return and efficiency in the use of spectrum."

The report also identifies three main public policy recommendations:
  1. Merger review should consider how efficiencies can stimulate players' ability and incentive to compete, using appropriate analysis criteria. Additionally, authorities should consider all the competitive pressures operators face in the digital ecosystem, particularly in the context of convergence. These recommendations apply to all the markets, although specific barriers have been identified in Panama, where specific legislation de facto has prohibited mergers for many years; and El Salvador, where efficiency arguments have not been accepted in merger review;
  2. Retail and wholesale regulations limit operators' ability to compete. Three of the six markets have price caps (Honduras, El Salvador and Nicaragua), direct regulations on network quality (Costa Rica, Panama and Honduras) and constraints on price discrimination (Costa Rica, Panama and Nicaragua). Authorities should review the market and competition assessments that form the basis of these regulations; and
  3. Spectrum regulation should promote efficient use by assigning sufficient amounts of spectrum in large blocks and high and low frequency bands. The study finds that Central America has assigned only 21% of the required spectrum recommended by the International Telecommunication Union for efficient and effective provision of mobile services. In this regard, Guatemala, Panama and El Salvador are significantly lagging behind.
Mobile technology can serve as tool for positive change for those living in Central America. Governments of Central American nations, however, must make a concerted effort to reform regulations to attract investment from the private sector.

What recommendations would you add to stimulate the growth of Central America's mobile technology sector?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

May 8, 2018

Mobile Ecosystem to Be Worth $51 Billion to West Africa Economy by 2022

The role of the mobile technology sector in driving economic growth is a topic that is discussed regularly in this blog. Whether it is in India, Latin America, Southeast Asia, or Sub-Saharan Africa, the mobile ecosystem can play a vital role in empowering billions of people while achieving the 17 Sustainable Development Goals (SDGs), which seek to end poverty, protect the planet and ensure prosperity for all. This post focuses on a report, The Mobile Economy: West Africa 2018, produced by the GSMA Intelligence, the research arm of London, England-based GSMA,

Available in both English and Français, the report presents three major points:

Mobile adoption on the rise

"By the end of 2017, there were 176 million unique subscribers across the West Africa sub-region, comprising the 15 member states of the Economic Community of West African States (ECOWAS),"  Overall subscriber penetration reached 47% in 2017, up from 28% at the start of this decade. Despite the remarkable subscriber growth in the sub-region in recent years, and indeed across Sub-Saharan Africa, more than half of the region's population do not yet subscribe to a mobile service."

Moreover, "Subscriber growth will be driven by a demographic shift in the coming years, as many young adults take out a mobile subscription. Over the period to 2025, around 72 million new mobile subscribers will be added in West Africa, taking subscriber penetration to 54%.

The study importantly explains that "the transition to mobile broadband is gaining momentum across West Africa. 3G remains the dominant mobile broadband technology, but 4G adoption is rising rapidly from network expansion and greater availability of 4G devices. The number of smartphone connections has more than doubled over the last two years to reach 112 million, accounting for 35% of total connections on average at the end of 2017."

Mobile contributing to GDP and employment

The GSMA study says the mobile ecosystem contributed $37 billion to the West African economy in 2017, equivalent to 6.5% of GDP. "The mobile ecosystem consists of mobile operators, infrastructure service providers, retailers and distributors of mobile products and services, mobile handset manufacturers, and mobile content, application and service providers. The use of mobile technology also drives improvements in productivity and efficiency for workers and firms. 3G and 4G technology allow workers and firms to use mobile data and internet services. This improves access to information and services, which in turn drives efficiency in business processes across many industries, including finance and health. This impact of mobile internet is particularly significant where fixed infrastructure is poor and mostly confined to large cities and business & industrial districts."

What is more, "Mobile operators and the wider mobile ecosystem provided direct employment to more than 200,000 people in West Africa in 2017, predominantly in the retailing and distribution of services and handsets. In addition to this, economic activity in the ecosystem creates jobs in other linked sectors as a result of the demand generated by the mobile sector. Going forward, we expect the economic contribution of the mobile ecosystem to continue to increase in both relative and absolute terms. In value-added terms, we estimate that mobile will contribute $51 billion to the West African economy by 2022, equivalent to 7.7% of GDP."

Mobile delivering greater inclusion and empowering consumers

Encouragingly, "The number of mobile internet subscribers doubled over the last four years to reach 78 million, nearly half of the total number of mobile subscribers, by the end of 2017." The number of registered mobile money accounts in the sub-region reached 104.5 million in 2017, while the total value of transactions for the same period reached $5.3 billion. The rapid adoption of mobile services and the funding and infrastructure gaps in the provision of essential services present an opportunity for local innovators to create digital solutions that address a wide range of social and economic challenges across different countries in the sub-region. As of February 2018, there were 142 active tech hubs across West Africa."

Based on my experience of working in West Africa, I agree with the report's assertion:
Collaboration among all stakeholders is required to sustain growth and innovation in the mobile industry across the sub-region. In addition to the work of operators to expand and improve networks, significant efforts from governments at all levels are needed to create the right conditions for continued investment. At the supranational level, ECOWAS is well placed to convene and facilitate dialogue between multilateral stakeholders; serve as a hub for knowledge sharing and dissemination with regards to best practices; and provide a platform to harmonize differences in approach towards key issues that impact the mobile industry across the sub-region. At the country level, national and municipal governments have a role to play in addressing fiscal and regulatory issues that directly impact investment sentiments, especially on capital-intensive infrastructure deployment and the rollout of innovative mobile-based services.
Infographic: GSMA Intelligence
Are you engaged in West Africa's mobile economy? If so, what advice to you have in creating solutions that will end poverty, protect the planet and ensure prosperity for all?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.