Could East Africa become an outsourcing hub?

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The arrival of broadband in Tanzania presents dazzling business possibilities.

By Eamon Kircher-Allen — Special to GlobalPost

Published: August 17, 2009 06:36 ET
Updated: August 18, 2009 10:18 ET

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“If you divide this between 20 users, you probably get 8 to 12 kilobytes fluctuating,” said David Adila, who works in customer support at BOL on the 16th floor of the PPF building in Dar es Salaam. “You can imagine 8 to 12 is horrible. You could watch YouTube, but it would take a long time.” In other words: load, pause, wait and — after a few minutes of downloading — play. Uploading content to YouTube is even slower.

The fiber-optic cable will mean a dramatic reduction in cost for BOL, which is a client of Seacom. BOL currently pays about $60,000 a month for the 20 MBps it rents from a satellite connection, which it then repackages and sells to consumers. With the Seacom cable, it expects to pay just $15,000 a month for 150 MBps — though BOL doesn’t yet know how much government fees will affect costs.

After investing some of the savings into expanding its network, BOL hopes that the cable will bring a 90 percent price reduction for consumers. That’s the same savings figure that was tossed around in Kenya before the SEACOM launch. But when the Seacom cable "went live" in Kenya last month the cost savings were drastically re-estimated to a price reduction of 20-30 percent.

But even if prices for, say, BOL’s “normal” subscribers decreased by 90 percent, the $150 per month would still be far out of reach for most Tanzanians, where the gross domestic product per capita is about $540. Personal computers are also prohibitively expensive for most people. Computers are all imported and marked up to often twice their price in the United States. Computer hardware would need to be locally manufactured in order to bring down its cost to a level that would allow many more consumers to enjoy the cable’s full potential for East African economies.

In fact, there are many obstacles to Tanzania becoming an internet utopia in the next few months. For one thing, only about 5 in 100 people use the internet here, according to the International Telecommunication Union, so there will be a steep learning curve.

There are other unique challenges, too: Pirate attacks delayed the launch of the Seacom cable earlier in the summer. And when a damaged undersea cable in West Africa paralyzed the internet in several countries there a couple of weeks ago, it was a reminder that Africa’s internet connectivity is still a long way from other parts of the world.

That hasn’t stopped an air of excitement from creeping into local tech circles.

“When fiber-optic comes, I’m talking a vast difference,” Adila said with a glint in his eyes. “I’m talking way faster.”

Comments:

1 Comments.

Posted by thadk on August 17, 2009 10:25 ET

As an IT Peace Corps volunteer serving in Tanzania for the past two years thank you for this piece of well informed global journalism! It isn't every day I read an good technical and cultural perspective on TZ.