ICANN’s Report Shows African DNS Market Worth $52m

The Internet Corporation for Assigned Names and Numbers (ICANN) has released its Final Report on Africa Domain Name System (DNS) Market Study.

The study serves as part of ICANN's outreach efforts to support and improve the regional DNS industry.

The report is the first of its kind in the region, which includes 54 countries and shows that there are, as of May 2017, some 5.1 million domain names associated with Africa. The total annual value of the African Domain Name market is some $52 million.

African DNS Market
The African continent top level DNS address space consists of 54 top level country code ccTLDs, (of which one, Southern Sudan (SS) is not yet delegated) plus five Internationalised Domain Names (IDNs): Egypt (مصر ,(Algeria (الجزائر ,(Tunisia (تونس ,(Sudan (سودان (and Morocco (المغرب (as well as three city codes (.CAPETOWN, .DURBAN and .JOBURG).

ICANN recently delegated the .AFRICA domain to the South African administrator, the ZA Central Registry (ZACR), and registrations will be fully open in July, 2017.

Analysis of the responses shows that at least 46% of Registries offer non-Latin scripts and more than a third of Registrars (34%) do.

Data from May 2017 indicates that a total of just over 3.5 million domains are active under the African ccTLDs10 .

There are about 1.4 million registrations in the gTLDs by African entities. Key findings of the research show approximately 1% of gTLD domains are registered by Africans.

Over the last six months (November 2016 – May 2017), African ccTLD domains have increased by 21%.

However, almost all (93%) of this increase was in fact in the four Freenom ‘domain hack’ countries. Nevertheless, the statistics quoted in the remainder of this Report are based on the November 2016 figure of 2.9 million ccTLD domain names.  Registrations by Africans of gTLD domains total approximately 1.4 million, the bulk of which is ~1.2 million .COM domains.

The research indicates that high access costs, the lack of infrastructure and the fact that African Internet access is primarily via mobile devices results in a lower demand for domain names than elsewhere.

This was confirmed by responses to the survey, with respondents citing high prices as the biggest barrier to the development of the DNS market in most African countries followed by lack of infrastructure.  Other broader issues identified as high barriers by respondents include poor dependability of Internet connections and unclear or restrictive policy and regulatory environments.

In addition, the research analysed the relationship, if any, between a country’s ranking in relation to levels of freedom (using rankings by Freedom House and IIAG) and the number of domains registered.

According to this, citizens of “free” countries in Africa register some 22 times as many domains as citizens in countries ranked “not free”.  Domain name registration by African entities takes place mainly in countries where the local hosting industry and web development sector has developed sufficiently to create demand for local domains, i.e. mostly in South Africa, Egypt, Mauritius, Nigeria, Kenya, Zimbabwe, Uganda, Tunisia and Morocco.

The research also confirmed zero or low levels of local hosting in a significant majority of countries in the region: 41 countries hosted over 95% of their gTLD domains outside Africa.

The research found 51 functioning ccTLD Registries, with South Sudan (SS) not yet delegated and Eritrea (ER) and the Comoros (KM), which each have just over 100 domains, but have no apparent method of registering new domains via the Internet, also non-functional.  Compared to other regions, Africa has a very small number of ICANN accredited Registrars.

In total, there are only 11 ICANN accredited registrars in the region13 - four in South Africa, two in Morocco and one each in Burundi, Ghana, Nigeria, Senegal and Tunisia out of a global total of 2,143. However, there are many more Registrars than this actually active in Africa, with 450 Registrars accredited by the ZACR alone, for example.

Unless specified otherwise, the term “accredited Registrar” means a Registrar accredited by the relevant ccTLD Registry in the remainder of this report.

In reality, 26 countries have only one Registrar (typically the Registry itself), whereas 13 countries are fully competitive, use EPP and have multiple Registrars, with the remaining 14 being partly competitive and Southern Sudan not yet delegated. This was a factor in the number of ccTLD domains sold, although it is also true that successful markets attract more Registrars.  For the Registrant Market, this market review identified over 5 million African ccTLD and gTLD domains. This equates to some 4.4 domains / 1000 population, whereas some commentators state that 100 – 300 domains / 1000 population is the norm in Europe.

In this regard it should be noted that there are a number of African countries (11 are most popular) that have unexpectedly high numbers of domain registrations due, it seems, to what are known as ‘domain hacks’ (where domains are utilised by entities or individuals not from these countries because the ccTLD forms part of an intended word or similar unexpected uses).

These occur because these countries have domain names that cost little or nothing to register or are attractive for special purposes where registering a short or a common word in the ccTLD has more relevance than registration in the more popular gTLDs such as .COM or .NET.

In addition these countries have non-restrictive rules that allow registration of domains from entities located outside the country.  The DNS market roughly equates to a total value of about USD $38 million per annum for African ccTLD domain names alone. 14 At least 25% of this is likely to accrue to the international registrars and the remaining USD $29 million would be import or local revenue generated by the ccTLDs and Registrars.

About 73% of the total annual revenue on the continent is made by just ten countries (South Africa, Morocco, Nigeria, Zimbabwe, Egypt, Tanzania, Libya, Somalia, Cameroon and Ivory Coast).

Including the gTLD domains with an African connection increases the total annual value of the industry to some USD $52 million.  Most of the African ccTLDs are available for registration for offshore entities without the requirement for a local presence.

In 15 countries there is a requirement for some form of local legal presence (corporate or individual) in order to register a domain name: Algeria, Angola, Benin, Burkina Faso, Cap Verde, Egypt, Gambia, Guinea, Liberia, Mauritania, Niger, Senegal, Tanzania, Tunisia and Zambia. In a few countries, including Kenya, there is an additional requirement for Registrars to be locally based, but not Registrants.

The study also considered the likely growth in the market. In all markets except South Africa (which is mature) there has been significant growth in the number of African domains registered by top-level domain registrars (e.g. .COM, .ORG and .INFO domains) as infrastructure rollout has increased in many countries, albeit off a low base.

The research expects this trend to continue – projecting an annual overall growth of 33%.

This suggests significant growth opportunities for local providers in individual countries – noting that 91% of the Registrants that responded to the online survey said they preferred to deal with local Registrars.

On 27 June, from 15:15-16:45 at Pavillon S8, ICANN will hold a public presentation to discuss the report during ICANN's 59th Public Meeting (ICANN59), in Johannesburg. ICANN59 is also the 2nd Policy Forum, the 1st one being in Helsinki last year.