News / Africa

Increased Investment Rapidly Changing Africa’s IT Landscape

African investors see potential market in continent’s technology sector, especially Internet cable networks

Brian Herlihy CEO of SEACOM
Brian Herlihy CEO of SEACOM

Part 3 of a 5 Part Series: Investment in Africa

Africans must have greater access to new technologies if they are to catch up with the developed world, say development experts.  Technology improves the lives of consumers and attracts foreign investors eager to profit from a growing consumer population.

McKinsey & Company, a leading global management consulting firm, estimates Africa’s gross domestic product at about US $2.6 trillion, with US $1.4 in consumer spending.  That, coupled with the fact that Africa’s population growth and urbanization rates are among the highest in the world, are good indicators for any potential investor.

Recent research also shows Africans can accelerate development by skipping less efficient technologies and moving directly to more advanced ones.  Among them is the telecommunications sector, which is attracting a flurry of public and private investment.

Many ask whether such a leap is possible on a continent that lacks basic infrastructure. Others are more optimistic.

Two researchers at the University of Yaounde in Cameroon say it is feasible. The academics, Yunkap Kwankam and Ntomambang Ningo, are the authors of a paper entitled “Information Technology in Africa: A Proactive Approach and the Prospects of Leapfrogging Decades in the Development Process.”

Africa's lack of technological infrastructure, they write, should not be seen as a drawback to investing on the continent.  They say it “can be turned into an advantage if properly managed.”

That’s because African countries are not weighed down by extensive networks built on obsolete technology.  By using the latest products and methods to build new infrastructure, African countries can bypass several stages and even decades in the use of Information Technology (IT).

“In doing so, they will learn from the experience of more advanced countries the ways and means of providing the greatest social benefits to a large fraction of the population, while avoiding any unpleasant side effects,” write Kwankam and Ningo.

Communications Technologies

Africa’s IT landscape is rapidly changing, says Alex Twinomugisha,  the manager for country programs and special projects for the Global e-Schools and Communities Initiative, based in Nairobi.  He attributes the improvement in Africa investment environment to financial backing from public and private investors.

The growth of the telecom industry, he writes, is due to the large amount of foreign direct foreign investment.  “This investment alone is about 1% of sub-Saharan Africa’s total GDP in 2008, estimated by the World Bank to be about $987 billion dollars!”

But the money is not only from foreign sources.  Local companies are raising millions of dollars from local banks to expand network coverage.  “The banks wouldn’t put in their money if they didn’t think that the business was viable,” says Twinomugisha.  “There is money to be made. In fact I think the market is still virgin.”

Still, businesses have been focusing their resources on big investments like cable networks.  Twinomugisha says the potential market is underestimated.  “There has been little investment going into services, software…because it is seen as small market.”

He says there is still a misconception that the market is small.  But he points to successful ventures like MPESA, a mobile money transfer scheme that has been embraced by millions of Kenyans, according to parent company Safaricom.

MPESA was launched in 2007 and is used by six million people around the country, mostly in rural areas. It has transferred 135.38 billion Kenya shillings, equivalent to US $1.8 billion (representing about 5% of GDP).

Two other telecommunications companies, IBM and the India-based company Bharti Airtel, have announced they will provide IT services for 16 African countries.

As part of a 10-year agreement, IBM will deploy and manage the information technology infrastructure and applications to support airtel’s goal of providing affordable and innovative mobile services throughout Africa, the world’s fastest growing mobile market.

Connecting Africa

Making it all possible is the development of underground fiber optic cables. Several efforts are underway to lay them across the continent.

Kenya and Rwanda have both openly encouraged investment in information technology.  Kenya has invested more than $US 80 million in an initiative called TEAMS (The East African Marine System), which will link East Africa to the rest of the world through an underwater fiber optic cable.  TEAMS moves Kenya away from expensive satellite communications, thereby lowering costs.

But perhaps the best-known cable system in Africa is SEACOM.

Its CEO, Brian Herlihy, says the project is providing inexpensive bandwidth to cell phone and Internet customers, including businesses, in southern and eastern Africa, connecting them to global networks in India and Europe.

Broadband access is expected to reduce the digital divide between Africa and other continents.  It is also expected to be a major boon to many local industries, especially ones based on outsourcing.

The cost of SEACOM was around US $600, says Herlily.  He’s not surprised that more than 70 percent of the money was raised in Africa.

“They understand the need,” he says.  “That African investors are willing to spend millions of dollars on a project that benefits the continent is very telling (about) the level of enthusiasm (and) shows a belief in the viability and potential of the African market.”

You May Like

Video For West Ukraine City, Conflict Far Away Yet Near

Physically and culturally close to Western Europe, Lviv feels solidarity with compatriots in country’s east but says they need to decide own future More

West African Women Disproportionately Affected by Ebola

Women's roles in families and the community put them at greater risk for contracting the disease, officials say More

Video NASA's MAVEN Spacecraft Arrives at Mars

Mars Atmosphere and Volatile Evolution craft will measure rates at which gases escape Martian atmosphere into space More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA’s MAVEN Probe Enters Mars Orbiti
X
September 22, 2014 9:20 PM
NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid