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

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

'Rumble in the Jungle' Turns 40

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license 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.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid