Internet Solutions
Internet Solutions

By the year 2050 Africa will have the largest workforce in the world with one in every four people hailing from the continent.

Africa’s population is expected to surpass that of India and China combined, meaning it is set to play a major role in the global economy. However, while this sounds exciting, the continent remains largely non-industrialised and its demographic bulge could either be a huge success or massive burden on its prospects.

Africa is often mentioned as a continent of “vast potential” full of “exciting opportunities”. In order for telco’s and carriers to benefit from this, it is important that they understand and navigate the following five policy conundrums:

Democracy or Development?

There is much conjecture around the system that will best “fit” Africa. The continent is being asked to do what no other continent has had to do - democratise and industrialise simultaneously.

Democracy with its ideals of greater political stability, regular and peaceful elections, and a lack of military influence has not fully translated into meaningful economic gains for African citizens. The developmental authoritarianism model used in countries like Rwanda and Ethiopia (countries that have experienced rapid development) has proven particularly successful. The major constraint with this approach is its systematic and rigid political control; coupled with an over-reliance on an enlightened autocrat to ensure continued progress.

But there is no “one size fits all” approach. In East Africa there are signs of growing authoritarianism and suppression of dissent; in Southern African countries such as South Africa, Botswana, Angola and Zimbabwe liberation movements have embraced reform agendas. Meanwhile, West Africa is consolidating democratic gains with frequent changes of power, enhanced judicial independence and respect for presidential term limits across countries like Gambia, Sierra Leone and Liberia.

So, what is the role of technology in all of this? Will it create improved governance and accountability, or will it lead to increased polarisation and be manipulated by political elites? In Africa, it is important to note that the mobile device is quickly becoming a symbol of democracy opening up communication and stimulating new ideas amongst citizens. The question is whether technology can work hand in hand with promoting good governance and transparency; and whether governments will allow this to flourish (if not threatened); and in turn allow telco’s to benefit.

Africa’s Facebook vs. Facelift Generation

There are very few African leaders under the age of 65, and even fewer under 60. However, according to the Population Reference Bureau, 41 percent of Africa’s citizens are under the age of 15, and just over 70 percent are under 30. This huge age difference is reflected in the different experiences of government and those governed.

Africa’s “old guard” seek to maintain traditional values, while the “new guard” crave new economic opportunities, quality education, basic healthcare, and most importantly access to technology. The mobile phone is their primary tool of choice with young Africans hungry for social media, streaming services, and connectivity to various digital applications. It is estimated that by the end of 2019 there will be over one billion mobile phones in Africa.

This increased demand for connectivity is driving the youth to use information and communications technology (ICT) to boost their own prospects. Over the next few years, fibre optic cables and a backbone network will need to be enhanced to support this growing access; which could help reduce the cost of Internet access and open up new markets and avenues for telco’s and carriers looking for new customers through content, software, and digital applications.

The point of contention is whether Africa’s leaders will succumb to the technological culture of the millennials or remain loyal to their “button-up culture” of government.

Africa’s Goldilocks vs. Cinderella Economy

2017 was a good year for African financial markets with the “feel-good” factor returning to the continent after more than two years of subpar performance. This “Goldilocks” economy – not too hot, not too cold, was positive for both developed and developing markets. Fast forward to 2018, and there is no longer room for complacency. Escalating global trade war tensions as well as emerging market contagion has started creating a more negative economic outlook for Africa again. Despite this, the African continent remains laden with opportunity as the digital economy continues to rise.

But how does a prospective telco/carrier de-risk their entrance into the African continent in light of these potential economic stresses?

Be aware of geo-political/economic issues bubbling beneath a country’s surface such as political instability and power transitions, irregular elections, currency fluctuations, and more. Countries with bad politics and bad economics will be in the firing line when the hot money heads for the exit.  Against this backdrop, telco’s and carriers need to be wary of a Cinderella effect, whereby the carriage very quickly turns into a pumpkin when the proverbial clock strikes 12. Entering new markets and investing in technology can be financially disastrous to a telco/carrier if the correct due diligence isn’t carried out. A negative economic outlook can easily spill into the real economy in which telco’s operate, leading to financial distress and a harmful impact on day-day operations.

East vs. West and the New Scramble for Africa

There has been a sense of anxiety among many in Africa around what the changing global geopolitical landscape means for the continent’s prospects. While the West has been focused on inward issues surrounding migration and security, the East – mainly Asia’s big three (China, India and Japan) have focused outwards with Africa increasingly featuring on their radar.

This has led to Asia seeking new trade and investment opportunities on the continent; and the colloquial phrase that the “Sun rises in the East”. For China, in particular, Africa is highly strategic. Its young population, growing consumer market, and cheap labour provide complementary drivers for China’s economy. At the same time, Africa faces a major infrastructure deficit and funding gaps, which China is able to fulfil. The Belt and Road Initiative – the $900 billion silk road corridor, has already allowed the Chinese government to develop physical and digital infrastructure on which both Chinese and African companies can capitalise.

As many Asian companies continue to search for new markets and push towards setting-up shop in Africa, they will require reliable telco/carrier partnerships to establish state of the art digital infrastructure and provide connectivity services. For telco’s, the opportunity lies in being aware of these opportunities arising from the East and the development of new, non-traditional partnerships with Asian companies.

Back in the 2000’s China’s Internet penetration was less than 1%. However, with the growth of Tencent, Alibaba Group, and Baidu; today, over 800 million Chinese citizens are connected to the Internet. Africa is experiencing the same digital rise as more of its citizens are connected; and with the infrastructural foundation provided by “Belt Road” projects, China sees the continent as the perfect place to develop Chinese technology tailored to Africa.

Will Africa Leapfrog or Lag?

Given the scale of the developmental challenges Africa continues to face, digitisation and technology offers opportunities to overcome these traditional barriers. But while AI, robotics, and machine learning have the potential to be a game changer for Africa — this needs to be contextualised. Many African countries continue to lag on several fronts. Countries are still struggling to name streets, fix potholes on roads, provide clean water, solve basic sanitation needs, and even provide functioning public services to their citizens.

Despite these negatives, the potential for economic and technological growth in Africa is clear. The example of M-Pesa, which saw Kenya move from zero mobile telephony to becoming a global leader in mobile banking, illustrates the transformative power of such technology. ICow – an app aimed at farmers with livestock, acts a virtual veterinary nurse and midwife for subscribers, giving advice on gestation, milk production and fodder. The mobile app was recently featured on as one of Africa’s best mobile applications. All these technologies need a strong database and efficient levels of connectivity to function properly; all of which are opportunities that telco/carriers can exploit.

However, new technologies also involve pronounced risks. Globally, they are causing the loss of many low-skilled routine jobs, of which Africa has a disproportionate share. It is estimated that up to 66% of all jobs in developing countries are at risk. This leaves a burning question: how do African countries industrialise without leaving anyone behind?

New Call-to-action

Read more blogs below