The Imperative of Digital Infrastructure for Africa’s Future

The Context

According to InternetWorldStats, only 17.8% of Africans have internet access at home and only 10.7% of households have a computer. Connecting an additional 1.1 billion people online globally by 2030 and bridging the connectivity gap will cost $100 billion, or about $10 billion per year, according to the Broadband Commission of the International Communication Union and UNESCO. The digital divide has impacted disadvantaged groups the most, and this has been exacerbated by the COVID-19 pandemic. The Africa Union (AU) Digital Transformation Strategy also emphasizes the importance of digital infrastructure, noting that an additional 300 million people are expected to come online by 2025. A primary challenge is the breadth of a strategy that will apply to 54 countries. The strategy has five cross-cutting themes, six critical sectors and four foundation pillars, with nearly 100 policy recommendations. Its implementation is dependent on the progress of other initiatives such as the African Continental Free Trade Area (AfCFTA).

To bridge the gap, digital infrastructure investments will require 250,000 new 4G base stations and at least 250,000 kilometers of fiber in Africa. With the move to 5G, increasing need for data storage will only add to these demands. In remote and rural areas, investments are needed to expand Wi-Fi and deploy satellites to reach 100 million people. Eighty percent of the investment will likely be on hard infrastructure, and that does not include reliable supply of electricity. Of course investment in digital infrastructure, without complementary investment in other hard infrastructure such as power generation and distribution, will not lead to the desired connectivity.

The physical infrastructure financing gap in Africa has been well documented – up to US$170 billion a year by 2025 according to the African Development Bank. And according to the Global Infrastructure Facility, the financing gap for Africa is approximately $1.7 trillion for the next 20 years. There is significant international support, yet according to McKinsey and Company, 80% of infrastructure projects fail at the feasibility stage. And of those that do proceed, African governments are providing 42% of the financing, albeit often with concessional loans. The Infrastructure Consortium for Africa reports that for information and communications technology (ICT) infrastructure in particular, private sector commitments account for more than half of total commitments. The reasons for the lack of infrastructure investment range from low capacity at the national level to perceived risks among financiers. Often, infrastructure projects are responses to political priorities rather than spatial needs, and when multilateral finance institutions are involved, project cycles can be very long.

The Urgency for Investment

There is an urgent need for a special emphasis on Africa’s digital infrastructure. This is due in part to developmental impact. The World Bank has shown a direct association between digital economy and levels of development. For example, mobile broadband penetration has a positive correlation with income per capita; and population penetration of internet services is positively correlated with GDP per capita. A good example is mobile money, which is helping to transform the formal financial sector as well as trading and agriculture across the continent. But African countries currently spend only about 1.1% of GDP on digital investment, while advanced economies spend 3.2%.

There are ongoing initiatives to accelerate investment, including the new EU-AU Digital4Development hub, intended to advance partnerships and investments in the African digital economy. Likewise, the AU Programme for Infrastructure Development in Africa is focused on regional infrastructure projects, while Smart Africa, an initiative of African Heads of State, is promoting harmonized regulation across countries.

Europe Offers a Model

Africa needs a holistic model to address digital infrastructure, but few models exist at this scale and complexity level. The US and Chinese models are for a single country, and there are few robust models for regional economic groups. The EU is implementing a digital strategy that seeks to accelerate digital transformation, in part by setting common regulatory standards. The EU strategy also has a strong focus on data, technology, and infrastructure, and provides lessons for Africa.

Importantly, the connectivity strategy is being implemented jointly with business to bring reliable internet. The EU connectivity strategy creates more digital choices, increases citizens’ digital rights and provides for affordable calls. A critical part of the strategy is to ensure that mobile subscriptions apply throughout the EU with no extra charges, and there is rapid establishment of free Wi-Fi hotspots.

An example is the WiFi4EU initiative which promotes free access to citizens in public spaces. At the same time, the EU is enabling seamless wireless connections across borders. Another key part of the strategy is the Common Union Toolbox for Connectivity. The Toolbox is designed to reduce the cost of deploying high-capacity networks and access to the 5G radio spectrum. The Toolbox is supported by various policies, for example, the Broadband Cost Reduction Directive that aims to facilitate high-speed electronic communications networks.

The EU has an effective model for connectivity that can help inform the AU strategy. But there needs to be a more coordinated and accelerated process across a broad range of initiatives to make digital infrastructure a priority in Africa – and to view it as a regional public good. The EU model can provide insights, particularly related to harmonized policy and affordability. Finally, the EU is making huge investments in Africa – but very little in digital infrastructure to date, although this may change with the EU-AU Digital4Development Hub. Africa’s digital transformation can be realized, but it requires a program of integration that draws from global best practices, and a massive increase in investment to ensure that all of Africa is connected.