A recent McKinsey report on “digital globalisation” found flows of data and information now generate more economic value than the global trade in goods.
Essentially, this means that an industry that did not exist 15 years ago is now bringing in more value to a country’s Gross Domestic Product (GDP) than the centuries-old trade in goods. That is quite something.
It is also a huge opportunity for Africa, a continent that has built a reputation based on leapfrogging. Across the continent, from Lagos to Nairobi to Cape Town, it is an opportunity tech startups and hubs are trying to grab with both hands.
Yet it is also an opportunity that may yet be passed up. Less than 30 per cent of Africans have access to the internet. Growth has been strong but is fading, as cities are connected but the less economically viable rural areas remain out of reach.
This lack of connectivity could have “profound consequences”, according to Erik Hersman, chief executive officer (CEO) of Kenyan tech startup BRCK, which has designed a modem-cum-router device aimed at bringing connectivity to rural, off-grid areas.
“While the continent is moving forward, the internet is more available and devices for accessing it are getting less expensive, we’re still far behind. We’re simply not moving fast enough or staying close enough to the rest of the world,” he said.
This is a sentiment echoed by Alan Knott-Craig of Project Isizwe, which is rolling out free Wi-Fi in South African cities. He says the lack of connectivity across the whole of Africa would limit the ability of the local tech startup ecosystem to grow.
“Online businesses need connectivity to both operate and sell. For example, an online radio station needs connectivity so that it can upload and broadcast content. It also needs potential listeners to have connectivity. Without ubiquitous and affordable connectivity, the odds of success for all online businesses are dampened,” Knott-Craig said.
That is not to say that there are not serious efforts at tackling the problem. Initiatives such as those of BRCK and Project Isizwe are pushing the boundaries. The likes of Liquid Telecom are rolling out fibre connectivity at a very quick rate. Even global firms like Facebook – with its Free Basics initiative – and Google – with Project Loon – are invested in African connectivity.
Expansion of connectivity
Hersman said there are a lot of interesting business models for the expansion of connectivity, but they really needed breaking into two sides: transmission and distribution.
“Transmission is the – mostly – air game about getting the internet from the world to a location, so think cables, Facebook drones, satellites, mobile operators, and Google balloons. Distribution is the ground game, where you get the internet signal to the phones that people use, this is where you find BRCK playing, as well as some other great services like Project Isizwe,” he said.
“That being said, I believe the transmission is a lot easier for people to understand and it’s just about getting the massive amount of capital expense needed to make it happen. However, on the distribution side, you’re dealing with another problem – which is that most Africans can’t pay more for internet than about 20 shillings ($0.20) per day. The way forward isn’t found in just making it cheaper and more efficient, it has to be a business model that makes it free.”
Knott-Craig said though governments sometimes have enough money to 100 per cent subsidise, this is rare.
“What is more common is the requirement to introduce a self-funding commercial model. Advertising revenue is insufficient in isolation. Other models are being tested, included incentives to pay outstanding rates and taxes, litter collection, and vocational learning,” he said.
Political will is key to the equation. Both Hersman and Knott-Craig are complimentary of the attitude of South African authorities, while the efforts of the Rwandan government have also not gone unnoticed. But the same cannot be said across the board.
Knott-Craig said the South African national policy of SA Connect was a good one, but the implementation on the ground is a bit slower than hoped for. That said, the Tshwane Free Wi-Fi project rolled out by Project Isizwe is now widely recognized as a successful and viable model for bridging the digital divide.
“If a mayor, premier, minister is a believer in the power of the internet, then the respective administration doesn’t hesitate. Leaders that don’t understand the Internet are indifferent, and their administrations won’t prioritize,” he said.
“Once you have political buy-in, the trick is to ensure the technical deployment is effective. There are many failed models.”
Hersman said, however, in other large economies such as Kenya, Nigeria and Ghana the will power to subsidize this space is not yet there.
“The commercial models and the technical models to make it happen have to be done through the private sector for most of Africa, even if the regulator is easy to deal with,” he said.
Credit: AFK Insider