A clash of the titans in Africa’s digital economy
Africa’s population is expected to roughly double by 2050, adding 1,3 billion people to the 2020s population of 1,2 billion people.
Notably, Africa’s internet economy has a gargantuan potential of reaching US$180 billion by 2025; according to the e-Conomy Africa 2020 Report by Google and the International Finance Corporation (IFC ). This has created a gold rush for Africa’s digital economy on many fronts; internet infrastructure development, telecoms, e-commerce, big data analytics, fintech — the list is inexhaustible. A clash of the titans has thus developed between African and global players in the digital arena for a piece of this pie. It must be noted, however, that some of the challenges encountered in this quadrant are structural issues that include internet connectivity, mobile phone access, smartphone penetration, as well as financial inclusion. While there are many innovations and start-ups in Africa, for now we will focus on the “titans”, whose groundwork serves as enablers and benchmarks for all the other players.
In dealing with the internet infrastructure gap, several giants have made great strides with noteworthy plans in the pipeline. Among others, Liquid Telecoms has built Africa’s largest independent fibre network, spanning more than 73 000km, and operating state-of-the-art data centres in Johannesburg, Cape Town and Nairobi. In 2018, Liquid completed the installation of Africa’s first terrestrial fibre network stretching all the way from Cape Town, South Africa, to Cairo, Egypt.
In May 2020, Facebook committed to US$1 billion toward the development of a new sub-sea cable link designed to improve internet connectivity in Africa. Facebook and its several brands average 140 million African Facebook users per month and are looking to increase their footprint. Facebook’s internet infrastructure plan for Africa is expected to connect 16 African countries when complete. In a scramble for the digital social space, MTN, the leading mobile operator in Africa, leveraging on a subscriber base of just below 250 million subscribers across 20 African states, two years ago announced plans to introduce an instant messaging (IM) service akin to China’s WeChat and Facebook’s WhatsApp, as it looks forward to boosting revenue from digital services and mobile money.
Vodacom, in the last quarter of 2020 announced plans to launch a lifestyle app, in partnership with Alipay in South Africa, Kenya and Tanzania, which will enable merchants to sell products internationally.
In China, protectionist policies helped WeChat thrive, especially with the banning of Facebook. The question is: Would these instant messaging integrated platforms flourish without similar protectionist moves by Africa.
The advent of mobile money platform M-Pesa by Kenya’s Safaricom proved Africa can also lead the world, where digital innovation is concerned. M-pesa has a presence in more than 10 countries, with tens of millions of users across the continent, a concept which has been replicated by Econet in Zimbabwe successfully, is under serious consideration in Ethiopia, as the telecommunications sector gets liberalised by government and is being relaunched by MTN in South Africa.
Safaricom will own a majority stake of 51% in the consortium of firms seeking a telecommunications licence in Ethiopia, while South Africa’s Vodacom will own a paltry 5% stake in the consortium. Vodacom continues to eye new opportunities in Ethiopia.
Not to be outwitted is Airtel Africa, which in October 2019 announced a partnership with Mastercard, giving more than 100 million Airtel Africa mobile phone users across 14 African countries access to Mastercard’s global network.
Airtel Kenya has in recent weeks picked Nokia to modernise Nairobi with high speed 4G and 5G-ready hardware from its comprehensive AirScale portfolio in a three-year agreement aimed at improving connectivity and capacity benefits.
Currently, the digital economy contributes nearly US$115 billion to the continent, a sector expected to grow to US$712 billion by 2050. Research has shown a 10% increase in mobile internet penetration increases gross domestic product per capita by 2,5% in Africa, compared with 2% globally.
Mabunda is an analyst and TV anchor at Equity Axis, a leading Financial Research firm in Zimbabwe. — ebenm@equityaxis.net