Infrastructure Solutions: Digital power for Africa

Digital infrastructure, including broadband, mobile telecom and internet, is at the heart of the digital economy. However, a stark digital divide remains. An estimated 900 million people are still not connected to the internet across the continent; for those who are connected, connectivity prices remain mostly high and bandwidth is severely limited in many areas. Only 0.4% of the African population has a fixed-broadband subscription and the great majority of internet users rely on mobile broadband.

Mobile internet is a real need for the rural population living in remote locations with patchy network coverage. During the COVID-19 pandemic, many of those who were not digitally connected lost access to health services and education. Production across sectors got severely impacted. To accelerate Africa’s economic recovery beyond the pandemic, the continent will need to speed up its digital transformation.

The Global Gateway, the EU plan to support infrastructure development around the world, aims to mobilise €300 billion between 2021 and 2027 for connectivity projects, including in the digital sector. Here’s how investing in Africa’s digital infrastructure can help the continent build a secure, inclusive and safe digital economy.

Connecting and protecting the unconnected

Getting everyone online is a great challenge for market players, especially in areas with low purchasing power. Furthermore, the return on investment declines with decreasing population density or geographical constraints which result in increased costs. So, in many African countries, the market fails to provide certain geographic areas with high economic and social returns connectivity services.

Multilateral public banks can help government improve voice and data connectivity in rural areas. The European Investment Bank is a member of the digital4Development (D4D) Hub. This platform gathers key stakeholders from EU countries, private sector, civil society and financial institutions to scale up investments and support a digital transformation that works for ordinary people.

The European Investment Bank is helping to find solutions to connect underserved areas. For instance, the EIB makes use of its “blending” facilities (which incorporate EIB loans with financing from the European Commission) to de-risk investments, attract private sector investors and secure connectivity for priority public usages. Such instruments could also include a dedicated telecom infrastructure financing structure managed by the EIB and crowding-in investments from various sources, using blended grants or guarantee schemes.

One alternative approach to increase connectivity in rural areas is infrastructure sharing, which reduces costs and makes it easier to expand the reach of networks. The sharing arrangement can concern passive and/or active equipment. Passive infrastructure sharing involves, for example, the sharing of towers, fibre cables and access to buildings. Active infrastructure sharing involves, for instance, the sharing of a radio network, national roaming, and the introduction of mobile virtual network operators.

Routes undersea

Around 99% of global international data traffic runs through undersea cables. The major submarine cable routes connect North America with Europe and Asia. The growing data traffic is channeling investments in data transmission infrastructures. The fibre-optic submarine cables footprint and capacity are increasing exponentially.

Although the African continent still remains underserved, operators and investors have recently led some projects, especially on its eastern coast. An example is the Eastern Africa Submarine System, a cable network of nearly 10 000 km and the Africa Coast to Europe cable connecting Gibraltar to South Africa and landing in countries of the Gulf of Guinea.

A €25 million EIB loan in a submarine cable will reinforce Mauritania’s digital connection with the rest of the world. The 600 km cable will support economic resilience in the country by reducing the risks arising from loss of connection through existing systems and provide digital access for more people.

A ripple effect

Africa can think big on digital development. Digital technologies unlock new pathways for rapid economic growth, innovation, job creation and access to services that would have been unimaginable only a decade ago. Yet there is still a ‘digital divide’ between urban and rural, between genders, and cyber-risks are growing as economies are increasingly digitalised.

Development institutions much support African governments to find more nimble and effective means of delivering services and interacting with citizens. Businesses need to use digitally centered models to connect with the hundreds of millions of customers previously out of reach because they lived in remote locations or did not have a mean of payment for e-transaction.

It’s a sector where the benefits of infrastructure are clear and crucial—and they bring with them tremendous economic and social development opportunities.