Why West African Digital Infrastructure Needs Massive Investment
Investing in digital infrastructure in West Africa is highly important for the development of innovation and the digital ecosystem, building digital capacity and skills, establishing data and digital governance, all-round digital transformation, and promoting digital economy which is an enabler for various income groups across the region.
The role of digital infrastructures in any information society and digital economy cannot be overemphasized. Explicitly, infrastructural development, human capital development, economic policies, and institutional quality could provide a viable platform for digital economy to thrive. Development experts have noted that, digital public infrastructure (DPI), such as digital identification (ID) systems, digital payment systems, and trusted data ecosystems, underpin digital transactions and connections and enable other solutions by and for individuals and public and private sector entities to build on. Therefore, seamless integration of these systems is essential to unlock more advanced products and services.
Despite the fact that ensuring a resilient and secure data hosting infrastructure or cloud has also become an important agenda. This includes data protection and cybersecurity provisions. While, studies by the International Telecommunications Union reveal that developing nations accounted for 67% of the world’s mobile subscriptions by the end of 2006, with positive projections on future growth potential. Similarly, a study by Global System for Mobile Communications Association (GSMA) revealed that by the end of 2020, 46% of the sub-Saharan African population (the~495 million people), had subscribed to mobile services, further highlighting the rapid and successful market penetration of mobile digital devices in Africa. As mobile devices represent one of the several technologies that are accelerating Africa’s advancement towards a digital future.
The West African country, Nigeria, is regarded as the vast ICT market in Africa, with 82% telecom subscribers and 29% internet usage, the West Africa Telecommunications Regulators Assembly (WATRA) indicated. They also state that the estimated mobile industry’s contribution to the GDP of West Africa is $70 billion. While the GSMA Intelligence Mobile Report 2019 for West Africa shows that the mobile ecosystem employs 200,000 people directly. In addition, the sector supports 800,000 jobs in the informal sector and 600,000 in other economies. The GSMA projects West Africa’s unique mobile subscribers to hit 248 million with 442 million sim connections and $18 billion in operator revenues and investments in 2025, the report continued. As addressing barriers to digital inclusion will accelerate the industry’s impact on the Sustainable Development Goals (SDGs). Affordability, low levels of literacy and digital skills, a lack of relevance, and safety and security concerns are the biggest barriers to mobile internet use from consumers’ point of view.
The Missing link
Inadequate digital infrastructure in this era promotes inequality and poverty amongst global citizens. Indeed, Africa’s internet economy is one of the largest overlooked investment opportunities available, with a potential to add US$180 billion to Africa’s GDP by 2025, the International Finance Corporation (IFC) and Google’s e-Conomy Africa 2020 report said. Analyst says expanding mobile networks, increasing and improving fibre links, and building data centre capacity presents some of the greatest investment opportunities in digital infrastructure across Africa. These specific sub-sectors offer significant potential for growth and are essential for driving connectivity, data storage, and processing capabilities on the continent. In the interim, African countries have rolled out more than 1.389 million kilometers of terrestrial fiber links, approximately 936,000 kilometers of which were already operational in 2018. The 2Africa cable system—the largest subsea project, which will ring the entire African continent with a 23,000-mile-long, high-speed subsea cable—is expected to include 21 landings in 16 African nations and double the continent’s total internet capacity, once completed in 2024. Affordability, measured by the price of 1Gb of mobile data, has also improved significantly from 10.5 percent of the monthly GNI per capita in 2019 to 5 percent in 2021, especially in Benin (from 21 percent to 3.2 percent) and Somalia (from 18.1 percent to 1.7 percent). However, despite progress in mobile broadband coverage, West Africa still faces significant gaps in digital connectivity, access, and usage. The adoption of mobile broadband services remains below 40%, primarily due to high retail prices acting as a barrier. Infrastructure deficits, especially in international connectivity and resilient fiber optic backbone, remain major obstacles to meeting the growing demand for data and online services.
Recently, a widespread internet outage in Nigeria, Ghana, Senegal and Côte d’Ivoire were reported on March 14, 2023 making many websites unavailable and disrupting online banking operations. Although, some of the difficulties have eased in the days since, but the weeks-long timeline for fixing the issue means internet access will remain spotty. The affected cables are those of the West Africa Cable System (WACS), the Africa Coast to Europe (ACE), MainOne, and SAT3. However, this not an unresolved issue it just a matter of time. But analysts have been raising concern about the gap in the digital infrastructure ecosystem especially lesser competition among the service providers operating within the region. Though, most times investors are being challenged by government policies and reforms in West Africa as some countries institutes telecom sectors are solely controlled by the authorities. Up till now, digital infrastructure assets demand larger capital expenditures, the need for more structured financing solutions will likely grow. The high costs of constructing and operating mega-data centres might also encourage shifts toward alternative funding sources that deploy capital more efficiently.
Paving the way
Mobile markets are developing fast in Sub-Saharan Africa and large investments have been undertaken in international connectivity, national backbones, and access networks. However, the adoption of digital technologies by households, firms, and governments in the region still lags that of other regions in the world; and there are large digital divides by urban-rural, gender, and firm size. Further uptake of digital technologies is hindered by limited, affordable and quality internet connectivity as well as a lack of widespread availability of adequate digital services to pull demand for digital technologies, coupled with low levels of digital literacy. Experts say, in order 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.
Temporarily, 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. Experts has indicated that policies are needed across various areas: digital infrastructure for connectivity, digital business models and digital financial services to provide appropriate digital services across economic sectors, public digital platforms and e-government services to create an enabling environment for business and pull demand for digital technologies, and digital skills, gender inclusivity, and capacity to address digital literacy gaps.
West African policymakers should design and implement policies that will promote significant investment in digital infrastructures and human capital, and provide a stable and predictable policy framework. Also, experts have advised West African countries such as Senegal to implement reforms that will enhance competition and better management of public telecom assets while Togo should privatize the state-owned telecom operator. Likewise other affected countries should open the internet wholesale and retail markets to competition, allowing for increased private sector engagement and investments in the telecom sector. Therefore, investing more in digital infrastructure in the West Africa region will bridge the digital divide, making internet services in the region more affordable, promoting competition among service providers, and improving the underlying infrastructure to unlock new opportunities.
Writer and researcher at Alafarika for Studies and Consultancy.