As published in the July issue of SubTel forum magazine
By David Eurin
July 29, 2022
Africans are preparing to conquer the world. It may not be a sentiment the developed world tends to agree with, but it’s time to face the facts. Around 17% of the world’s population resides in Africa and according to an article by the World Economic Forum, Africa’s urban population is expected to almost triple by 2050.
Add to that the fact that Africa is home to the youngest and most urbanized population in the world and you have a recipe for growth. But what is preventing them from taking their rightful place in the global economy?
The answer to this question is obviously complicated and full of history and nuance, but I would argue that a structural obstacle still stands firmly in the way of Africa’s economic metamorphosis. There just isn’t enough internet connectivity.
The World Bank postulates that the digital economy represents 15.5% of global GDP, which has grown two and a half times faster than global GDP over the past 15 years. Research reveals that a mere 10% increase in mobile broadband penetration in Africa would result in a 2.5% increase in GDP per capita.
According to the UN’s International Telecommunication Union, Africa is home to around 700 million of the world’s 3.7 billion unconnected people. As we see for ourselves every day (think what happens if your Internet access is not working this morning?), if one cannot connect to a digital economy, one cannot access the growth opportunity.
As we enter a post-pandemic era, where physical presence is no longer synonymous with effort and added value, developing countries (and continents) are going to need the right tools and environments to enable economic dynamics. . On this side, there is a lot of progress to be made.
At Liquid Intelligent Technologies, a Cassava Technologies company, we’ve seen demand for bandwidth grow exponentially in Africa by at least 50% year-on-year – doubling every 18 months, faster than anywhere else somewhere else. The cost of connectivity is falling rapidly (almost everywhere) and basic internet access is rising.
Analysts continue to point to rapid growth in intra-African network traffic. Yet there is also a wealth of submarine cable capacity coming to the continent over the next few years (eg Equiano, 2Africa, PEACE cables and others). This will bring the total available capacity to over hundreds of terabits across the oceans around Africa. It follows that this capacity must be dispersed across the continent, linking data centers together and bringing the service to every building and home. This creates a symbiotic relationship between marine cables, a secure, reliable and efficient fiber network and even satellite dishes.
These are attractive measures for investors, although success really depends on how well Africans are able, through service delivery, to ensure that they can create competitive offerings in the market like silver mobile and insurance. At the end of the trading day, basic internet is only the beginning of the story.
Routing cables to remote areas is a challenge, and once you get connectivity to an area, network access tends to come at a fixed cost.
In the connectivity game, higher capacity requirements create constant downward pressure on unit cost. This is the defining characteristic of success in the connectivity market. But this is not always easy to achieve. The fewer people using the Internet in an area, the more they have to pay to use it. These are unfortunate economics at first glance, but dig deeper and you’ll find that the value often outweighs the cost when it comes to connectivity, even in developing countries.
Although you will find that it is not the ability to connect with the world that really keeps the local economic engine running, but the ability to connect with other people, businesses, towns, cities and regions of the country – to trade , communicate and seize opportunities to grow, develop their businesses and their national economy.
As we continue to close the connectivity gap in Africa, eventually reaching levels seen only in developed economies, we will undoubtedly witness an exponential boom in GDP and productivity. Along with this, there will be improvements in health conditions and educational opportunities. Over time, and with the right attitude, it is connectivity that provides the spark to reduce poverty and promote economic and social success.
We have seen it in African economic powerhouses like South Africa, Kenya and Nigeria, but other corners of the continent are about to light up as they join the chorus of connectivity. The value of the internet will continue to spread across the continent as we transform tens of millions into hundreds of millions of connected Africans.
We know that technology favors young people, and with such a young population, it’s unclear what this continent is capable of as it finds African solutions to African (and probably global) problems. Come watch and tune in.
About the Author
David Eurin, CEO of Liquid Dataport, is responsible for developing the international connectivity business and submarine cable investments at Liquid Intelligent Technologies. Under his strategic leadership, the organization completed three digital corridors that connect East Africa to West Africa and developed partnerships to expand Liquid’s reach across Africa. He is also instrumental in Liquid’s growing investment in links between Africa and other international markets like Asia, Europe and the Americas.
He joined Liquid in 2013 and, as Chief Strategy Officer, was responsible for the organization’s expansion strategy – which combines organic growth with strategic acquisitions, debt and equity fundraising and partnerships across the continent. He helped triple the company’s revenue and backed Liquid’s bond financing and several additional funding rounds with global investors.
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