One in six people in the world live in Africa – but its digital infrastructure is much lower than the global average.
This is why many of the world’s leading tech firms are targeting the continent as a key growth area over the next decade.
Following cryptocurrency project Cardano’s Africa investment earlier this year, Google have just announced a $1 billion investment in Africa’s internet infrastructure through US tech company Alphabet Inc. (GOOGL.O).
Here’s what the ten-year plan will involve.
‘A digital transformation’
Africa suffers from some of the slowest internet speeds in the world. Nations such as Ethiopia and Malawi have average connections of below 0.5 megabytes per second (MBPS) compared to, say, Denmark, which has 107.78, according to Fastmetric. This means that while users in Europe and Asia are bouncing around sites ranging from internet forums to lottery sites, their African counterparts are often struggling to perform basic tasks.
However, the project has an ambitious aim: to boost internet speeds five-fold, increase capacity by 20 times, and reduce the average internet price in the process.
Google and Alphabet CEO Sunar Pichai referred to it as a ‘digital transformation’ and confirmed the company’s commitment to make the internet ‘accessible, affordable and useful for every African’.
His pledge must be welcome news to people across the continent, but how do Google plan to achieve such lofty ambitions?
Google are in the process of building an undersea cable connecting Africa to Europe. It has been under construction since 2019 and, when complete later this year, it’s going to provide a huge upgrade on existing infrastructure.
The cable – named Equiano after Olaudah Equiano, a famous Nigerian author and abolitionist – will be the first ever to incorporate optical switching at the fibre-pair level, which will greatly boost internet speeds. Its higher flexibility also means it will be much easier to carry out repairs.
It will be fully funded by Google, meaning the company has full power over the timescale of the project and which business partners are involved.
A big part of the project will be the $50 million Africa Investment Fund, set up and controlled by Alphabet Inc (GOOGL.O). This money is to be invested in African start-ups who normally struggle to get capital from banks – even when credit is available, interest rates are often set at very high levels.
The $50 million will be divided as follows: $40 million to non-profit organizations who are focussed on improving the standard of living in Africa. Then, the additional $10 million will take the form of low-interest loans to help small businesses and entrepreneurs in Ghana, Nigeria, Kenya, and South Africa.
The managing director for Google Africa, Nitin Gajria, said that he believed ‘Africa’s innovators and entrepreneurs could solve Africa’s biggest problems’.
It’s not just business owners who will benefit. There are estimates that this boost to the region’s digital economy could lead to 1.7 million new jobs in Nigeria and South Africa by 2025.
Expansion of Safaricom project
Expansion as well as creation will be at the heart of the project. Last year, a project with Safaricom in Kenya allowed Google to distribute 4G-enabled phones to customer in instalments, working in tandem with operators MTN, Orange and Vodacom.
They intend to expand the focus of this agreement across more countries, including Nigeria, Kenya, Uganda and Ghana. It ties in with the previous two benefits outlined in the article: to get cheap but reliable internet to more people, and to invest in small enterprises in those countries.
Safaricom isn’t the only operator, either with plans to extend to other telcos such as Orange, Vodacom, MTN and Airtel.
Not just Google
Google may be about to become the key player in Africa, but other tech entrepreneurs have been there for a while. Firms backed by wealthy magnates such as Jeff Bezos and Mark Zuckerberg are already present, helping to drive tech growth there for the last decade or so.
Google’s new venture, though, is reaching new areas, such as directly funding African start-ups. The continent appears ready to embrace the benefits – and challenges – that big tech has brought to other parts of the world.