21st August 2023


Africa’s promising digital landscape

The digital landscape in Africa presents a promising yet often overlooked investment prospect. According to the International Finance Corporation and Google, Africa's internet economy could contribute $180 billion (£142 billion) to its GDP by 2025, underscoring the need for robust digital infrastructure to support this growth. The COVID-19 pandemic acted as a significant catalyst, amplifying the demand for improved digital infrastructure as internet usage surged and efforts were made to bridge the digital divide.

Current trends signal substantial progress in internet accessibility, mobile connectivity, and the adoption of cloud services across the continent. The availability of affordable smartphones, alongside the expansion of fiber-optic networks and undersea cables, has facilitated greater connectivity in previously underserved areas. However, there are still areas that require attention, such as expanding mobile networks, enhancing fiber links, and bolstering data center capacity.

Internet usage in Sub-Saharan Africa has surged from 1% in 2000 to approximately 40% today. With Africa's population projected to reach 2.5 billion by 2050, the demand for digital services is set to soar. The African Union reports that around 473 million Africans are currently online, with another 300 million expected to join by 2025. Achieving and exceeding this level of penetration is pivotal for Africa's future growth.

Expanding mobile networks, improving fiber connections, and establishing data centers represent some of the most promising investment avenues in Africa's digital infrastructure. These specific sectors hold substantial growth potential and are critical for enhancing connectivity, data storage, and processing capabilities on the continent. GSMA projects that Africa will have 615 million unique mobile subscribers by 2025, up from 303 million in 2020. Moreover, the Africa Data Centres Association emphasizes the need for data centers to support the expanding digital ecosystem, noting that "Africa requires at least 100 additional data centers by 2025." Investing in mobile network expansion, fiber infrastructure, and data centers is not only essential to meet rising connectivity demands but also to foster a resilient digital economy, unlock fresh business prospects, and bridge the digital gap by granting underserved populations access to digital services and information.

However, numerous challenges persist. The World Bank estimates that achieving universal, high-quality internet access in Africa demands $100 billion in investments, with 80% allocated to core infrastructure for establishing and maintaining broadband networks. This encompasses 250,000 new 4G base stations, over 250,000 kilometers of fiber, and the migration to 5G, which could further escalate the need for data centers. While investors are increasingly recognizing and expressing interest in African digital infrastructure opportunities, current investment levels fall short of meeting the escalating demand.

Another hurdle arises from the complex array of regulatory frameworks across the continent. The International Telecommunication Union highlights that the divergence in regulations poses a significant challenge to cross-border connectivity and regional integration. Inconsistent regulations create obstacles for digital infrastructure providers and investors, leading to deployment delays and hindering cross-border connectivity initiatives. This regulatory inconsistency stifles innovation, investment, and the overall expansion of Africa's digital economy, limiting the potential for comprehensive digital inclusion and economic progress.

Africa's digital infrastructure landscape also grapples with evident deficiencies, notably the absence of reliable electricity, which severely impacts the deployment and operation of digital infrastructure. The World Bank reports that approximately 600 million people in Sub-Saharan Africa lack access to electricity, posing difficulties in sustaining the requisite power supply for digital networks and data centers. Without a stable electricity infrastructure, expanding and optimizing digital services becomes constrained, impeding economic growth and digital inclusion across the continent.