Africa needs $6bn yearly in digital infrastructure to connect millions of citizens

Africa will need to double its spending to $6 billion annually if it hopes to connect more people and businesses to the Internet. The money will be used to deploy more fibre optic cables from the sea to the cities and homes, said the International Financial Corporation (IFC).

“The $6 billion is just the capital expenditure of building that (digital infrastructure) out, it doesn’t include running and operating the infrastructure,” Susan Lund, IFC’s vice president of Economics and Private Sector Development told TechCabal.

The World Bank has committed $2.8 billion to different digital development projects in sub-Saharan Africa over the past ten years. These include investments in fibre optic cable deployment for high-speed internet, data centres, internet service providers, technological tools like mobile phones and laptops, and digital education initiatives. But the investment has barely scratched the surface of the problem, as a large portion of countries in Africa remain uncovered with infrastructure.

The IFC, a member of the World Bank Group, wants to take its total investment in the continent to around $10 billion by the end of 2024. This would be doubled in the following year according to Makhtar Diop, managing director of IFC. Much of these investments would go to innovative companies helping to encourage digital adoption in different industries.

A survey of firms in 54 countries to determine how they use the internet in their business operations, found that while more businesses are done online, not many firms are taking full advantage of online opportunities. Only 5% of firms with fewer than five workers have computers with internet connections in countries like Ethiopia, Ghana, Kenya, Nigeria, South Africa and Uganda. In many cases, the firms are located in areas without fibre optic cables that enable high-speed internet or they can’t afford smartphones to do digital payments.

Due to this, a further $2.7 billion is needed to assist small and medium businesses in transforming into digital companies. Investments in this area could help support firms in the manufacturing and agriculture sectors, where digital technologies are usually required to perform specific tasks beyond the current capabilities of most firms in Africa.

The IFC sees the arrival of new submarine cables on the continent as an encouraging step to solving the infrastructure deficit. Around 30 submarine cables with hundreds of terabits of internet capacity have landed in Africa so far. However, the cost of transmitting the internet capacity from the submarine cables to the cities where firms and individuals can access them is a costly challenge.

Helping small businesses get online not only increases their productivity it also ensures they continue to employ more people. about 70% of the labour force in Africa is employed by these group of firms. This represents about 400 million workers, the IFC report noted.