To enhance Internet connectivity in Africa, doubling the current annual spending to $6 billion is imperative, as highlighted by the International Financial Corporation (IFC).
According to Susan Lund, IFC’s Vice President of Economics and Private Sector Development, this funding will primarily facilitate the expansion of fibre optic networks, extending from coastal regions to urban centers and households.
However, it’s crucial to note that the $6 billion represents only the initial capital expenditure for building out digital infrastructure, excluding operational costs. Over the past decade, the World Bank has allocated $2.8 billion to various digital development initiatives across sub-Saharan Africa. These initiatives encompass the deployment of fibre optic cables, establishment of data centers, support for internet service providers, provision of technological devices like mobile phones and laptops, and implementation of digital education programs.
Despite these investments, a significant portion of African countries still lacks adequate digital infrastructure coverage, indicating the necessity for increased funding and concerted efforts to bridge the connectivity gap.
The IFC, a member of the World Bank Group, aims to increase its total investment in the continent to approximately $10 billion by the end of 2024.
According to Makhtar Diop, managing director of IFC, this amount would be doubled in the following year. The majority of these investments will be directed towards innovative companies that are facilitating digital adoption across various industries.
A survey conducted among firms in 54 countries to assess their utilization of the internet in business operations revealed that while there is a growing trend of online business, many firms are not fully leveraging online opportunities. In countries like Ethiopia, Ghana, Kenya, Nigeria, South Africa, and Uganda, only 5% of firms with fewer than five workers have computers with internet connections. This limitation is often due to the lack of access to high-speed internet enabled by fibre optic cables in their areas, or their inability to afford smartphones for digital payments.
As a result, an additional $2.7 billion investment is required to support the transformation of small and medium businesses into digital entities. These investments could play a crucial role in assisting firms in the manufacturing and agriculture sectors, where digital technologies are essential for tasks beyond the current capacities of most African firms.
The IFC views the introduction of new submarine cables to the continent as a positive development in addressing the infrastructure shortfall. Currently, approximately 30 submarine cables, boasting extensive internet capacity totaling hundreds of terabits, have been deployed in Africa. However, bridging the gap between the submarine cables and the urban areas where businesses and individuals require access to the internet poses a significant financial hurdle.
Facilitating the online presence of small businesses not only enhances their efficiency but also contributes to increased employment opportunities. According to a report by the IFC, these small firms employ approximately 70% of Africa’s workforce, totaling around 400 million workers.