African markets

The digital infrastructure imperative in African markets

Over the past two decades, Chinese companies have come to dominate the telecommunications infrastructure landscape in emerging markets. Around 50% of Africa’s 3G networks and 70% of its 4G networks are built by Huawei. The Clean Network Initiative was the Trump administration’s central policy aimed at curbing the expansion of Chinese tech infrastructure, but only succeeded in getting European countries to agree to use non-Chinese infrastructure to expand telecommunications networks. Countries such as the United Kingdom (UK), the Czech Republic and Poland, as well as telecommunications companies such as Orange and Telstra, have notably joined the initiative. While more diplomacy is expected in U.S.-China relations under the Biden administration, the recently created Pentagon China Task Force says the administration is equally concerned about spreading influence. Chinese than the previous one. Although the policies of the Trump administration have succeeded in curbing Chinese expansion in Western countries, they have not addressed the growing presence of Chinese tech infrastructure on the African continent. In African markets, the lack of local champions and constraints in financing capacity and building infrastructure have created a dependency on Chinese-funded projects.

According to the China Global Investment Tracker, Chinese technology investments and contracts in sub-Saharan Africa totaled $7.19 billion between 2005 and 2020. Huawei and ZTE have established more than forty 3G networks in more than thirty African countries and built national networks fiber optic communication. and e-government platforms for over twenty African countries. To counter China’s influence through Chinese telecommunications companies, the United States cannot use the same tactics that have worked in the developed world. Instead, US policy should provide an alternative to Chinese technology by promoting new direct-to-consumer satellite solutions and supporting US tech companies already investing in African markets. The United States can also invest in technology solutions, such as improved routing protocols, that build device trust and avoid the binary choice between American and Chinese technology. Through these policies, the United States can slow and possibly erode the gains that companies like Huawei have made on the continent by promoting innovative American technologies and providing resources to help spark the second wave of the Internet revolution in the continent. African countries.

As the youngest continent with the highest rate of urbanization in the world, Africa’s market of 1.2 billion people, home to six of the ten fastest growing economies, is increasingly attracting attention from American tech and entertainment companies. In 2019, Google announced an undersea cable called Equiano that connects South Africa to Portugal, with a stopover in Nigeria. This undersea cable will be owned and operated solely by Google, unlike the consortium of investors who typically co-own these cables. Facebook is embarking on an even more ambitious project: the 2Africa submarine cable that circles the continent and connects twenty-three countries in Africa, Europe and the Middle East. The 2Africa cable alone, which is expected to be completed by 2024, would double total internet capacity on the continent. These undersea investments by US companies are expected to dramatically increase internet supply on the continent, potentially leading to lower internet prices.

The additional broadband capacity that will be provided by the new submarine cables will then require investment in terrestrial fiber infrastructure to extend access from the port inland. American companies are also investing in innovations that are still in the pilot stage but with the potential to scale and be transformative. Google’s parent company, Alphabet, through its company X moonshot, launched Project Taara to extend the existing fiber network to surrounding rural areas at significantly lower costs. Initially piloted in Kenya and India, the Taara project uses light to transmit high-speed data between two points above the ground through invisible streams of light. Transmitting data over the air avoids the cost and inconvenience of digging paths to lay fiber optic cables and will encounter fewer regulatory hurdles since private and public land is not required. U.S. government agencies, such as the Millennium Challenge Corporation, U.S. International Development Finance Corporation, U.S. Export-Import Bank, and U.S. Agency for International Development, could partner with X to bring scale these pilot projects and provide regional solutions as learnings. accumulate and costs fall.

The high cost and low laying margins of fiber optic cables in rural areas have resulted in a persistent last mile problem, increasing reliance on mobile data usage and deepening the digital divide. Less than a third of Africans have regular access to the Internet of any kind. An attempt to solve this problem was another Alphabet project called Google Loon. Although Loon ultimately failed and was shut down in January 2021, the ambitious plan to use tennis court-sized solar balloons to bring internet access to rural areas is the kind of original thinking needed to cross the last mile of internet connectivity on the continent. With a self-proclaimed slim chance of success, the small victories in delivering internet to hurricane-damaged Puerto Rico and rural farmers in Kenya should encourage Alphabet and other tech companies to continue investing in developing solutions. innovations aimed at increasing Internet access on the continent. .

The SpaceX StarLink satellite project could also prove transformative in delivering high-quality internet directly to consumers wherever they are. The project’s network of interconnected satellites can provide high-speed Internet access, with speeds exceeding 95% of US connections, even in the most remote places on the planet. It is currently in an invitation-only public testing phase and is only available in latitudes 45-53 degrees, which covers a small range of regions in the northern hemisphere. Initially only available in the northern US and southern Canada, recent regulatory clearance in the UK has allowed StarLink services to be offered in the country as well. As new satellites are launched, more and more parts of the world will be covered by this service. Countries like Greece, Germany and Australia have already approved StarLink operations in anticipation of such expansion. The cost of StarLink’s $499 starter kit and $99 monthly payment would be a barrier to expansion into African economies, but expected price drops for new models will make it an attractive option for internet access in African markets over the next eighteen to twenty-four months.

African nations no longer just attract investment in extractive industries. The young and fast-growing markets have proven attractive to Chinese tech infrastructure companies for decades. Big US companies are finally taking notice and can help unlock the developmental benefits of a second internet revolution in African markets, providing the backbone for the growth of innovative e-health, edutech, fintech companies. and reg-tech. The Biden administration has the opportunity to work with flagship American technology companies to accelerate and scale critical digital infrastructure to benefit Americans and Africans.

Aubrey Hruby is a Senior Researcher at the Atlantic Council’s Africa Center. She is also co-founder of Insider and Africa Expert Network. Follow her on Twitter @AubreyHruby.

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Image: Cell towers in Angola, 2014. (Flickr/jbdodane)