Private and Public sectors must work together to bring Africa’s forgotten telecom market online
New and innovative partnerships between governments, the private sector and multilateral financing institutions are vital to improving broadband penetration and boosting investment in telecoms infrastructure in African countries that have fallen behind their peers.
That’s the word from Suveer Ramdhani, Chief Development Officer at SEACOM, who says that a handful of countries are at risk of being left behind by Africa’s emerging digital economy. These are mostly landlocked territories with small populations, emerging economies and modest infrastructure budgets.
According to statistics from the World Bank, there are a number of countries in Sub-Saharan Africa, with less than 2.5 Internet users per 100 people. By contrast, Kenya has 43 Internet users per 100 people and South Africa has 49 per 100. “The digital divide is no longer just between Africa and the wealthier economies off-continent,” says Ramdhani. “There is also a widening digital divide within the continent itself.”
Ramdhani says that building terrestrial fibre networks to connect towns and cities with each other, as well as to neighbouring countries and undersea cables, is challenging because of the sheer cost and long payback period involved. With low population densities, and great distances between relatively poor potential Internet users, most private players struggle to make a solid business case for investment. “Given that every metre of fibre is a metre of cost, operators in these countries need a more efficient way of approaching the market,” he says.
Where governments lead the building of telecoms infrastructure, broadband prices often don’t fall as fast as they should. This is partly due to government owned-operators lacking the commercial and engineering skills of the private sector. Also, state-owned operators are not incentivised to embrace the commercial imperative of driving traffic and user growth to monetise their networks which would lower prices. The result is a network with prohibitive pricing, says Ramdhani, which leaves the private sector with little choice but to duplicate the very same infrastructure that has been deployed by the government.
The road forward is for governments to work with neighbouring countries, the telecoms industry, and multilateral financing institutions to pool resources. Private-public partnerships can pull together the funds, skills and political backing to help turn affordable telecoms infrastructure into a reality, Ramdhani says. Future fibre infrastructure deployments should take on private operators as key anchor tenants by providing these operators with access to dark fibre, which would financially de-risk the projects, while continuing to offer open access services to mid- to small- operators or new market entrants.
Similar models have worked well in East African countries like Rwanda and Malawi. The goal is to make it easy for governments to participate and to drive infrastructure as a national strategic priority, but to do so without restricting the flexibility and competitiveness of the market, Ramdhani says.
“In East Africa, we have seen that selling capacity at a fair price can catalyse enormous growth in broadband penetration, in turn triggering economic growth,” he adds. “With the abundance of international capacity coming into Africa from undersea cables like SEACOM, it is now time to find ways to connect landlocked countries to the global digital economy.” These models can be further applied in countries with high internet penetration to migrate narrowband Internet users to Broadband users that are fully and comfortably engaged with the sources of information, e-commerce as well as the entertainment available on the Internet”