Published on 12 Nov 2021

The challenges and opportunities of bridging Africa’s digital divide

Africa is a fraction of the global ICT market but has much more room to grow.

By Ronak Gopaldas

Despite rapid growth over the past two decades, Africa’s information and communications technology (ICT) landscape remains uneven, with most of the developmental progress occurring in just a handful of countries. From low mobile phone penetration rates to slow internet speeds and prohibitive data costs, the pace of development is inhibiting faster continental growth. There are, nevertheless, pockets of excellence and Africa’s infrastructure gap has inspired best-in-class technology and software development.

Recognised by the African Union (AU) as a key enabler of economic growth, ICT sector development has the potential to be truly transformative for the continent since it is not as hamstrung by the continent’s infrastructure deficits. Instead, it offers a platform from which its productive and consumptive sectors could leapfrog developmental stages and spur innovation across manufacturing, commerce, mining, and logistics and agriculture.

Here we examine some of the challenges facing the continent in its drive toward the fourth industrial revolution, how it is overcoming these hurdles and how collaboration with the East could propel innovation. Finally, we unpack which countries and sectors foreign investors should keep an eye on to capitalise on emerging growth markets.

  1. The digital divide: How Africa stacks up
  2. Bad signal: ICT challenges in Africa
  3. Strong reception: Kenya and Rwanda leading the pack
  4. Connecting to growth: The Asia / Africa opportunity

Information, communications, and technology (ICT) fundamentally refers to the infrastructure (hardware and software) and systems that connect us to the digital world. From landline telephones and cable television to mobile payments, artificial intelligence and machine learning, ICT allows individuals, communities, and countries to rapidly relay information across geographies (Figure 1).

Figure 1: Components of ICT

ICT systems and platforms have become critical infrastructure of the economy today and are considered a key driver of growth.[1] So central is ICT to economic and social development that it is part of the United Nations (UN) sustainable development goals (SDG) for “decent work and economic growth” and “industry, innovation and infrastructure”.[2] ICT is entrenched in the African Union’s Agenda 2063 which calls for a highly connected continent to drive business, social and governance development.[3] It is also a key enabler for reducing global inequality and achieving Agenda 2030’s other 15 goals.

ICT infrastructure and systems are, however, not evenly distributed and better developed economies have greater quality and access to these growth-enhancing systems. The economic, developmental, and societal consequences are already substantial.

1. The digital divide: How Africa stacks up

Africa’s ICT market is estimated to grow from US$95.4bn in 2020 to US$104.2bn in 2023, a compounded annual growth rate of 4.5% according to the International Data Corporation (IDC)[4], making up just 2% of the global ICT market, but 8.5% of Sub-Saharan GDP.[5] From a low base, the continent is playing catchup to serve rapidly expanding demand. Despite several African countries having made great progress in growing their ICT infrastructure and access, the continent lags developed markets and even many of its emerging market peers[6] (Figure 2).

Figure 2: Africa’s ICT development indicators

As an example, less than 10% of households in Africa have a computer and just over 20% have access to the internet. In part due to the infrastructure deficit, broadband speeds are low as is access to fibre. Consequently, mobile broadband subscriptions outnumber fixed line subscriptions by 25 to 1.[8]

There are also significant ICT quality, access, and affordability gaps between developed and developing markets. Median fixed-line internet speeds in developed countries range between 30 to 40 Mbits/s but just 3 to 5 Mbits/s in developing countries.[9]

For cellular transmission base stations, developed nations have approximately 1 transmission tower for every 1,000 subscribers whereas in countries like Tanzania and the Democratic Republic of Congo (DRC), a single tower supports roughly 3,500 and 6,500 subscribers respectively.[10] 95% of African consumers use mobile voice services to overcome the lack of landline access.[11] The result: network congestion and poor service quality.[12] Limited supply, coupled with high demand also means service providers have significant pricing power and telecommunications costs in Africa are among the highest in the world on a purchasing power parity (PPP) basis.

In the 2020 ICT Affordability Report[13], the International Telecommunications Union (ITU) found that while the prices of mobile and fixed broadband services dropped by 0.2% of gross national income (GNI) per capita (to 1.7% and 2.9% respectively) developing market prices remained well ahead of the Broadband Commission on Sustainable Development’s 2% affordability target (Figure 3).

ICT basket prices, 2019 - 2020There are also clear pricing differences. A 2021 study by British technology research firm, Cable, found that Sudan had the cheapest data on the continent, followed by Somalia. Kenya and South Africa, despite boasting some of the highest quality telecommunication network in the continent, twice as much for data as Sudan, But the expensive of all was oil-rich Equatorial Guinea where 1GB of data could cost a whopping US$50[15] (Figure 4).

The cost of 1GB of data in select African countriesHistorically, Africa has been a laggard in terms of ICT development. At the G7 conference in Brussels in 1995, former South African President Thabo Mbeki famously bemoaned that there were more telephone lines in Manhattan than there were in the whole of Sub-Saharan Africa (SSA).[17] But while Africa missed the landline, it did jump on to the mobile train with enthusiasm. As digital technology became cost effective and prices of handsets dropped Africa leapfrogged from fixed line to mobile very quickly – unburdened by legacy infrastructure that did not much exist, to begin with. Now with data turning into the ‘new oil,’ the continent, can ill afford to be left behind yet again. Africa must address the issues of digital access as well as data speed if it must keep pace with technological change. The pace of technological advancement, however, is a double-edged sword. While it allows Africa to leapfrog several ICT developmental stages, it could just as easily leave it too far behind to catch up.

2. Bad signal: ICT challenges in Africa

At the heart of the problem is insufficient investment in infrastructure both in communications networks (fibre, broadband data) as well as the hardware and devices that enable participation in these networks. The African Development Bank (AfDB) estimates that of the annual US$170bn investment required to close Africa’s infrastructure gap, US$7bn is needed every year for the development of the ICT sector.[18] The World Bank estimates that every 10% increase in broadband penetration leads to an increase of between 2% and 3% in GDP growth.[19] For a continent where just 30% of the population has access to the Internet, that is a price tag worth investing in.


There are various reasons for the ICT infrastructure deficit in Africa. Poor roads and electricity infrastructure (or a lack of it) in certain areas raises investment costs and lowers returns. Base stations often must be installed with a solar energy supply unit due to the lack of a reliable electricity networks. The terrain is vast and often inaccessible. Dense jungle in the DRC, for instance, forced UK-based Helios Towers to install 90 metres tall cell phone towers to relay communications above the jungle canopy.[20] Since fixed-line telephony is non-existent in many parts of Africa means that the bulk of communication must run almost exclusively on the wireless network thus putting a strain on the already tenuous mobile infrastructure. To make their ICT infrastructure more resilient African countries need to improve electricity and roads as well. This would substantially improve the ease of doing business and encourage greater private sector and foreign investor participation.

Human capital

Finding well qualified manpower is a significant challenge in Africa. The talent pool that is available is small and thus commands significantly higher salaries. This erodes the continent’s labour price competitiveness. Several countries such as South Africa, Nigeria, Kenya, and Rwanda have invested considerable resources in developing training facilities and opening coding schools to supply their rapidly growing markets. The private sector too has been quick to respond. South African start-up, We Think Code was developed to teach underprivileged youth in the country how to programme and prepare them for the job market.[21] That said, there remains a dearth of talent in the African market which has been a brake on faster growth. Importing skills is broadly frowned upon but are an important way of transferring those skills to local talent. Here, policy sanity must prevail to expedite growth and knowledge transfer.


Financing is seldom an issue for large ICT infrastructure projects, which readily receive backing from governments, donors, and the international private sector. The real challenge in Africa is bank financing or investor backing for technology start-ups and young entrepreneurs. Banks typically want a watertight business plan coupled with a strong track record and are not geared to extend loans against intellectual property (IP) which is often the only form of security start-ups have, if any. The African venture capital and angel investor pool is also under-developed. Larger companies like South Africa’s Naspers, an early investor in China’s Tencent, are beginning to develop their own funding channels and incubator labs which scout for innovative start-ups with potential for rapid scaling.

Public / Private impasse

Government policy and fiscal constraints are hampering investments in many parts of Africa, particularly in Nigeria and South Africa. The Nigerian government has repeatedly butted heads with South African mobile operator MTN. In 2019 it charged the firm US$1.5bn for failing to disconnect 5.2 million unregistered subscribers. The fine was originally set at US$5.2bn (US$1,000 for each unregistered SIM card) but eventually settled at a lower figure after protracted diplomatic intervention.[22] The government said it was concerned that the MTN network was being used by Boko Haram insurgents.

MTN and South African digital broadcaster, Multichoice, have also been embroiled in tax disputes with the Nigerian government. In the latest run-in between Nigerian tax authorities and the private sector, Multichoice was cleared on October 20, 2021, to appeal a US $ 4.4bn tax fine, 15% higher than the company’s market value.[23] The company was accused by the Nigerian Federal Inland Revenue Service of having denied auditors access to its servers and skipping tax payments.[24] Nigerian authorities have a history of imposing exorbitant fines on foreign multinationals. The adversarial relationship with many foreign companies combined with the ever-so difficult business environment in Nigeria has seen many South African investors withdraw from the country in recent years. These include Shoprite, Tiger Brands, Mr Price, Truworths and Woolworths. Global tyre manufacturers Dunlop and Michelin have both expressed an interest in leaving Nigeria for Ghana and Cadbury and Unilever have dramatically scaled back operations in the country. Despite these challenges, Nigeria remains a vibrant incubator of ICT talent and innovation, boasting 85 innovation hubs.

In South Africa, the freeing up and allocation of spectrum – the migration from analogue signal to digital - has been delayed by more than 6 years[25] due to political infighting, competing interests and ongoing policy shifts. The private sector too, has contributed to the impasse by seeking a review of the spectrum auction legislation which they believe is flawed and threatens their market share.[26] The digital switch, now planned for March 2022 could also be scuppered by ongoing litigation.[27] Freeing up higher frequency digital spectrum would allow communications providers to dramatically improve network quality and speeds and reduce data and broadcast costs which in South Africa, are high even by continental standards.

According to the South African Reserve Bank (SARB) this reform alone could raise billions of dollars for the country’s fiscus, be a meaningful job and investment creator and add as much as 0.5 percentage points to the country’s GDP.[28] Nevertheless, South Africa is one of the most technologically advanced countries on the continent and home to some of the world’s most innovative tech firms like Vodacom, MTN, Multichoice and Naspers which have all made strong inroads into African markets.[29] The South African government has a strong focus on ICT growth, but policy uncertainty has cast a shadow over implementation. Despite the challenges, the country has a strong start-up culture and is attracting investment interest from some of the biggest venture capital outfits in the world.

There are more examples across the continent where policy inertia or a lack of implementation has hobbled industry advancements, not just in the sector but across dependent industries.[30] The overall outlook though, remains positive.

3. Strong reception: Kenya and Rwanda leading the pack

While their markets may not be as big as those of Nigeria or South Africa, Kenya and Rwanda have both demonstrated strong and sustained ICT sector growth over the past decade and are positioned to continue being drivers of economic growth. Neither are overly encumbered by legacy infrastructure which requires gradual migration to new platforms. Instead, these two markets have leapfrogged ICT developmental stages and are at the forefront of technological advancement and innovation.[31]

Kenya – It’s well-developed ICT policy and entrepreneurial environment has earned it the moniker, Silicon Savannah.[32] Kenyan policymakers have long championed a robust digital economy, right from a digital government to business, infrastructure investment and innovation and is attracting extensive interest from foreign investors.[33] The top-down focus on ICT investment and sector development has provided the country with a strong base from which to capitalise on surging ICT demand and benefitted sectors from agriculture to finance.[34] A healthy and competitive private sector has successfully been co-opted in the development of the industry and are seen as allies rather a threat. The result is that Kenyans are well connected.[35]

96% of the country’s population is covered by mobile cellular network with 94% and 77% having 3G and 4G network coverage respectively. It was also one of the first countries to roll out 5G technology.[36] Mobile cellular subscriptions have reached 114 per 100 inhabitants. There are 47 active mobile broadband subscriptions for every 100 inhabitants. The picture is decidedly different for fixed-line subscriptions, however, with only 1 per 100 inhabitants. The future of ICT in Kenya is undoubtedly mobile, making it nimbler and more responsive to industry changes and innovation. The sector bounced back strongly from the impact of the Covid-19 pandemic. During this time, the number of mobile money agents increased 26.2% in 2020.[37] Over the same period, the number of ICT clients grew 13% and the number of transactions by 17%.

The pursuit of technological advancement has permeated all levels of business, but particularly the mobile payments industry which developed to circumvent non-inclusive, cumbersome, and costly bank transfers. M-Pesa, a mobile phone-based money transfer (remittance) and micro-finance service was launched in 2007 by Safaricom - Kenya’s largest mobile network operator. The country has booming financial (FinTech) and education (EduTech) technology with 48 tech hubs[38], one of which, iHub, has launched as many as 170 start-ups (Figure 5).

Figure 5: Africa’s tech hubs

Africa's tech hubsThe supportive environment the Kenyan government has created is exemplified by the 5000 acres tech hub, Konza Technopolis, which is being constructed between the capital, Nairobi, and Mombasa port.[40] The project has already secured US$800m in funding and while construction is behind schedule, once completed Konza Technopolis will be a significant draw for entrepreneurs, funders and companies looking to leverage tech skills.[41] IBM picked Nairobi to build its African Lab. Kenya’s capital also hosts Intel and Microsoft development centres.[42]

Rwanda – Rwanda is Kenya’s closest competitor when it comes to establishing itself as an ICT services hub in East Africa. Like Kenya, much of Rwanda’s ICT development impetus has come from state. At the Transform Africa summit in 2013, Rwandan President Paul Kagame equated the Internet as a ‘public utility’[43]  – much like water or electricity.

The country’s leadership has been unequivocal about its ambition to transform the country into a knowledge-based economy and allocated a large percentage of its budget to achieving this – Rwanda’s ICT spend as a percentage of GDP is on par with OECD countries.[44] To attract talent and investment, the country offers incentive packages to ICT firms such as import duty exemption, up to 7-year tax holidays, capital gains and VAT exemptions and a depreciation allowance of 50% in the first year.[45]

The country’s ICT sector is estimated to be worth US$646m. It grew by 29% in 2020 at a time when the country’s national GDP contracted 3.4%.[46] Rwanda’s pool of young, talented, and relatively cheap ICT workers is conversant in both French and English. Ease of doing business and a world class ICT infrastructure makes it an attractive market for the ICT sector. The country has also laid out 7,000 kms of fibre optic cable delivering reliable high-speed internet via Seacom sub-marine cables.[47] 95% of Rwanda’s population have access to LTE networks. The country leads in the promotion of ICT according to World Economic Forum and before the rankings were scrapped, Rwanda stood 29th on the World Bank’s Ease of Doing Business rankings.

The single-minded focus on ICT as a growth and development enabler has seen the country produce many successful start-ups that have raised hundreds of millions of dollars in funding. This includes Zipline a US-funded logistics firm that delivers medical supplies using drones; Jibu, a platform that gives entrepreneurs affordable access to purified water franchises and OffGridBox, which provides renewable energy and clean water to remote communities.[48]

Kenya and Rwanda see ICT as a strong and vibrant sector that will be the enabler of growth for all other industries.

4. The Asia / Africa opportunity

Asian ICT firms have taken the lead in investing in Africa’s ICT sector. UK-listed but Indian controlled Airtel Africa is one of Africa’s most ubiquitous telecom and mobile money service providers. It operates in 14 African countries and has delivered handsome returns to its shareholders in recent years. The company recently partnered with UNICEF to roll out a US $57m e-learning project for children across Africa.[49] Korea Telecom has been invited to build Rwanda’s national fibre optic backbone. In May 2021, Japan’s Sumitomo Corp became the first Japanese firm to make investment in Africa’s booming ICT sector taking a 30% stake in an Ethiopian telecom consortium led by UK’s Vodafone. The move is expected to inject much needed competition in a market where state-run Ethio Telecom has held monopoly. Ethiopia, with a population of 112 million people, has only 40% mobile penetration rate. 

China has been one of the primary investors in Africa’s ICT growth (Figure 6). Notwithstanding Western misgivings about data leakage and backdoor digital ‘espionage’, 70% of the continent’s data goes through a 4G network supported by Huawei. China has sought to establish a digital Silk Road, based on its own internet network, as part of Beijing's broader Belt and Road infrastructure initiative.

Top 3 African countries with the most FDI stock from ChinaIn January 2017 the firm was accused by African Union officials - who gave them the contract to install communications equipment in the African Union Buildings – of hacking their computer system every night for five years and downloading confidential data.[51] Chinese tech firms enjoy a wide price advantage over competing bidders and 41 of the 70 deals Huawei has done with governments have been with Sub-Saharan African countries.

Singapore too has made its mark on Africa’s ICT sector. CrimsonLogic[52] has been involved in more than 20 trade and digital government projects across the continent in Mauritius, Kenya, Namibia, Botswana, Ghana and South Africa.[53] In 2018, it signed collaboration agreements with Kenya Trade Network Agency for a blockchain project and opened an African hub and base office in Kigali.[54] The company noted how many African governments, companies and agencies wanted to emulate the “Singapore experience”. The company has taken advantage of Africa’s unique mobile ICT operating environment rolling out citizen e-services in Rwanda, e-government solutions, and e-judiciary projects.[55]

Several other Singaporean companies are expanding their footprint in Africa. Fintech start-up, InfoCorp already operates in both Rwanda and Kenya where it uses its blockchain-based platform called FarmTrek to provide financial solutions to the livestock industry. InfoCorp is working in Kenya to ‘collateralise” the cattle of smallholder dairy farmers through an identification and traceability platform. Guud, a Singapore-based software service provider has developed a single-window customs clearance platform to facilitate cross-border trade between the East African Community (EAC) member states. Singapore’s Thunes, in partnership with PayPal and Safaricom, specializes in cross-border payments in Kenya while ACK-TEC Technologies has developed a mobile micro-learning app in French for onboarding truck drivers in Cameroon. Other prominent firms include CCR Manager which serves Kenya, Nigeria and Egypt, and Gozem helps commuters hail motorcycle taxis in Benin and Togo.

Opportunities for Asian investors in Africa’s ICT sector are aplenty. Much like Silicon Valley is revered for its pioneering and innovative technologies, much of Africa views Japanese, South Korean and Chinese solutions as best-in-class. Their ability to beat Western competitors on price is an important factor too. Concerns around political influence and motives aside, partnership agreements between Asian and African governments and companies are mutually beneficial, reducing cost, improving efficiency, and accelerating trade links between the two regions. Africa’s developmental and infrastructure needs are significant and entrenching already strong ties with Asian tech giants offer a way to overcome existing infrastructure challenges while addressing these deficits for the economic advancement of both regions.

ICT as an enabler has strong backward and forward linkages with almost every sector of a continental economy in need of rapid development.[56] To succeed in Africa, businesses from must keep these developmental needs front-of-mind and focus on accelerating growth[57], supporting the continent’s industrialisation ambitions and addressing challenges across the following key areas of importance[58]:

  • Agriculture – help address the impact of climate change, manage trade, increase yield
  • Manufacturing – automation, cost reduction and efficiency
  • Electricity and water – demand management
  • Education – e-learning and upskilling for the jobs of the future
  • Healthcare – digitisation of patient records, medicine delivery
  • Service delivery – e-citizen and e-government portals
  • Job creation – offset job losses through automation by developing the knowledge workers

The benefits of investment in ICT will reach far beyond just the sector itself. Under the recently launched African Continental Free Trade Area (AfCFTA), the continent’s internal trade volumes are likely to increase significantly, requiring ICT software support for cross-border trade, manufacturing, and logistics. Rapidly growing data volumes will also necessitate the development of data centres. Innovative funding solutions tried and tested in Asia could be of enormous benefit to Africa.[59]

As with any region, there are inherent risks in doing business in Africa and methodologies with proven success in Asia will need to be tweaked for successful application in-country. While the skills gap is closing, finding the right talent locally can take time and importing the required human capital can be onerous. ICT and industrial policy are often shifted and inflexible and governments wary of ulterior motives. Repatriating funds from certain jurisdictions can be challenging and exchange rate risks will need to be carefully managed. For those bold enough to accept the challenge, however, the demand and opportunities are plentiful and financially rewarding.



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