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Africa needs to spend $6 billion a year to connect more 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 roll out more fiber optic cables from the sea to cities and homes, the International Finance Corporation (IFC) said.

“The $6 billion is just the capital expenditure to build that (digital infrastructure), it doesn’t include the running and operation of 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 last ten years. These include investments in deployment of fiber optic cables for high-speed Internet, data centers, Internet service providers, technological tools such as mobile phones and laptops, and digital education initiatives. But investment has barely scratched the surface of the problem, as a large portion of African countries still lack infrastructure.

The IFC, a member of the World Bank Group, wants to bring its total investment in the continent to around $10 billion by the end of 2024. This figure would double next year, according to Makhtar Diop, managing director of the IFC. Much of these investments would go to innovative companies that would help foster digital adoption in different industries.

A survey of businesses in 54 countries to determine how they use the Internet in their business operations found that while more business is being done online, not many businesses are taking full advantage of online opportunities. Only 5% of companies with fewer than five workers have computers with Internet connections in countries such as Ethiopia, Ghana, Kenya, Nigeria, South Africa and Uganda. In many cases, businesses are located in areas without fiber optic cables that allow for high-speed Internet or cannot afford smartphones to make digital payments.

Because of this, an additional $2.7 billion is needed to help small and medium-sized businesses transform into digital businesses. Investments in this area could help support businesses in the manufacturing and agricultural sectors, where digital technologies are typically required to perform specific tasks that go beyond the current capabilities of most businesses in Africa.

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

Helping small businesses get online not only increases their productivity, but also ensures they continue to employ more people. Around 70% of the workforce in Africa is employed by this group of companies. This represents around 400 million workers, the IFC report notes.

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