• Cable ties

    A steady roll-out of fibre connections that reach underserved areas needs ongoing investment

    Cable ties

    Global enterprise software provider Commvault recently announced the launch of its Metallic backup-as-a-service (BaaS) portfolio in South Africa. On the sidelines of the virtual event, the conversation with Gerhard Fourie, Commvault’s district channel manager for South Africa, turned to the issue of data connectivity in Africa – specifically, the growing digital divide between the continent’s major centres and its outlying areas.

    ‘If you’re in Nairobi, for example, the network is fine,’ he said. ‘But as soon as you go out of the city, it falls flat.’ The same could be said in Rwanda, Nigeria or anywhere else in Africa. Broadband data connections in major metro CBDs are quick and reliable, but when you’re out in the sticks you’re unlikely to get the speeds you need to run a large enterprise – let alone host a Zoom meeting or attend a digital classroom.

    As Fourie pointed out, the problem isn’t new. ‘Go back to the early 1990s, when the first cellphone providers launched in South Africa,’ he said, evoking memories of Vodacom’s iconic ‘Yebo Gogo’ ad campaigns. ‘The original idea around cellphones was that they would service the remote areas that Telkom couldn’t reach. I don’t know when last you’ve been to places like Ellisras out in Limpopo province. Telkom has fixed lines there now but you still can’t get a good cellphone signal. It’s the same with data: in Johannesburg the connection is fine, but as soon as you move into a remote area you start to lose speed and connectivity.’

    Fourie was quick to add that South Africa’s telcos have made several improvements in this regard, with an ambitious fibre roll-out putting the country in a position where global cloud giants such as Azure can now provide their services to customers in the country. Yet his observations are borne out by recent AU studies. In its Africa’s Development Dynamics report the AU notes that 45 out of 54 African countries had an active digital broadband infrastructure development strategy in 2018, compared to just 16 in 2011, while the continent’s fibre-optic networks had extended from 278 056 km in 2009 to 1.02 million km in June 2019. Despite this progress, the report states, ‘access to the last-mile broadband infrastructures remains a challenge across the continent. Currently, nearly 300 million Africans live more than 50 km from a fibre or cable broadband connection’.

    The AU warns that this high concentration of digital ecosystems in Africa’s megacities raises the concern of growing spatial inequality due to digitalisation. Consider that five African cities host 49% of the continent’s most dynamic start‑ups (as identified by Crunchbase in 2019): Cape Town (12.5%), Lagos (10.3%), Johannesburg (10.1%), Nairobi (8.8%) and Cairo (6.9%). But those five cities have just 53 million inhabitants between them. That’s less than 4% of the total African population. Victor Harison, the AU’s commissioner for economic affairs, echoes that warning in an op-ed piece written for Uganda’s Daily Monitor.

    ‘Policymakers must promote the dissemination of digital innovation to everyone, not just to those living in large cities,’ he writes. ‘Although 73% of Africans will be living in intermediary cities and rural areas by 2040, today only 35% of those cities are within 10 km of a high-speed terrestrial fibre-optic network. Likewise, only 25% of the continent’s rural dwellers have internet access, compared with 35% in Asia and 40% in Latin America.’ Harison believes that universal access to digital technologies requires more affordable data across the board. Again, that’s backed up by hard numbers. A 2018 Ecobank Research report found that Africa has the most expensive mobile data, ‘both in real and income-relative terms’. In Equatorial Guinea, Zimbabwe and Eswatini – the three most expensive countries – a gigabyte of data costs more than US$20. The average price across the continent was estimated at US$7.04, with most countries charging prices above the UN Broadband Commission’s target of 2% of monthly income.

    High-quality investor interest is helping to drive improvements to connectivity in previously unconnected areas

    While some countries have struggled with the costs and infrastructure investments required for nationwide fibre roll-outs, others have been their own worst enemy. In Tanzania, for instance, the government added a 17.5% excise duty on all voice and internet services (over and above VAT), while the Tanzania Rural and Urban Roads Authority added its own ‘rights of way charges’ of US$1 per month per metre of fibre cables laid. ‘That led to the digital divide,’ tech expert Charles Makakala writes in the Citizen. ‘While coverage [in Tanzania] was 90%, less than half of the people reached could afford the cost of internet services.’

    Something had to change. And it has. In December 2020, the Smart Africa Alliance, representing more than 750 million people and around 40 private-sector members across 31 African countries, committed to bring down the cost of the internet by half. Private-sector fibre providers have since got in on the act. In Kenya, Safaricom announced that it was doubling its fibre-to-the-home (FTTH) speeds, taking its 10 Mbps subscribers to 20 Mpbs speeds for no extra charge. And the KES12 000 that subscribers pay for 40 Mbps now deliver FTTH speeds of up to 100 Mbps.

    Openserve, which provides FTTH to more than 2.4 million South African households, then announced major changes to its wholesale offering, upgrading its 10 Mbps and 20 Mbps services to 25 Mbps and 50 Mbps speeds respectively for free.

    And while costs are coming down, fibre infrastructure is being built at a rapid pace across the continent – significantly in previously unserved areas. The investor appetite for this expansion is significant. Take Liquid Intelligent Technologies, for example. It has already installed more than 70 000 km of fibre across Africa, and operates five data centres in South Africa, Kenya and Rwanda. Yet when it recently raised US$840 million in a bond sale to refinance its debt and expand further into Africa, the offering was 5.5 times oversubscribed. ‘The level of interest from high-quality investors has been unprecedented for an African issuer and reflects an excess of 220 investor orders,’ Liquid’s chief financial officer Kate Hennessy told the media. ‘The order book shows the confidence that investors have in the future growth strategy for the group.’

    Meanwhile, South African fibre operator Vox was given access to debt facilities to fund its fibre roll-out plans, after shareholders agreed to buy out Investec as part of a ZAR2 billion recapitalisation. Laverne Chetty, a specialised finance consultant at Investec, says that when FTTH was introduced in South Africa, wealthy areas with high housing density in metropolitan areas were naturally targeted first. ‘We are now at the point where fast-growing companies such as Vox and Frogfoot are expanding beyond these areas, into new outlying regions where both homes and businesses still need fibre,’ according to Chetty. ‘With the additional funding we have provided, Vox has the capability to implement the next stage of its growth strategy, which includes taking fibre to those areas eager to benefit from high-speed internet access.’

    Elsewhere, the Kenyan government announced that 630 km of fibre would be laid between the Rift Valley town of Eldoret and the village of Nadapal on the border with South Sudan, in a project worth KES30 billion. Remote North Rift counties including Turkana, West Pokot, Trans Nzoia and Uasin Gishu will all enjoy fibre connections under the plan.

    China’s state-owned Eximbank is providing a NGN126.7 billion loan to fund phase two of Nigeria’s expansion of its National Information Communications Technology Infrastructure Backbone (Nictib II). The initiative will take fibre internet to Nigeria’s previously underserved 19 northern states.

    This comes after the announcement of plans to complete a 6 000 km fibre roll-out in Lagos state. Crucially, though, the state’s House of Assembly approved the unification of fibre infrastructure for telecoms companies, meaning that a single cable can be deployed for all telecoms companies and other utility providers operating in the city. That ‘dig once’ policy is aimed at preventing the constant digging up of Lagos’ pavements… But it’s also an indication that – unlike the roads agency in Tanzania – Africa’s local governments are learning that fibre roll-out is an opportunity that needs to be enabled, not exploited. That shift in mindset could see Africa bridging its great fibre divide quickly – hopefully, in time to meet the growing demand for fast data connection.

    By Mark van Dijk
    Images: Gallo/Getty Images