08.05.2020 Africa

West Africa: Future Re-imagined For Africa

West Africa: Future Re-imagined For Africa
08.05.2020 LISTEN

In a rare television broadcast Angela Merkel, the German chancellor, described the coronavirus (COVID-19) pandemic as “Germany's biggest challenge since the Second World War”. It has indeed proved to be a crisis of global proportion with material implications for the economies and livelihoods of all.

Governments across the globe have locked down cities, towns, villages, and townships to curb the spread of the virus. Massive fiscal stimuli have been enacted to cushion the economic and humanitarian impact of the pandemic. The World Bank and International Monetary Fund have set aside a large quantum of emergency financial support for countries to tap into.

African countries have implemented strong containment measures to avoid further spread of COVID-19. For countries in West Africa, lessons learned from the potential health and economic impacts from the Ebola outbreak has resulted in swift responses from governments.

With the world changing at such a rapid pace, companies and investors have asked whether the African continent, which held such promise prior to the crisis, will be able to deal with the financial devastation.

In answering this question, there are a few angles that one can venture into, some of which are specific to an African context, including:

. technological advances buoyed by the pandemic. impact on the African diaspora and sustainability of remittances

. implication for Africa’s demographic dividend

. effects on Africa’s debt issues

. Africa’s infrastructure needs

In this instalment, we will explore the first topic in a bit more detail and provide a top-of-mind perspective on the rest.

Digital transformation

Data from the International Telecommunication Union, an agency of the United Nations responsible for matters in the information and communication technology sector, indicates that in just under two decades more individuals have access to and are increasingly using the internet. Notably, developing countries have seen the number of individuals using the internet increase 17-fold to 47 per 100 inhabitants (from 3 per 100 inhabitants). This increase was mirrored by a rise in mobile-cellular telephones and active mobile-broadband subscriptions with fixed-line offerings taken-up at a slower pace. Consumer appetites have shifted towards mobile technology.

As authorities adopt measures to contain COVID-19, including quarantine, suspension of international passenger flights and forbidding of all public gatherings - including closing places of worship, universities, restaurants and gyms—the demand for mobile-based internet has skyrocketed. Most companies have responded to this crisis by enforcing work-at-home programmes which are dependent on reliable mobile connectivity. Given that periods of lockdown are likely to be extended throughout the African continent, the need for mobile connectivity would prove the same for learning institutions such as schools, universities and colleges.

Next generation of wireless technology

For African countries, this situation presents an opportunity to expedite opening tracts of spectrum to enable next generation (NextGen) technology such as 5G to flourish. As can be seen in Figure 1, Africa has a long way to go to catch up with the rest of the world in terms of mobile network infrastructure. Good progress has been made in the past five years where a significant number of African countries have created 3G mobile network connectivity with coverage increasing to 79 per 100 inhabitants (from 51.3 per 100 in 2015). While this is encouraging to see, much more work is needed to catch up with the rest of the world, which has transitioned to faster NextGen wireless networks.

Figure 1: Africa’s prospects to catch up on mobile network infrastructure

High-speed, reliable and robust network infrastructure is required to underpin the digital economy. Ongoing investment into 3G and 4G networks in sub-Saharan Africa should be expedited with the aim of enabling 5G technologies. 5G is advantageous as it promises spectacularly faster download and upload speeds with websites likely to open in microseconds and videos downloaded in seconds as opposed to minutes.

5G will enable many other technologies such as Internet of Things. It has the potential to open the much-needed new industries on the continent that come with the promise of the fourth industrial revolution—virtual classrooms, remote medical surgery, agricultural drones, self-driving tractors and cars, to mention but a few.

It is encouraging that the Independent Communications Authority of South Africa, in an effort to stimulate the economy during the period of COVID-19 lockdown and recent downgrades of South Africa’s debt into non-investment grade, will release emergency high-demand spectrum for companies to apply, and expedite the awarding of licences for a permanent arrangement.

Holistic perspective on Africa’s prospects

The one question that lingers is whether COVID-19 will alter Africa’s prospects for faster economic growth and prosperity? The table below provides a broad perspective on key issues.

Will the impact of COVID-19 change the possibility: Reason
1. For Africa to leapfrog the release of spectrum and related use of 5G? YES Regulators might be encouraged to expedite the commercial use of 5G technology to enhance faster mobile connectivity.
2. For African diaspora to halt sending remittances? NO Those in diaspora tend to be highly skilled professionals in critical sectors.
3. For Africa to forgo monetising its demographic dividend? NO It is upon leaders to construct economic policies that unleashes mass employment opportunities.
4. For Africa to deal with its debt issues? MAYBE Lenders might in fact construct different debt relief programmes. Adverse credit rating downgrades and currency depreciation due to COVID-19 market dislocation will negatively impact.
5. For Africa to retreat from its focus on infrastructure generation? NO This is an absolute necessity for Africa to deal with its existential dilemma.

Bottom line

As the 2008 global financial crisis ensued, Rahm Emanuel, chief of staff of the former President of the United States, Barack Obama said: “You never want a serious crisis to go to waste. What is meant by that is you take opportunity to do things you think you could not do before”. COVID-19 provides an opportunity for Africa to leapfrog into the high-speed internet age.

Countries such as Gabon, Lesotho, Nigeria, Kenya and South Africa are leading the way in fast tracking the adoption of 5G networks for commercial use, an outcome which should be encouraged throughout the rest of the continent. Communication regulators should liberalise the process of awarding licences to mobile carriers in order to make it easier to launch NextGen wireless technologies.

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