Digital Africa : Massive need for funding for infrastructures

Operators’ investments

In 2016, operators invested 22.9 billion EUR in telecommunications networks in Africa and the Middle East, with the vast majority of funding going to mobile systems. After a sharp increase of 18% in 2015, the trend is still positive with a 8% growth in 2016.

The Africa – Middle East region’s share of total global spending now stands at close to 8%, which is slightly below the region’s share of global revenue. Operators are nonetheless scouting for solutions to reduce their rollout costs, including outsourcing and especially infrastructure sharing schemes. Outsourcing is used to a large extent in network rollouts being performed under national digital development schemes backed by public authorities, or State-owned incumbent carriers.

Aided investments

Institutional partners are also investing in telecoms infrastructures in Africa, including the World Bank, the African Development Bank as well as the Bank of China as a way to help Chinese companies do business in the region. The World Bank is lending its support to regional infrastructure projects in Africa, underscoring the importance of regional integration, especially for small countries on the continent, and the relevance of regional backbones.

PPP: an opportunity for Africa

Public-private partnerships (PPP) have emerged over the past decade as one of the best ways to stimulate development, overcoming the lack of investment and growing pressure on State budgets. These are typically long-term (10 to 35-year) contracts through which a government entity will contract a private company to design, deploy, finance and in most cases manage, maintain and/or operate the facility. Nowadays, this type of contract is relatively absent from most major foundational projects. In the coming years, we expect to see more and more PPP in Africa devoted to digital technology infrastructures and services.