Africa

Mind the Gap

In 2023, more than 90 percent of people in high-income countries were online, compared to 26 percent in low-income countries. Europe and Central Asia has the highest internet penetration at 84 percent. The online population in South Asia doubled from 2018 to 2020, largely driven by India which has brought one-third of its population online since 2018 (in part by promoting internet literacy and providing cheaper data plans). In East Africa, less than 30 percent of people use the internet. Much of Africa is only now establishing essential infrastructure and many communities throughout large regions of Africa remain disconnected from the power grid (never mind telecom cables). It almost seems stale to point out that addressing this infrastructure deficit (across classes) is crucial for Africa's economic advancement.

An interesting company that's making a difference in India is Wifi Dabba, Inc.

?

Africa – All Infrastructure Projects

A staggering 80 percent of all infrastructure projects fail even when totally feasible on the African continent. There’s no lack of effort involved that predetermines these failures, with international investors demonstrating a considerable appetite for African infrastructure projects. In fact, 麦肯锡 estimates investors could have as much as $550 billion in assets under management throughout the continent. This includes government agencies, private-sector pension funds, and investment companies. Investors from the United States account for 38 percent, with significant funding also available from the United Arab Emirates, China, the United Kingdom, and France. The appetite and investment vary across asset classes, with some investors eager for the returns (and risk) associated with greenfield development, while others are more attracted to the steady performance of brownfield assets. But, all in all, there trend line is up on the number and value of recent deals in the region. Notably, Nigeria leads with projects in the planning stage or those that are further developed.

Rating the Failure

The elevated rate of failure stems from a few separate but related things: from lack of expertise and financial resources to the brevity of political terms that undermine commitments. Not to mention that– relative to the opportunities –only a few projects meet investors’ risk-return expectations and reach financial close. That being said, even projects within asset categories known for historically high returns (like power generation, and those with assured revenues and guarantees, such as mining) still encounter formidable hurdles in achieving financial closure.

Worse still, it is and will likely remain extremely difficult for projects in Africa because of logistical challenges in the region, from un-navigable water ways to a lack of built roads and other critical infrastructure (gas, etc.). Read Tim Marshall’s ‘The Power of Geography’ or ‘Prisoners of Geography’ for more insights. These types of logistical challenges make it all but impossible to transport equipment and required resources to the some necessary places. Adding to that, and sometimes eclipsing it, is interaction with the governments itself. Ongoing negotiations between the national government and other stakeholders often crop up and, when culturally opposed in a corporate sense, negotiations and seemingly viable projects breakdown. ?

OPTIMISTIC: Closing and Continuing

However, looking at some of the many regions on the continent, there are successes that close on the deal and, crucially, continue through development and operation. According to McKinsey for example “there are solar energy programs currently being rolled out in Senegal and Zambia, supported by the International Finance Corporation (IFC). The governments and the IFC have agreed to manage key risks, including issues related to land, currency, and politics.”

Many private developers are also investing capital upfront to ensure projects are feasible and are executed. An example is Turkey’s major infrastructure developers, which have ramped up their presence in Africa in recent years via infrastructure classes. By identifying financial partners and in-depth plans to manage the full set of risks related to the project, everything from currency risk to political volatility can be more readily managed.

Subsea in Africa

Our company, Subsea Cloud INC , is looking toward the region as a provider of crucial infrastructure (that’s not burdensome for the environment, resources or population). This means taking a data driven and responsible approach for now and for the future.

Our primary mission is to bolster and advance the data center and internet exchange landscape. But it’s also to purposely assist the burgeoning fintech scene and start-ups such as Chipper Cash . Chipper is a good example because it offers not only low-cost money transfers but bill payment, crypto trading and the ability to buy U.S. stocks. Excluding crypto transactions, it booked more than $75 million in revenue in 2021. The company itself enables African consumers to send money to each other, across national borders, more cheaply and easily than the antiquated banking system.

It acts an important mechanism that depends on important infrastructure. And the most honest and sustainable way to support mechanisms, tools and systems like this is via radically green, scalable solutions. And there's no solution available on the market today that's more sustainable and scalable than Subsea Cloud INC . Whilst some companies (across industries) end up with positive externalities, we are actively planning projects that generate benefits that extend beyond the our organization and advocating for our deployments to affect third parties in a positive manner.

Where Money Goes the Internet Flows

In 2022, high-income countries accounted for around 60 percent of public IXP globally and nearly three-quarters of connected data centers, compared to 2 percent in the Middle East and North Africa region and 7 percent in Sub-Saharan Africa. Some 51 countries and territories, representing 5 percent of the world’s population, do not have any IXP access. I’ve written extensively about subsea IXPs over multiple platforms, including on Linkedin, which you can skim read here. We have also partnered with FullCtl on IXPs.

?Internet exchange points (IXP) are physical structures that facilitate connection to global internet traffic, while data centers store and process data. They are crucial for enabling cloud computing, big data analytics, and AI.

Deploying in Coastal Waters

In some regions throughout the world, it becomes easier for us to deploy outside of territorial waters, but still in the exclusive economic zone (EEZ), and without incurring latency. This is point of consideration for some African regions, particularly in the northeast. However, we expect to sit inside the 12 mile zone (territorial waters) as we expand into the region.

The Opportunities

Studies, reports and—yes—polls suggest many African’s want a more robust, comprehensive infrastructure and that includes access to the internet and some of its most important and critical facilitations for everyday life, such as banking and learning. Only about 40% of Africa’s 1.4 billion people are considered “banked”—meaning they have access to, and use, a bank—making the continent rich territory for fintech startups looking to bring financial access to hundreds of millions of African mobile phones.

More than anywhere else on Earth, Africa has huge unmet needs for infrastructure, reflecting a long history of underinvestment. Today the continent has the opportunity to build the infrastructure its people and businesses need—at speed and scale.

The West's Reliance on Regions

Much of Africa is only now establishing essential infrastructure, but it is also noteworthy is that we (“we” the Western World) are dependent on many resources that are found, mined and transported from Africa.? The French need parts of Africa to remain stable so as they can continue to extract uranium for their nuclear power. Fears are particularly focused on Niger and also Namibia. Renewables in general would be rendered almost impossible without Africa’s copper mines and we also rely on the continent for the most commonplace yet luxurious of things, like chocolate (the Ivory Coast is one of the largest exporters of cocoa beans).

Finding the way round obstacles and deploying responsibly relative to the continent’s environment, resources and people are our top priorities within the region. For Subsea Cloud, that means subsea data centers – they use 40% less power, zero water, place no hardship on the population’s resources and are material to Africa's continued growth, development and digital success.

?

?