Inaugural Working Group on Increasing U.S. Investment in Africa’s ICT Sector
Photo 1: A cross section of delegates at the ICT working group Photo 2: Scott Ticknor, CCA, Florizelle Liser, CCA, James O'Connor, USTTI, Heather Lannigan, USTDA
On November 20, 2019 the Corporate Council on Africa (CCA) relaunched an ICT working group, featuring speakers from Google, Flutterwave, the U.S. Telecommunications Training Institute (USTTI) and the U.S. Trade and Development Agency (USTDA). Sixty-seven people attended, including representatives from industry and NGOs as well as from the embassies of Ethiopia, Zambia and Malawi, and from the Department of State, MCC, USAID and USTR.
CCA President and CEO Florie Liser welcomed the group, highlighted the importance of ICT in Africa and globally and noted the following CCA goals for this working group:
- To better understand the opportunities and challenges in Africa’s ICT sector, particularly for U.S. business.
- To strengthen the public/private network for companies and stakeholders interested in Africa’s ICT sector.
- To identify specific engagements that CCA and the working group can pursue to expand U.S. investment in the ICT sector in Africa.
- And to help frame issues for the ICT component of the CCA Summit in June in Morocco.
Each panelist then shared some insight on the opportunities and challenges in the ICT sector.
Titi Akinsanmi, Policy and Government Relations Lead, West and Francophone Africa, Google
Africa’s large youth population and high unemployment/low productivity makes the potential of digital transformation crucial to the future of the continent. Some of this is already happening – e-commerce is predicted to grow 40% by 2025 in Africa – and some sectors show great promise, such as fintech. ICT is driving about 10 percent of Africa’s GDP, according to a representative from Covington law firm. Akinsanmi argued that Africa needs partners to realize this potential.
African leaders/governments do not fully value the potential of ICT. There are worrying trends of legislation and regulations that restrict investment and growth in the sector.
There is a persistent digital divide between Africa (29% Internet penetration) and the rest of the world (49%), with Africa trailing in anticipated ICT sector growth.
Many Africans lack ICT skills – there is a need for training and investment in this area.
Omosalwa Adeyemi, Head of Global Partnerships and Expansion, Flutterwave
Flutterwave is a U.S.-based Nigerian payment platform that seeks to harmonize and facilitate payment processes across Africa and between Africa and the rest of the world.
Africa’s large youth and urban population represents one of the world’s largest potential markets for ICT, with a population trending toward greater ICT use. Africa is leap frogging technology – for example, an ACH transfer takes about 15 seconds in Africa versus 3-5 business days in the United States.
ICT is contributing to the creation of an African middle class that itself is generating demand for new ICT services.
The African market is fragmented. Doing business requires an understanding of multiple different market environments.
While infrastructure has been developing, there is still a large unmet need for ICT infrastructure.
The ICT sector is moving faster than the regulators. Regulations often restrict/punish rather than facilitate growth. There is a strong need for education and training for regulators.
U.S. and European business people often lack an understanding of Africa, especially as it relates to ICT. Potential investors need to do more due diligence than in other markets.
James O’Connor, President of USTTI
USTTI is a non-profit, government-industry joint venture that offers a broad range of ICT and cybersecurity training. Since 1982, USTTI has graduated over 10,000 communications officials, regulators and entrepreneurs from 171 countries, including all of Africa. In 2019 alone, USTTI trained officials from 30 African countries. USTTI is well positioned to fill gaps in training of regulators and other officials in Africa.
While African regulators have done some good work in standardization of ICT policies, policy and regulations have not kept up with technological change.
While many regulators understand the importance of ICT, there is a lack of coordination among regulators and – most concerning – often a lack of high level pollical understanding and support for ICT in Africa. This has resulted in punitive and restrictive policies and needs to be addressed.
Governments across the continent need to harmonize policy especially at a technical level in order to create an economy of scale.
Heather Lanigan, Regional Director for Sub-Saharan Africa, USTDA
ICT is USTDA’s biggest sector focus and has been a priority for 20 years.
At the CCA Summit in Maputo, USTDA launched “Access Africa,” a partnership with U.S. industry (including CCA) to support the development of quality ICT infrastructure and services across Sub-Saharan Africa.
USTDA ICT programs in sub-Saharan Africa have resulted in support for over twenty African countries and 65 U.S. companies, generating $650 million in U.S. exports.
USTDA supports feasibility studies, reverse trade missions, workshops/conferences and helps governments analyze life-cycle costs through the Global Procurement Initiative.
USTDA has an active program in South Africa, developing digital infrastructure in Capetown, supporting four U.S. companies in Kwazulu Natal, and organizing a reverse trade mission (RTM) in Johannesburg.
Moderator Florie Liser asked: why are some African leaders not supportive of more liberal ICT policies? The group flagged several possible reasons:
- Governments fear that ICT will mean revenue losses as fewer transactions flow through formal channels. In response, there is a strong case to be made that ICT shifts revenue sources rather than reduces overall revenues. An ICT-enabled economy will grow faster, creating jobs and revenue from other kinds of businesses.
- Governments do not want to lose control – social media in particular is seen as a forum that encourages criticism of the government and can lead to less government control of society.
- Governments are responding to protectionist pressures and the lack of trade harmonization across Africa. In the absence of external pressures to liberalize, African governments are more free to protect traditional domestic industries by constraining ICT. The African Continental Free Trade Arrangement (AfCFTA) has the potential to break down these barriers. We need to reframe the ICT issue by stressing the value of free trade arrangements.