5G to Benefit the Sub-Saharan Africa Economy by $11 Billion in 2030

In its annual report on the state of the mobile economy in sub-Saharan Africa, the GSMA says the mobile connectivity on the continent "continues to drive digital transformation and socioeconomic advancements. This underlines the need for continued efforts to address the persisting barriers that impact mobile internet adoption in the region, particularly the affordability of devices, online safety concerns and the lack of digital skills." The UK-based organization that represents the interests of mobile operators worldwide adds: "Meanwhile, authorities and enterprises see an opportunity to leverage growing 4G and 5G networks, alongside emerging technologies such as AI and IoT, to enhance productivity and efficiency in service delivery."

Findings of the report, which is available in English and Français, include:

Growing 5G momentum

"In 2022, there was a marked uptick in 5G-related activities in Sub-Saharan Africa, including 5G commercial launches in 15 countries and a growing number of spectrum allocations. This comes at a time when 3G is the most dominant technology in the region (accounting for 55% of total connections in 2022) while 4G is already dominant in other regions, implying network and customer readiness for the transition to 4G. The approach to 5G in the region will need to consider the current connectivity landscape and unique market features that could affect the rollout and adoption of the technology. 5G network ecosystem players in the region must also find ways to deliver cost-effective and efficient 5G networks, balancing investment and value creation."

Steering growth with AI

"The emergence of new AI tools and use cases is accelerating the implementation of AI across various verticals and business processes. Most AI developments are occurring in advanced markets. However, the technology can be utilized in any scenario where there is sufficient data to draw insights. As a result, several industry players are already taking steps to apply AI across a variety of use cases in Sub-Saharan Africa. The potential benefit of AI in the region is significant, given that it can help offset the impact of limited resources and poor infrastructure in the delivery of many life-enhancing services, such as healthcare and education. Mobile operators in the region have employed AI at different levels, from improving network operations and customer services to achieving efficiencies and cost savings."

Climate-related risks spur circular economy principles

"The concept of circularity has risen to the top of the agenda for policymakers and industry players in light of growing concerns around the generation of e-waste and unsustainable levels of consumption of natural resources. Although the technical lifespan of a mobile device is now between four and seven years, the average use period of mobile devices is only around three years. Governments and industry players have a role to play in incentivizing consumers. This includes building new channels and suppliers to collect, refurbish and resell devices and implementing awareness campaigns on sustainability. Some operators in Sub-Saharan Africa are already taking a lead in this regard, with initiatives to drive circularity in mobile phones and other digital devices."

Infographic: GSMA

Improving smartphone access

"Smartphone affordability is a key barrier to using mobile internet. The average selling price of smartphones in Africa has reduced significantly in recent years, with an influx of devices priced at below $100 – but the cost remains unaffordable for many. The challenge for manufacturers is to produce devices at low enough price points that align with local earning capacities and allow them to gain market share. To ease the current cost burden, operators offer a range of initiatives, including device financing plans, instalment payments and entry-level smartphones through partnerships with manufacturers."

Collaboration and innovation in fintech is on the rise

"Fintech has become increasingly prominent in Sub-Saharan Africa, driven by the need to improve regional financial and digital inclusion. The industry has seen a rise in partnerships and innovation, leading to the diversification of products on offer, particularly in the payments segments. Operators have partnered with ecosystem players to expand products and offer options such as buy now, pay later (BNPL). At the same time, the growing fintech startup industry continues to attract investors, allowing them to improve access to a variety of financial products for both individuals and small businesses, such as microlending and B2B payments."

Policies for safe and inclusive development

"As cyberattacks continue to grow in scale and scope, governments face increasing pressure to protect their citizens and infrastructure and establish a framework for the mobile industry. Sub-Saharan Africa's rapid technological evolution makes the region an attractive target for fraud and cyberattacks."

Infographic: GSMA

According to the GSMA, "5G is expected to benefit the Sub-Saharan Africa economy by $11 billion in 2030, accounting for more than 6% of the overall economic impact of mobile." While it is encouraging to learn that mobile connectivity in Sub-Saharan Africa continues to drive digital transformation and socioeconomic advances, I have concerns about the mobile internet usage gap, which refers to individuals who are not using mobile internet despite living in an area covered by mobile broadband networks. of 59%. Nevertheless, the continent holds significant opportunities for entrepreneurs to develop innovative solutions in AI, IoT, cybersecurity, EdTech, fintech, digital health, e-commerce, and enterprise services.

What opportunities are you seeing the Sub-Saharan Africa's mobile economy?

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

347 African Tech Startups Raised $1.4 Billion in 2020, Says Africa Tech Venture Capital Report

347 African tech startups raised a total of US$1.43 billion in 358 equity rounds in 2020, according to the 2020 Africa Tech Venture Capital Report published by Partech Partners, a venture capital firm with offices in San Francisco, Paris, Berlin, and Dakar. This was an increase of 250 rounds by 234 startups in the previous year, which represents a year-over-year (YoY) growth rate of 44% in deal count.

"This is quite remarkable," the report says. "In such a challenging year, more startups have closed rounds than in any previous year. Activity has grown by almost half. No other region in the world has seen anything like this. The global interest for the African tech ecosystem remains strong even in the context of the global crisis driven by the pandemic."

However, not all is rosy. The equity funding raised by African tech startups in 2020 totaled US$1.429 billion compared to US$2.02 billion in 2019, a YoY decline of 29%. As the report explains: "Despite a strong growth in activity, the total amount raised by African startups decreased for the first time after nearly a decade of accelerating growth. While it is still higher than 2018 and before, this sharp drop clearly marks the impact of the pandemic and subsequent lockdowns."

What is more, "Activity has drastically reduced for mega rounds (above US$50M), barely grown on large-size deals and accelerated on venture-type rounds."

More encouragingly, however, "As the table above shows, the activity level has increased for almost any deal below the US$50M size. Deals between US$200k and US$1M have actually almost doubled, keeping up with previous trends. The main drive for the lower total amount of equity funding raised seems to be the disappearance of mega-rounds. Indeed, when we exclude rounds above US$50M, this total equity amount raised is flat between 2019 and 2020. Thus, this explains to a great extent the drop in funding amount."

Focusing on a breakdown by country, the report maintains that "As in previous years, VC Funding is still concentrated in few markets, but we see strong signs of diversification as half of African countries are now in play."

• Nigeria remains Africa's top destination with US$307M invested (21% of all equity funding) with Kenya following closely behind with US$305M.
• Egypt completes its rally toward #1 in equity deal count, with 86 deals (+83% YoY), almost a quarter of the continent's VC transactions.
• African VC investment remains centered around 4 top countries attracting 80% of the volume invested. However, we see more diversification as Ghana reaches a solid #5 spot, with a 102% increase in equity funding to reach US$111M and in total an unprecedented 26 countries have attracted capital.

As indicated in the image above, fintech is still the leading vertical with 25% of funding (despite a 57% YoY drop in volume). The 2020 highlight, however, is on the rising investment in the digitization of key economic sectors with agritech (US$179M), logistics and mobility (US$157M), offgrid/energy (US$148M) and health tech (US$141M).

"When we further breakdown funding in each vertical by markets, it's clear that investors in each vertical focus on a few countries":

• "Fintech investment is quite concentrated with Nigeria (38%), Egypt (28%) and Ghana (13%) attracting together nearly 80% of all the funding in this vertical.
• "Agritech is even more concentrated with 79% of the equity funding in this vertical flowing into Kenya. However this is partly driven by a single large deal at US$85M.
• "Nearly half of Enterprise funding goes to South Africa. And the same applies with half of funding in Logistics, Mobility and Edtech flowing into Egypt."

Focusing on gender, the report reveals that female-founded startups raised 13% of the rounds in 2020, a four point decrease from 17% in the previous year. But they accounted for 14% of the total equity funding just above 13% in 2019.

Moreover, female-founded startups raised US$204 million in equity funding in 2020, a 22% drop from the previous year. Interestingly, startups in Kenya accounted for 65% of this amount keeping with a similar trend in 2019 when 78% of funding to female-founded startups occurred in Kenya.

As for giving a breakdown of the investors, "Africa's tech ecosystem is not only attracting more investors (+24% YoY), but they are also more committed to the market, with 108 of them involved in 2 or more deals and 22 very active in 5+ deals." Furthermore, "443 unique equity investors were involved in the 359 equity rounds raised by African startups in 2020. It was around 87 when we started tracking this metric in 2017, a 5x growth in 3 years."

"Looking at the investors' distribution per stage, early stages' attractiveness is strongly confirmed with 421 active investors involved in Seed+ transactions (228 rounds), 229 investors in Series A (through 86 rounds), 80 investors in Series B (29 rounds) and 43 active investors in the 16 Growth rounds."

Partech Partners provides the following explanation to its methodology noting that the firm reports on tech and digital VC equity deals above US$200k, in African startups:

1. The numbers are about equity deals. This means Partech excludes everything else: grants, awards, prizes, conventional debt, venture debt, loans, Initial Coin Offering (ICO), non-equity/technical assistance, post-IPO and M&A deals. Examples: Twiga Foods US$29.4M debt from IFC announced in Oct 2020 is not counted. Lumos Global's debt round of US$45M from DFC announced in September 2020 is also not counted.
2. The numbers only include equity funding rounds higher than US$200k. This includes deals that Partech categorize as Late Seed (Seed+) to Growth stage equity rounds. Angel deals and smaller Seed deals below US$200k (numerous on the continent) are omitted voluntarily. Example: Credit startup Swipe's round of US$120k funding from YC as part of the W20 batch in March 2020 is not counted.
3. Partech focuses solely on VC deals that are in the tech and digital spaces. This means Partech only count companies where the value is built around digital technology. Example: In May 2020, the Series A of US$11.2M of insect-based feed and fertilizers company, NextProtein, was not counted.
4. The firm covers African start-ups that they define as companies with their primary market, in terms of operations and/or revenues, in Africa but not based on HQ or incorporation. When this company evolves to go global, Partech will still count it as an African company. Example: Gro Intelligence’s US$85M Series B round is counted as an African deal, as it was founded in Kenya before expanding to the USA.

Having been engaged in the African market as an investor for over two decades, I am encouraged to see the steady rise in the number of tech companies that are raising funds as well as the increasing number of investors who are investing in the continent. As addressed in previous posts on this forum, I remain optimistic on the potential opportunities in high-growth sectors including fintech, agritech, digital health, e-commerce, connected devices (Internet of Things or IoT), and logistics technology and mobility. Challenges remain, however, including the disproportionate number of female-founded startups receiving support from investors. While not mentioned in the report, challenges I have encountered as an investor in Africa include systemic corruption, burdensome government regulations, and an inadequate supply of infrastructure, just to name a few.

What do you think of the report's findings? Which sectors will present the greatest opportunity for investors in Africa?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Mobile Is Accelerating Digital Transformation in Pakistan, Says GSMA Report

"Mobile technology is at the heart of digital transformation in Pakistan driving social development and economic growth," explains a report by GSMA Intelligence, the research arm of the GSMA, a UK-based industry association. "Digital transformation is underway in the country, with government and public institutions as well as private and development organizations using digital platforms to increase engagement and improve service delivery to its citizens."

The power of mobile to accelerate digital transformation in Pakistan discusses the following:

• Pakistan government socioeconomic aspirations in context;
• Digital transformation in Pakistan and the role of mobile technology;
• Mobile technology contribution to social and economic progress in Pakistan; and
• Opportunities ahead to accelerate the impact of mobile-enabled digital transformation on socioeconomic progress.

Based on my experience of working in developing countries such as Afghanistan, Uzbekistan, and Iraq, I concur that a "knowledge-based economy is built on the foundation of common access to fast, reliable and affordable digital content and services by individuals, businesses and public institutions." The report notes that in "Pakistan, this is primarily enabled by mobile technology, which now provides access to digital services for more people in the country than any other communications technology; 70% of internet users in Pakistan only ever access the internet on a mobile phone."

The report further says: "Rising smartphone adoption means more people are able to use feature-rich and IP-based digital content on their mobile devices, mitigating the challenge of much lower penetration of PCs and other data-enabled devices. The Pakistan Citizens Portal, which connects government organizations both at federal and provincial levels, is powered by smartphone apps on the Android and iOS platforms, so can be accessed by people on mobile devices."

Moreover, "In addition to internet connectivity, mobile technology enables cellular IoT (Internet of Things) connectivity for a variety of personal and industrial devices. Currently, IoT applications in Pakistan include solar-powered home solutions enabling off-grid rural households to power electronic devices; on-board diagnostics (OBD) devices for fleet management; and IoT solutions integrated with vehicle and motorcycle insurance products to reduce theft. In future, cellular IoT connectivity and services will play a vital role in implementing smart city solutions, which can help governments at different levels to cope with rapid urbanization and improve security services."

The report's key findings include:

• Mobile broadband networks now cover 80 percent of the population and 97 percent of internet connections are mobile;
• Pakistan has nearly 700,000 cellular IoT connections across areas including agriculture, clean energy and safe water solutions;
• Mobile technology is the primary channel for digital financial services, digital birth registration initiatives, digital health solutions and digital learning;
• Mobile operators and the ecosystem also provided direct employment to around 320,000 people in Pakistan in 2018;
• The mobile ecosystem in Pakistan plays an increasingly important role in economic growth, contributing around $16.7 billion, equivalent to 5.4 percent of GDP; and
• Enablement of digital ecosystem is largely supported by timely policy interventions for the facilitation and enablement of the industry and most importantly the end-user.

What mobile products or services do you think should be developed to help accelerate Pakistan's digital transformation?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Report Examines the Factors Enabling Businesses in Sub-Saharan Africa to Scale Up

Having done business in the world's second largest continent, I concur with a report's assertion that the "rise and fall of interest in Africa has been contingent on its promise for growth." Published by The Economist Intelligence Unit (The EIU), the report adds: The demographic advantage and increasing per-head income spur investors but the regulatory complexities and political risks they encounter turn sentiment. Businesses on the continent are innovative and eager to expand but this is often impeded by limited access to new markets and growth finance. Delivering on the promise of economic growth is closely tied to the ability of home-grown businesses to scale up, so policymakers must establish an environment that enables businesses to thrive.

Sponsored by the Dubai Chamber of Commerce and Industry, Promise and perils: Scaling up businesses in sub-Saharan Africa "examines the factors enabling businesses in sub-Saharan Africa (SSA) to scale up." The report considers "the policy environment, state of technology and infrastructure, and financing options that allow businesses to access markets in other countries on the continent and beyond. In addition, it explores the role of foreign investors in facilitating business expansion, focusing on those based in the" six Gulf Co-operation Council (GCC) countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The report's key findings include:

• Policies for regional integration are helping African businesses gain greater access to other markets.
• Expanding telecommunications networks are facilitating the growth of internet connectivity, mobile money and new digital services that build on it.
• Progress in transportation projects are improving physical connectivity within and between countries in Africa and driving operational efficiencies.
• Foreign companies with expertise in infrastructure development and emerging technologies are capitalizing on Africa's scaling-up potential.
• High interest rates offered by domestic banks are a perennial problem for businesses seeking growth finance.
• Alternative sources such as venture capital (VC), private equity (PE), development finance institutions and even crowdfunding have been more appealing.
• Corporations are fueling African business expansions, through direct stakes and VC funds.
• Gulf investment is concentrated in East Africa, with the UAE leading the charge.

The report correctly explains that "financing has long been a bugbear. A quarter of African" small and medium-sized enterprises "surveyed by the European Investment Bank between 2011 and 2017 said access to finance was their biggest obstacle. Improving the depth, speed, cost and variety of financial tools is central to business growth, whether it be from commercial banks, PE, VC, development finance institutions and even crowd-funding."

Furthermore, "PE, which tends to focus on more established firms looking to scale up, closed 1,022 deals worth US$25bn across Africa between 2013 and 2018" as reflected in the chart below. "VC also seems to be gathering a healthy head of steam: African start-ups enjoyed an almost fourfold increase in VC funding in 2018, raising a record US$725m across 458 deals. They are receiving bigger tickets above the US$5m mark too."

"In terms of investment through PE and VC," the report notes "information technology (including internet services), financial services and consumer goods and services have attracted the highest volume of investments over the past five years." As indicated in the chart below, "The fintech sector was, in 2018, by far the largest draw for finance-raising. The data show that EdTech is the fourth biggest draw, which, combined with cleantech at second, shows the centrality of social and environmental narratives to business in Africa. Other sectors of note in Africa include mobility, which is drawing interest from foreign start-ups."

I agree with the report's conclusion that "Africa's growth recovery offers hope the continent can return to its GDP surge in the earlier part of the millennium—but only if its businesses can scale within and across borders. Policy improvements, including trade and customs unions, financial harmonization, and transport integration, are helping companies build regional footprints."

Encouragingly, "Start-ups are attracting VC from some of the world's biggest brands and reaching the international stage through global IPOs. But a perception challenge remains, with many citing political risks as an impediment."

Lastly, "As businesses on the continent scale up, foreign investors are playing an important role on two fronts: building infrastructure that enables African businesses to scale and investing directly in SMEs to facilitate growth."

Do you agree with the findings of the report?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

GSMA Report Says Mobile Technology Will Enable Access to Life-Enhancing Services in the Pacific Islands

A post that I published in this forum in 2008 focuses on a project my colleagues and I developed in utilizing information and communications technology (ICT) to implement social and economic development initiatives in the Federated States of Micronesia (FSM). One significant outcome of our proposal was to create a digital strategy to be incorporated into the FSM's national development strategy. Eleven years later, I read with great interest a report, The Mobile Economy Pacific Islands 2019, that says "[m]obile technology can play a pivotal role in the digital transformation of the Pacific Islands, enabling access to life-enhancing services in areas such as health and education, while proving a catalyst for innovation and economic growth, with the promise of new jobs and increased tax revenues."

Authored by GSMA Intelligence, the research arm of the UK-based GSMA, below are the report's findings:

• Mobile helping to boost financial inclusion: The Pacific Financial Inclusion Programme (PFIP) was launched in 2008 and has funded 44 projects with financial service providers helping more than 2 million Pacific Islanders access formal financial services;
• The ongoing shift to mobile broadband and digital transformation: at the end of 2018 mobile internet penetration in the region was the lowest of any region in the world at 18 per cent. However, 4G connections in the Pacific Islands are set to account for more than half of total connections by 2023, doubling the figure from the end of 2018 and increasing access to services;
• Infrastructure challenges: Many countries in the Pacific Islands region face issues around insufficient infrastructure. Several countries are yet to complete the digital switchover process, including Papua New Guinea, Tonga and Solomon Islands; and
• Unlocking the full potential of mobile: The upcoming World Radiocommunication Conference will be one of the best opportunities for governments and industry to identify a significant amount of harmonized millimeter wave spectrum, which will result in massive economies of scale for 5G in the future.

Infographic: GSMA
Intelligence

The report encouragingly explains: "Mobile phones are bringing internet access to previously unconnected populations across the world, particularly in developing regions such as the Pacific Islands where there is a lack of alternative access technologies."

However, "Countries across the Pacific Islands still face significant challenges around funding infrastructure to provide mobile and internet access to their populations, which in turn reduces the ability of governments and policy-makers to address social and economic challenges. Providing mobile coverage is a particular challenge in a region often described as 'sea locked,' with large segments of the population living in remote and often inaccessible areas."

Further on the topic of the challenges of mobile connectivity in the Pacific Islands, the report notes:

The GSMA Mobile Connectivity Index measures digital inclusion in 163 countries across the world, including six countries in the Pacific Islands. The index is built around four key enablers of mobile internet connectivity, critical to creating the right conditions of supply and demand for mobile internet connectivity to flourish:

• infrastructure: the availability of high-performance mobile internet network coverage
• affordability: the availability of mobile services and devices at price points that reflect the level of income across a national population
• consumer readiness: citizens with the awareness and skills needed to value and use the internet and a cultural environment that promotes gender equality
• content: the availability of online content and services that are accessible and relevant to the local population.

There are many aspects of our 2008 proposal remain relevant in 2019 of using mobile technology as a pivotal role in the digital transformation of the FSM and throughout the Pacific Islands. Specifically, with the expansion of mobile technology, Pacific Islanders will be able to access digital health (mHealth), education, and financial technology (fintech) services. This presents a great opportunity for technology developers and investors to collaborate and support local small businesses.

In addition, with an early roll out of 5G services in 2020 and a projected 19,000 5G connections in 2025 (see left chart), frontier technologies such as artificial intelligence, blockchain, IoT and advanced data analytics will become available. "The Pacific Islands region might not be one of the first to roll out 5G services but it can benefit from a mature ecosystem and global economies of scale to see 5G develop in the same way as LTE has done in the region. New submarine cables with improved capacity and other technical advancements are setting the stage for advanced broadband services, including 5G."

What online content and services are you developing that are accessible and relevant to Pacific Islanders?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.