THE BLOG

Africa's Infrastructure 'Problems' Are Actually A Leapfrogging Opportunity

Entrepreneurs and innovators across Africa are building businesses and forming joint ventures that use new technologies to close the infrastructure gap.

05/05/2017 04:00 SAST | Updated 05/05/2017 11:09 SAST
Thomas Mukoya / Reuters
Residents perform at a mobile phone transaction at a stall within the trading centre of the village of Nyang'oma Kogelo, west of Kenya's capital Nairobi, July 15, 2015.

Ahead of last year's World Economic Forum meeting in Rwanda I wrote about Africa's potential to be the next great leapfrogging success story. Now, one year later, it appears at first blush that basic infrastructure could be a major stumbling block in that leapfrogging journey. But a deeper look suggests a different story. Through the next decade, the World Bank estimates that sub-Saharan Africa's infrastructure needs will be about US$93 billion (R1,25 trillion) a year. Current spending in the region amounts to only about US$45 billion (R608 billion) - a "needs'"gap of $48 billion (R642 billion) per year. From power and water to roads, railways, and ports, infrastructure challenges abound in Africa.

But this very shortcoming could actually yield a leapfrogging opportunity - especially when you add in the promise of 'Fourth Industrial Revolution' (4IR) technologies and the innovation it breeds. Entrepreneurs and innovators across Africa are building businesses and forming joint ventures that use these new technologies to close the infrastructure gap in small but unique ways. It's starting to happen in an area that has by and large proved intractable in Africa - access to energy. According to the World Bank, only 35 percent of the population have access to electricity.

In fact, electricity-generating capacity per capita has changed little over the past 20 years, indicating that grid build-up is a slow and uncertain process. But "solarpreneurs" are now pioneering a variety of techniques to bring energy to remote locations thanks to advances in battery storage and the advent of The Internet Of Things. Small businesses that use solar "kiosks" are sprouting up to provide charging stations and Internet access. Other start-ups sell solar units to individuals that are paid for via mobile money transfer. M-Kopa Solar, for example, is now providing pay-as-you-go solar to more than 140,000 households in Kenya, Uganda, and Tanzania.

Another infrastructure gap being addressed via advanced technology is transport. Sub-Saharan Africa has the lowest density of roads and railroads of any developing region around the world. Drones in particular are starting to alleviate this challenge, allowing for delivery across difficult and remote geographies. A few startups are using drones for aerial photography right now, like Ghana's Aeroshutter, and many of these start-ups are now looking into the business of drone delivery.

Other investors from outside Africa are also working with African businesses and governments to get drone delivery projects off the ground (literally). In fact, San Francisco start-up Zipline launched a for-profit drone delivery service late last year, transporting crucial medical supplies to remote regions in Rwanda. Other 4IR technologies are enabling innovative business models that are being used to reduce – and in some situations eliminate - travel needs. Ride-sharing and traffic-monitoring start-ups - including GoMyWay in Nigeria and Kenya's Ma3Route - are helping address Africa's overcrowded urban roads by using web platforms, crowd-sourcing, and GPS technology to locate customers, convey road conditions, and provide safety controls.

Infinite computing and ultra-high bandwidth is creating more "work at home" opportunities to overcome congestion and unreliable public transport. The Cape Town Chamber of Commerce, for example, has urged more people to take advantage of digital technologies to work from home, estimating that if those using private cars did this just one day a week traffic would decrease by 20 percent. Of course, all of the above can't take the place of critical investment in traditional physical infrastructure.

People will always need good roads to get places, manufacturers will always need reliable sources of power and water, and importers and exporters will always need ports to move their goods. But 4IR technologies, entrepreneurial spirit, and innovative business models can keep Africa moving forward. It's this movement that can provide parts of Africa with the potential to leapfrog the legacy systems of the developed world—and the potential to create prosperity at a greater pace.