29 Apr 2019
The world has its eye on Africa. Called "The Dark Continent" and other not-particularly-flattering names in the past, Africa is now fully in the spotlight as an emerging economic force. With many established markets saturated, organisations, both abroad and originating on the continent, have noted predictions like McKinsey's that consumer spending in Africa will reach $2.1 trillion by 2025. Combine that observation with another from the same study that Africa's young, growing and rapidly urbanising population will make up one-fifth of the world's inhabitants by the same year, and the continent appears obviously loaded with opportunity.
It's not just consumer businesses that have noticed the potential of Africa's burgeoning educated and increasingly affluent middle classes. With a greater percentage of white-collar professionals bolstering local economies with their skills and ambitions, African tech startups raised $195 million in investment during 2017, up 51% from 2016, with ICT companies stepping up to encourage this growth.
Microsoft announced the opening of its first ever Azure data centres in Africa in mid-2018, advancing their investment in the continent after earlier setting up Microsoft ExpressRoute connections between Africa and Azure data centres in Europe. Named "South Africa North" and centred in Johannesburg, as well as "South Africa West" based in Cape Town, these first Azure global regions in Africa mark a significant milestone.
Amazon Web Services has also chosen South Africa as their springboard into African infrastructure investment, announcing plans for the AWS Africa (Cape Town) Region in the first half of 2020. This builds on existing South African AWS investments like a development centre, points of presence and the launch of AWS Direct Connect in 2017. Meanwhile, Google embarked on an African equivalent of its Google Developers' Launchpad programme, and streaming content giant Netflix, already at home in South Africa since January 2016, has just announced its first original African series, Queen Sono.
What's really next for Africa?
Such high-profile investments in Africa from global connectivity, cloud and content providers leads to the important question: what does this all mean for the next phase of Africa's technical evolution? What can we expect of Africa's involvement in, and contribution to, the Fourth Industrial Revolution?
SEACOM has been in a privileged position to observe Africa's flourishing in the Digital Age. Since launching the continent's first broadband submarine cable along the eastern and southern coastlines in 2009, we've been speaking to and supporting businesses in the region, while participating in ICT industry and policy discussions. We've seen monopolies crumble, red tape fall away and opportunities increase in the sector.
Our simultaneous "big picture" and customer-centred perspectives have left us in a better position than most to comment on what's coming to the continent. Overall, sentiment is positive, and both the local and international business communities have good reason to be optimistic. This said, technical advances in Africa are expected to take time. Just like companies such as AWS have adopted a phased approach to their expansion into Africa, we can expect developments on the continent to be gradual before the area's full potential, and contribution, is realised.
Good times lie ahead for Africa, definitely, but it's important to remain realistic. The injection of capital into the region from world leaders in tech is a massive boost but even as connectivity continually improves, the continent is still playing catch-up with the rest of the world in terms of using digital solutions to advance businesses and economies. Locals must become comfortable with digital technologies and their adoption if that gap is to be bridged, and that will not happen overnight. Still, things are rapidly changing, and there is much to celebrate, even if cautiously.
South Africa as a springboard to future African investment
Looking at the major data centre announcements of 2018, it appears that South Africa is receiving the first wave of African technology investments, with other Sub-Saharan economic centres, like Kenya and Nigeria, in close pursuit. While it may appear unfair at first glance, it's important to return to the point of cautious phased growth. Practically, South Africa is already best positioned to meet the demands, and provide the resources, which will ensure the reliability of data centres.
At SEACOM we've already seen evidence of growing demand across the Southern and Eastern regions of the continent. Through our work, supporting businesses in Kenya, we've witnessed a rapid uptake of cloud services in the region, arguably more so than in South Africa. Regardless, the hunger for data is becoming more ravenous continent-wide, and through strategic acquisitions and expansions, we've been increasing our capacity to more effectively meet it, hitting 1.5Tbs in 2018.
The most important take-home here is that the rest of Africa does still benefit from data centres located on the southern-most tip of the continent. Aligned with global trends to move data handling closer to the edge, cloud services that connect to data centres located in Africa will still be faster and more efficient than those relying on computing power from the other side of the planet.
By Africans for Africans and the world
What localisation of the cloud means in Africa
The advantages of data localisation in Africa, thanks to data centres and servers opening on the continent, are honestly little different from elsewhere in the world.
From a service delivery perspective, the narrowing of distance between cloud processing power and end users means a decrease in latency, and a more seamless experience. While this improvement may be imperceptible for many businesses, in certain spheres a few milliseconds of lag does make a difference. Real-time, or near real-time, data transmission is a core requirement of Machine Learning, the Internet of Things and Digital Twin Technology. The gathering and analysing of data remotely, enabled by sensors and cloud technologies, has huge efficiency-enhancing and cost-saving implications for Mining, Manufacturing and Agriculture, in particular. These spheres remain fundamental contributors to the economies of Africa.
Along with mobile-money-centred Fintech, and Healthtech, Agritech is an especially vibrant sector in Africa, with an increasing number of African startups using innovative emerging technologies to solve agricultural problems such as weather analysis, supply chain issues and the challenge of feeding exploding urban populations. Faster and more powerful processing on the African continent supports the development of these solutions, and reliable fibre-driven interconnectivity with other countries allows these homegrown solutions to reach markets worldwide. Business today is global, after all, and global ICT networks open doors to new opportunities for African organisations
Localisation of the cloud in Africa also provides reassurances regarding legislative compliance and information security. Protection of data is becoming as much of a mandated concern on the continent as elsewhere, and data centres located within national boundaries or established trade territories mitigate these concerns. No longer is data exiting a country via the cloud to be processed and/or stored at an overseas facility. It seems highly likely that the "setting up shop" of notable content and cloud providers across the continent will make businesses more comfortable with the concept of migrating some, or all, of their business to the cloud. It will be interesting to see the actual spend of South African companies on cloud computing in 2018, as early in the year a World Wide Worx and F5 Networks report found that 83% of interviewed businesses intended to increase their cloud budgets.
Obstacles to growth
All the encouraging developments aside, it's important to be realistic about Africa's technical evolution. Looking at traditional obstacles to advancement, many are falling away. Markets are increasingly opening up, fibre access is slowly extending beyond urban centres to empower Africans in remote areas, and infrastructure limitations are being overcome (South Africa, Kenya and Nigeria all have international-standard, vendor-neutral data centres). There remain only two major barriers to Africa's full emergence into the Digital Age. The first is the currency volatility of Africa"s economies, as so much technological infrastructure and service pricing is in US dollars. A weakened exchange rate makes the adoption of these solutions significantly harder.
The second, and by far the biggest issue, is a glaring skills shortage. Digital economies require a workforce equipped with digital skills, and here Africa is lagging. On one level, African businesses need technology partners and providers who can help them integrate their existing systems with cloud solutions, and Africa, to date, lacks the support environment that mature economies have.
On another level, Africa is particularly vulnerable to the narrative that AI and other emerging technologies will lead to job losses. This mindset could easily transform into resistance to cloud adoption at a social and governmental level. Fortunately, the situation in the Silicon Savannah of Nairobi shows these fears are unfounded. Thousands of digital-savvy young Kenyans are employed in data capture and interpretation roles, distilling outsourced information from international markets for AI analysis, and programming the intelligence of machines to complete tasks.
To ensure Africa's future workers are employable in the digital economy, governments, schools and private enterprises need to work together to prioritise STEM learning and ensure everyone who leaves their country's education system is digitally literate and has basic coding skills. Not only does this approach help create more job opportunities at an individual level, but it also bolsters the greater economy.
Enthusiasm and optimism
Despite the risks and shortfalls, African businesses are increasingly interested in, and are adopting cloud technologies as part of their growth plans. Massive international cloud and content providers putting down roots in Africa may not be a panacea to the continent's problems, but it is a powerful sign of the world showing confidence in the region and locals are rightfully feeding off the positivity.
Unburdened with entrenched legacy systems in many cases, African enterprises are well-positioned to explore the potential that the cloud and other emerging technologies unlock. The next likely phase in Africa's technical evolution will be an explosion of solutions by Africans for Africans and the world, with the continent making high-value social and economic contributions at a global level. SEACOM is proud to support this growth, enabling the connectivity that underpins these digital technologies while educating businesses about the transformative capabilities of cloud, and other solutions for their operations.