Alexis’s view
Building digital infrastructure in Africa is easy to announce, but difficult to do: That’s a clear takeaway from comments by Kenya’s president that confirm our scoop, reported last year, that a $1 billion data center project backed by Microsoft and UAE firm G42 won’t go ahead. President William Ruto’s remarks, which we’ll get into in today’s briefing, crystallize the challenges faced by non-Chinese actors — who must grapple with balance sheets and ballot papers — hoping to tap into potential growth opportunities in the world’s least-connected countries.
China has been the lynchpin in the rollout of transformative technologies in Africa over the past decade — Huawei alone has built around 70% of the continent’s 4G networks. That dominance has been driven by Beijing’s policy banks providing strategic lines of credit, enabling Chinese firms to provide equipment, services, and financing at significantly lower prices than Western competitors. That approach rests on the view that shifting risk from African treasuries to Chinese lenders is in Beijing’s long-term geoeconomic interests.
It’s hard to provide financially viable alternatives to the Chinese model: Western developers face heightened credit costs due to the perception that Africa is inherently risky, before identifying a path to profitability in markets where purchasing power lags far behind advanced economies.
While the Chinese model reduces upfront budget pressures on fiscally-strained African states, governments across the continent will now rely heavily on a small number of firms for hardware maintenance, modernization, and training. The US, meanwhile, has long warned that Chinese technology poses a strategic risk by enabling surveillance, data theft, and large-scale disruption of critical infrastructure. But American alternatives to Chinese firms are few and far between.
Digital technologies look set to drive global innovation and economic growth over the coming decades. Just as control of railways and shipping lanes cemented Britain’s global economic and political power during the 19th century, Beijing’s foresight means its competitors need to adapt their business models to have any hope of having a foothold in a continent that will be home to about a quarter of the world’s working-age population by 2050.
Notable
While China benefits, the largest gains will still be felt on the continent, with shared digital public infrastructure likely to be transformative for intra-African trade, Yinebeb Bahru argues in a London School of Economics blog post.