ICT Driving Africa’s Innovation, Entrepreneurship & Economic Growth

Africa’s Information and Communications Technology (ICT) sector has seen unprecedented growth in recent years. The private sector has invested close to  $50 billion in the last decade, with a focus on mobile and related applications, and more recently in international submarine cables. Mobile density in the continent jumped from 20% (in terms of the number of SIM cards sold per 100 inhabitants) in 2005 to around 65% in 2011. Recent completion of undersea cables has tripled available bandwidth. However, the rollout of ICT infrastructure, in particular access to the Internet is uneven (Internet penetration is about 11.5% in 2011) and many underserved countries and areas remain. In addition the lack of regional and national backbone infrastructure is a stumbling block towards the development of broadband Internet. The promotion of ICT in Africa still requires investing billions of dollars.

The ICT sector has proven to be a strong driver of Gross Domestic Product (GDP) growth in nations across the world. From developing countries to developed nations – the ICT sector has played a part in the success of each of these nation’s economies, the advancement of its people’s skill-sets, capabilities and positioning the nations as a place for global firms to move efficiently conduct business.

Over the past decade – ICT has been a major economic driver to boost the social and economic landscape of the African continent. The ICT sector is better positioned to leverage businesses and the continent to some impressive growth of economies. The ICT sector witnessed double digit growth and if this trend continues upwardly – ICT expenditure in Africa could exceed $150 billion by 2016. The ICT expenditure would continue to include computer hardware and software, computer services (computer and network systems integration, data processing services) and communications services (voice and data communications services) and wired and wireless communication equipment. African countries have made positive progress on access to ICT services – however there is still work to be done in terms of ICT readiness. According to the International Telecommunications Union (ITU) Development Index – it indicated that the African region has made slower progress when compared to other regions in the past two years – with roughly half the improvement on an aggregate basis. Access to ICT still remains a huge challenge for most African countries.

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Crowdfunding Industry Overtakes Venture Capital and Angel Investing

By 2016 the crowdfunding industry is on track to account for more funding than venture capital, according to research firm Massolution’s annual report. With an estimated market value of $34 billion in 2015, crowdfunding has come a long way since its valuation of $880 million in 2010.

In comparison, the VC industry invests an average of $30 billion each year. Meanwhile the crowdfunding industry is doubling or more, every year, and is spread across several types of funding models including rewards, donation, equity, and debt/lending. In particular, equity crowdfunding – now being legalised in the US – holds huge disruptive potential.

Crowdfunding industry growth figures, as reported by Massolution

The crowdfunding market grew by 167% in 2014, continuing the exponential growth of previous years. Two months ago the thriving British FinTech (financial technology) sector witnessed its first billion-dollar business. The company? Funding Circle, a five year-old crowdfunding platform. Their $150 million funding round was over-subscribed.

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Unlocking Low-Cost, Large-Scale Solar Power

Solar power has enormous potential to quickly and affordably meet the energy needs of emerging markets—including in sub-Saharan Africa, where two out of three people lack access to electricity and existing grids are under strain.

But while large countries such as India, Mexico, and South Africa have benefited from surging investment in the renewable energy sector, many of their smaller neighbors remain off the radar of solar power developers and are struggling to obtain the electricity they need.

To bridge this gap, the World Bank Group has launched Scaling Solar, a “one-stop shop” for governments that want to attract private investors to build large-scale solar plants but lack the purchasing power of bigger emerging markets where strong competition has driven down solar prices to virtual parity with oil, gas, and coal-fired electricity.

Scaling Solar includes a package of technical assistance, templates for documents, pre-approved financing, insurance products, and guarantees that take the guesswork out of whether a solar project is viable and bankable for both governments and investors.

Under the program, a country can assess a project, manage a competitive tender, build a plant, and start generating cheap, sustainable solar power within two years—a fraction of the time it would take to do so independently, and faster than other generation sources such as hydro and thermal.

Zambia, for instance, is on track to have two 50-megawatt solar facilities up and running about two years after having engaged in the program. The country’s needs are urgent as several years of drought have significantly reduced the output from hydropower plants Zambia has traditionally relied on.

Zambia’s first tender attracted 48 interested groups including top developers EDF, Enel, and First Solar, and 11 prequalified to bid. This has provided an important boost for the country, which desperately needs new sources of energy but has otherwise struggled to attract investors given the impact of falling copper prices on its economy.

“For quite a long time, we’ve had interest from the private sector to invest in renewable energy including solar. But we haven’t had the coherent structure to implement this,” said Andrew Chipwende, chief executive officer of Zambia’s Industrial Development Corporation. “With Scaling Solar, what we’ve been able to do is develop a transparent process that the private sector and public institutions can work towards.”

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SME growth key to Africa’s future, says African Guarantee Fund

Enabling access to investment finance for micro, small and medium-sized enterprises is essential for economic growth to continue in Africa

Despite the internationally recognised importance of SMEs, African small businesses often have difficulties accessing financing from the formal financial sector. Almost 50 percent of African companies identify lack of access to finance as a major constraint to doing business. The cost of ?nance, including investment ?nance, is higher in Africa than any other part of the world, and the access for SMEs is particularly limited. Very few commercial banks do small-enterprise banking in Africa. Furthermore, SME financing is often considered by many financial sector players in Africa to be a risky activity as promoters quite more often than not, fail to come up with the collateral levels required to secure bank facilities.

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Equity-Based Crowdfunding: The New Kid on the Block