Drive demand to attract capital
Focusing on infrastructure to develop the digital economy in Africa (and reap the rewards of a better-connected society) is taking the wrong end of the stick. It’s creating demand at the most local level that will drive private capital investment.
At this week’s Africacom conference in Cape Town, I sat down for another DFI‑sponsored roundtable on how to draw private‑sector investment into Africa’s digital economy. A senior industry figure opened the discussion with a blunt question: “What are we going to do now so we don’t reconvene next year asking the same thing?” What followed was an intelligent—though, in my view, somewhat misguided—exchange among leading players about where subsea cables, terrestrial fibre backbones or FTTx deployments should be prioritized and how they ought to be funded.
For years we have operated under the assumption that making cheap capital available to infrastructure providers automatically expands connectivity. While that strategy does push networks farther into rural and underserved regions, it hardly moves the needle on everyday adoption of digital tools by the people we aim to serve. The networks are left empty, as end-users do not have the ability to leverage them. Private capital dries out. The result is a series of forums that keep circling back to the same fundamental problem.
Instead of focusing on infrastructure, DFIs should do more to empower the end‑users who actually generate demand for those pipes. Imagine a young mechanic named Jonas (a pseudonym) who is passionate about motorcycles and wants to open a bike‑repair shop in his town. Jonas would need a simple, mobile‑friendly website to showcase his services, a point‑of‑sale system that accepts mobile‑money payments, and a lightweight, locally‑developed ERP that integrates with the national mobile‑money platform and tax authority. This would let him track customers, manage cash and file taxes on time. He could start by setting up the site and POS at a nearby Internet café, then move to his own laptop once the business gains traction.
DFIs can catalyze this kind of demand in two practical ways. First, they can seed local funding channels by partnering with community banks and micro‑finance institutions to direct low‑cost capital straight to entrepreneurs like Jonas. Second, they can support ecosystem builders—Internet cafés, local system integrators, POS distributors, web‑design studios and ERP developers—by providing targeted financing for their solutions. As end‑users adopt digital tools, private infrastructure owners—from mobile‑network operators to fibre providers—will naturally follow the emerging demand, investing where the market proves its viability.
By redirecting a portion of DFI resources (and the industry’s attention) toward end‑user empowerment, we can spark genuine demand and ensure that the next roundtable isn’t a repetition of the last, but a celebration of measurable progress.
ABOUT DIGITAL AFRICA DEVELOPMENT AGENCY
The Digital Africa Development Agency helps public and private organisations to maximise the impact of digital services on economic development and their stakeholders, by providing expert advice, market insights and operational support. More information at www.digitalafrica.ai
Image courtesy of the Stromme Foundation.