What will it take for Africa to drive US$5-trillion digital economy?

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Continent's progress
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Wednesday, Nov 20th

FinTech, 5G key to continued FDI in Africa

FinTech, 5G key to continued FDI in Africa

FinTech and 5G aside, Africa's telecoms industry will likely witness a slow-down in investment this year.

EY's 2018 Africa Attractiveness survey noted a 43% decline in Africa's FDI projects for Technology, Media and Telecommunications (TMT) in 2017.

Arthur Goldstuck, MD of World Wide Worx, said that Africa's telecoms "is a mature industry with slow perceived growth, and major incumbents are already well established with long-term shareholders."

"On the other hand, FinTech is new, sexy and driven by start-ups hungry for investment. That is naturally where we'll see most action," he said.

In 2019, FinTech is expected to attract more investment - particularly as Africa's e-commerce sector starts to grow and as FinTech start-ups partner banks and mobile companies in markets such as Kenya, Nigeria, Tanzania and Zimbabwe.

Gartner says African telecom markets "are no longer growing at the breakneck pace to justify certain risks, so it's not surprising to see a slowdown in investment inflows compared to other sectors."

However, the "subsea cable continues to move ahead" and this is expected to "provoke a more vigorous response from satellite players" in terms of investments.

The market research and analysis firm adds that "resistance to liberalisation remains one of the chief concerns when you look at the continent and its prospects for investment attractiveness."

"The upgrade to 5G beckons but business models and pricing remain very uncertain and the cost both for Capex and Opex are potentially enormous. Growth of capacity in the backbone needs to be matched by buildout on the access side, both to increase throughput in existing/urban areas and to extend service to more rural/hard-to-serve populations," the company states.

Matthew Reed, the Africa Practice Leader at Ovum says according to the company's Africa Digital Outlook 2019 report Vodacom, MTN, and Comsol are "aiming to launch 5G in South Africa, though for Vodacom and MTN, lack of access to the necessary spectrum is holding up progress."

"The first use case for 5G in Africa will be for FWB, followed by enhanced mobile broadband (eMBB). As 5G technology matures it could enable a range of new services and business models," says Reed.

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