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    The digital industry remains a key driver of the African continent’s growth

    • Insurance
    • 7 November 2018

    [CAVIE-ACCI] Investment inflow into Africa’s Technology Media and Telecommunications (TMT) industries declined by 43% in 2017, with fund holders turning their attention to manufacturing and automotive projects according to research by Ernst & Young (EY).

    EY’s Turning Tides Africa Attractiveness report, released thisn days, said there were only about 75 Foreign Direct Investment (FDI) projects in TMT across Africa in 2017. Financial services FDI projects during the same period also dropped by 14% compared to the previous year.

    “Africa’s consumer story stalled… short-term considerations weighed on FDI in conventional consumer-facing sectors, i.e., TMT, CPR and financial services,” according to the report.

    The story could be different for 2018, with international telecoms industry investors such as Bharti Airtel eager to leverage opportunity in the continent’s communications and FinTech industries.

    Econet Wireless in Zimbabwe has invested in its local operations, while fresh investments and funding in South Africa and other markets could boost intra-regional and FDI inflows.

    Bharti has just announced that it has secured a US$1.25 billion fund from a grouping of international investors that include Singtel and Softbank for its Airtel Africa subsidiary and continental operations.

    “Our investment into Airtel Africa reflects our confidence in the long-term growth potential of Africa with its young and growing population. For many of Airtel Africa’s customers, the mobile phone is the key enabler for digital and financial inclusion,” said Singtel International CEO Arthur Lang.

    The restriction of social media and enforcement of taxes, particularly on mobile money and social media, are issues that concern prospective investors in Africa’s tech and telecommunications markets.

    However, EY remains bullish about the continent’s prospects and said: “the digital industry remains a key driver of the continent’s growth given the growing mobile and internet penetration rates coupled with the establishment of technology parks across numerous countries” that include Angola, Cape Verde, Kenya, Rwanda and Senegal, among others.

    Countries like Kenya and Egypt have remained attractive destinations for TMT investment – Kenya, “reported a 68% increase in inward investment” projects in 2017, said EY.

    “The country’s fast-growing technology sector, nicknamed ‘Silicon Savannah’ continued to draw foreign investor interest. TMT FDI projects in Kenya increased by 44% compared with 2016,” according to the Report. “This was largely because of a conducive environment, including a pool of well-resourced IT developers and a high smartphone penetration rate.”

     Tawanda Karombo

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