EXECUTIVE SUMMARY
Increasingly recognised as a pivotal infrastructure for inclusive economic development and social justice in Africa, information and communication technology is a fundamental component of the continent’s infrastructure budget. DFIs, such as the World Bank and the African Development Bank, have long included digital infrastructure and connectivity projects as one of the portfolios that receive financial support. Nevertheless, the investment landscape for sustainable information and communication technologies in Africa remains poorly understood. The availability of data is inconsistent, mirroring a broader knowledge problem across the entire infrastructure finance sector (see Cirolia, Pieterse & Pollio, 2022). Moreover, issues of sustainable investment are by nature of digital infrastructure much less visible and debated than in related sectors of mobility or energy.
This paper is, therefore, aimed at i) highlighting the different components of infrastructure investment in information and communication technologies, ii) showing that the value chain is complex and that different investment patterns and bottlenecks need to be recognised across the sector, and iii) identifying key sustainability issues that deserve attention for digital infrastructure as much as for other types of technical systems. To do so, in this paper, four sections and a tentative list of policy implications linking sustainability concerns to the financial design of information and communication technology infrastructure are featured.
In Section 2, a framework has been developed to understand key components of the digital infrastructure and information and communication technology value chain. Unlike other overviews of information and communication technology investment, this paper considers the hardware and software components of digital infrastructure, identifying hardwired broadband, mobile broadband and data centres for the hardware component, and digital ecosystems for the software component. The rationale for including capital investment in digital ecosystems reflects the fact that not only are venture capital investments in digital services more and more significant across Africa, DFIs and African governments are increasingly involved in supporting and de-risking these initiatives. For each of these four components, this section charters the status quo of current levels of information and communication technology infrastructure availability, with particular attention being paid to how these patterns interface with African cities. This review provides a broad-stroke map for understanding contemporary digital service delivery configurations and levels. Information is provided on unequal distribution and availability patterns, on the permanence of digital divides in light of these patterns, while also including an overview of current agendas aimed at addressing gaps related to access, legislation, skills development and other issues concerning information and communication technology justice. Concerning digital infrastructure from the supply side, the most visible divides appear in terms of broadband penetration and data hosting capacity, which is geographically unequal between countries and within countries, for example, between major urban centres and rural regions. Regarding digital ecosystems, major cities receive the lion’s share of investment in business development programmes and digital start-ups; a trend that is not unique to Africa, but to the continent, which has manifested in the emergence of a handful of cities absorbing the majority of high-risk capital directed towards digital innovation.
Having established a shared framework to understand the components and the status quo of digital infrastructure in Africa, Section 3 is focused on financial patterns, identifying the main actors and drivers for investment in each of the value chain parts. Drawing on secondary data and original research by the authors, this section charters key trends in the investment landscape, not the least some specificities that set digital infrastructure apart from other sectors. These trends include –
– a clear focus on supply-side investments by the public and private sectors often to the exclusion of demand-enhancing investments, such as digital literacy.
– a decisive private sector-led edge in certain hardware components, such as mobile broadband dominated by telecom providers and tower companies, and the data centre industry.
– the increasing involvement of city-scale actors in creating tech hubs, with select cities having bypassed the involvement of DFIs to attract international investment in information and communication technology.
– very diverse risk and profitability profiles across the value chain, resulting in the perpetuation of digital divides through profit-driven financial patterns.
Section 4 is dedicated to the sustainability issues that are emerging in relation to digital infrastructure. While the latter is often celebrated as an enabler of sustainable transitions, the hidden environmental and social costs of its components need to be better understood and eventually factored in. Of the many sustainability concerns relating to current investment patterns, this section highlights the following four key issues:
– The need to address digital divides. It is better for them to be understood in their geographic and social complexity. These divides work intersectionally but can be summarised by gross domestic product per capita, urban/rural and gender and age gaps.
– The need to implicate the systemic environmental footprint of digital infrastructure when factoring in the hidden costs of these kinds of investments, for example, sustainable energy, mining and e-waste.
– The need to consider personal data protection and data sovereignty as part of the design of these systems.
– The need to evaluate the impact of artificial intelligence and digital services more broadly on the future of work and employment in Africa.
Drawing on this overview, Section 5 provides key policy directions, namely shifting away from supply-driven investment to other forms of more holistic financing, in particular, those that address uneven demand, factoring in all the environmental costs of digital infrastructure and the extractive nature of many of its components; reframing the narrow yet significant role currently played by cities and local governments to ensure that subnational governments can shape and benefit from digital transitions; learning from the successes of the venture capital model of de-risking investment to apply it in other infrastructure sectors; and building social, environmental and data sustainability into the design of information and communication technology projects and programmes, rather than as an afterthought of digital infrastructure.