The rate at which Africa is growing and the imbalance between supply and demand within critical sectors such as higher education and infrastructure are presenting numerous opportunities for foreign investment into the continent. More than 200 million people in Africa are aged between 15 and 24, and by 2040 it is projected that the continent will have the largest labour force in the world. Indeed, some predict Africa may contain one-third of the world's population by 2050.

Growth in terms of population, GDP and FDI inflows in Africa offers exciting prospects for business – the continent's GDP growth is predicted to reach 4% in 2016 from 3.5% in 2015, and it has been named the fastest growing destination for FDI by EY’s Attractiveness Survey. These fundamentals make Africa a highly attractive destination for investment into the ICT sector – according to greenfield investment monitor fDi Markets, the value of FDI projects in the business machines and software and IT services sectors increased by 378% and 72% in 2015, respectively.

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Connecting Africa 

Unless this rapid growth is properly harnessed, however, many countries in Africa could face intensifying poverty, rising crime and unemployment levels, and social unrest. Powerful economic and social drivers such as mobile technology and communications first need a fit-for-purpose ICT infrastructure in place – and while many governments in Africa are investing significantly in this area, demand is such that they cannot do it alone. Multinational and private equity investment across a range of ICT fields is playing an increasingly powerful role in changing Africa’s economic and employment landscape. 

One such player is Africa-focused private equity firm Emerging Capital Partners (ECP), which has raised more than $2.8bn for ICT investment across the continent, from mobile carrier services and wireless infrastructure to internet services and pay TV. Alex-Handrah Aimé, managing director of ECP’s Johannesburg office, says: “Through our investment in [Kenya-based cable and pay TV company] Wananchi we have enabled the roll-out of the largest fibre network in Nairobi, which passes [through] more than 250,000 homes and is a leading provider of internet services to SMEs and corporates throughout the region.” 

“The need for infrastructure to support the explosion of mobile phone penetration led us to invest in IHS Towers in 2011,” she adds. A Nigeria-born company, IHS is now the largest telecommunications tower provider in Africa, with more than 23,300 towers in five countries after its purchase of telecoms providers MNT and Etisalat in Nigeria. IHS saw an 8% increase in employees in 2014 and now has more than 1000 employees across Africa. And research from IHS projects “a 20-fold increase of internet use on mobile phones over the next five years” in Africa, meaning massive market opportunities for entrepreneurship and corporate venture activity.

Cable impact 

Appropriate development finance for ICT infrastructure is transformative to Africa’s business climate, according to David White, chairman at the Emerging Africa Infrastructure Fund (EAIF), a multinational public-private partnership providing debt servicing for infrastructure projects. In 2008, the EAIF provided $36m in funding for Seacom, the first undersea fibre optics cable along the east coast of Africa. “This internet cable went up from South Africa to Djibouti and connected east Africa with Mumbai and London, enabling much greater connectivity with the rest of Africa and the world,” says Mr White. 

“The real impact is on the business environment – particularly in Nairobi, which was massively enhanced by this cable,” he adds. “The cable ultimately cut the cost of internet access by 120% and increased the access by a factor of about 100.” 

This has enabled the Kenyan capital of Nairobi to be considered a credible financial hub, according to Mr White. “Nairobi has proper communications and can link to the rest of the world in real time, meaning you can run your private equity and banking businesses from there. All the big service industries can now be there – at least there is hope, optimism and real talk about venture companies there in the tech space, doing it for Africa. This also means the creation of many jobs – and high-quality jobs, too,” he says. 

Channelling the young

One area where this improvement in ICT infrastructure will have a real impact is in the education and training of young Africans. Indeed, Unctad’s 2015 report on digital development says: “ICTs are an essential means to channel the potential of millennials toward sustainable development processes.” But while there is a surge in internet use from young people in developing countries, most lack the necessary digital capabilities to become producers or innovators. “This highlights the urgent need for a capabilities-based approach to ICT capacity building,” the report says. 

In response to this need, a number of multinational software providers are investing in programmes fostering tech education in Africa and elsewhere. US-based computer technology company Oracle’s flagship philanthropic education programme, Oracle Academy, offers students and educational institutions free software and curriculum portfolios. Recently the multinational has increased its investment in Africa through Oracle Academy partnerships that have a specific focus on Kenya, South Africa and Nigeria. One partnership with MTN Foundation in Nigeria, the social investment branch of telecoms provider MTN, provides training for up to 2000 students in database design and Java programming skills using Oracle curriculum and software. 

“In each country that we operate, Oracle Academy is keen to develop strategic relationships with ministries of education and national standards boards to help ensure our resources are aligned to key learning outcomes that give students a pathway to academic credits and professional certifications,” says Jane Richardson, senior Europe, Middle East and Africa director at Oracle Academy. “Future economic growth requires significantly more young people with computer science skills.”

Meeting demand 

Locally, governments and national agencies have an imperative to pursue education programmes. “The pace of growth in investment into Kenya has presented a sharp rise in demand for skilled industry professionals,” says Anne Muchoki, chairperson of Kenyan investment promotion agency KenInvest. “More public and private sector organisations are taking an active role in up-skilling the working population to accommodate growth.” 

“Online training of graduates is a new tool being employed by the private sector to address the demand for industry skills development opportunities,” Ms Muchoki continues. A number of incubators and accelerators have also been launched in recent years as a means to bridging the skills gap. “[Nairobi-based business incubator] iBiz Africa, for example, aims to fill the domestic skills gap for ICT and business innovation – key focus areas for the government of Kenya in which we welcome heightened interest from global ICT firms as Kenya holds its spot as a frontrunner in technology adoption,” she says.     

As only 30% of Africans finish secondary school and a mere 6% find places in African universities, dedicated FDI and private equity investment can be a key vehicle to fill this market gap. If not, many observers say, ‘Africa rising’ may be no more than a distant hope on the horizon.