Seeds of Opportunity: The African Growth Series
August 2024 | Issue 1
In this week's issue, you will learn more about:
- EXPERT INSIGHT: A Review of Internet Access, Smartphone Use, and Related Outcomes in Africa
- AFRICA TREND: Mining Company RMB Adds Wind Farm to Power KwaZulu-Natal Operations
- AFRICA OPPORTUNITY: South Africa's SEZs Pioneering Green Tech Revolution
- AFRICA OPPORTUNITY: Kenya’s SEZs Driving Investment Boom
- AFRICA TREND: Sovereign Wealth Funds Commit Millions in Unprecedented Funding in Africa
EXPERT INSIGHT: A Review of Internet Access, Smartphone Use, and Related Outcomes in Africa
It is no secret that the world is becoming increasingly interconnected, and this is forming the indispensable backbone of economies, business transactions, and human communication. The days of browsing physical stores and conducting in-person business agreements quickly become an anomaly in every industry. What is being done to move Africa with as business moves progressively online? Ultimately, securing Africa’s place in the digital ecosystem and avoiding digital exclusion should be a top priority for the region.
Internet access is intermittent in Africa, with only 36% penetration as of 2022. Approximately 1.5 billion people call Africa home, meaning over 900 million people had no internet access in 2022, which is mind-blowing. This means no smartphone connectivity, no access to Google, and no GPS systems, to name a few. Despite this, pockets of high connectivity in countries like Morocco, the Seychelles, and South Africa boast user numbers that are more than 75% internet penetration. Morocco recorded a 90,7% internet penetration rate, the highest in Africa. The country is home to just over 38 million people, meaning less than 4 million people do not have access to the internet. Conversely, Nigeria has the highest number of internet users, reaching 103 million, which is still less than half of the recorded 229 million population. This highlights the disparity between African countries, which can greatly impact the lives and futures of the respective populations.
Figure 1: Number of internet users relative to country population, in millions, by country, Africa, 2024
Regarding smartphone use, Android phones are significantly more popular than iPhones due to their comparatively lower cost and broader range of product choices. This is because the Android operating system is used by a variety of brands, such as Samsung and Huawei, in comparison with Apple’s operating system, iOS, which is run exclusively on iPhones. This provides a more diverse choice in smartphone price and capability, thus suiting a greater number of people. In 2023, This means that Android commands Android commanded an 85,6% market share, whereas in 2023. In the same year, Apple controlled a mere 13,3% market share.
Figure 2: Market share of Android and Apple, in percentage share, Africa, 2018-2023
This analysis shows that Android phones are well-suited to the African market, but the broader issue is the lack of widespread internet access in African countries. The variability in access between countries such as Morocco and Nigeria shows the capacity for widespread internet penetration, which ultimately can be achieved. This can be done by forming public-private partnerships (PPPs) or through effective policy aiming to roll out infrastructure to provide and ensure stable internet access to a greater proportion of a country's population. Africa must catch up to maintain relevance and participation in the global market. Should this be achieved, currently excluded African businesses and creators alike could be given the key to unlocking a new realm of possibilities for their businesses and futures.
Sources: Frost & Sullivan, World Bank, UNESCO, Statista, Exploding Topics
AFRICA TREND: Mining Company RMB Adds Wind Farm to Power KwaZulu-Natal Operations
Mineral sands mining company Richards Bay Minerals (RMB), a division of Rio Tinto diversified mining company, has begun constructing a 140MW wind farm Khangela Emoyeni in the Western and Northern Provinces of South Africa. This wind farm is intended to support RMB's operations in KZN and will reduce RMB's overall carbon emissions by 20%. This action also supports Rio Tinto’s boarder commitment to reducing Scope 1 and 2 greenhouse gas (GHG) emissions by 50% by 2030 and achieving net zero emissions by 2050.
Khangela Emoyeni Wind Farm, together with the existing Bolobedu solar PV project in Limpopo will meet 42% of RMB's power requirements. At maximum capacity, RMB operations can reach up to 400MW of power consumption, making it one of South Africa’s largest power consumers. Adding renewable energy sources will translate to significant load alleviation of the national grid. The power generated from renewable energy sources is transported to RMB operations using the existing network and transmission lines through a wheeling agreement with ESKOM.
AFRICA OPPORTUNITY: South Africa's SEZs Pioneering Green Tech Revolution
South Africa's Special Economic Zones (SEZs) are spearheading a green technology revolution, attracting billions in investments. The OR TAMBO SEZ is launching a groundbreaking hydrogen expansion plan. At the same time, the Atlantis Special Economic Zone for Green Technologies, Africa's first Greentech-focused zone, has already secured R2 billion from seven investors. Meanwhile, Dube TradePort Corporation SEZ's new industrial precinct is set to create 600 jobs in five years.
These developments position South Africa as a leader in sustainable innovation, with a projected CAGR of 25% in the green tech sector over the next decade.
AFRICA OPPORTUNITY: Kenya’s SEZs Driving Investment Boom
Kenya's Special Economic Zones (SEZs) are catalysing unprecedented economic growth. With corporate tax rates as low as 10% for the first decade, these zones have attracted USD 2.5 billion in investments in Tatu City alone. Global giants like Kärcher, CCI Global and The HEINEKEN Company are leveraging Kenya's strategic position to expand across East Africa. The recent Special Economic Zones Authority Amendment Bill 2023 promises even more investor-friendly policies, potentially transforming Kenya into a regional economic powerhouse.
AFRICA TREND: Sovereign Wealth Funds Commit Millions in Unprecedented Funding in Africa
Sovereign Wealth Funds (SWF) hold immense potential for increased investment into Africa. SWFs tend to focus on the long-term horizons and offer flexible structures with considerably less pressure surrounding exit strategies than other private investors. Generally, SWF focuses on government-funded endeavours, but more recently, there has been a push towards working with private sector players. Although local African SWFs have been more active recently, Middle Eastern SWFs remain dominant in Africa. Local funding amounts to just $83 M, which pales compared to the $383 M invested by Middle Eastern SWFs.
An example of significant investment into Africa from one such Middle Eastern Fund is the Qatar Investment Authority’s (QIA) partnership with Enel Green Power to supply 330MW of wind energy to Sasol and Air Liquide's South African Operations. Sasol and Air Liquide have signed three Power Purchase Agreements (PPA) with Enel Green Power to supply renewable power to these organisations through a wheeling agreement with ESKOM. The wheeling agreement will allow these independent power companies to use existing infrastructure and transmission lines from ESKOM to transport electricity produced. The wind farms are set to come online between 2025 and 2026.
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
