A Quiet Technology Revolution In Africa

What has just happened?

The pandemic is set to accelerate the digital transformation and the adoption of technology in Africa.^[1] Africa is on the ‘frontier of a tech revolution’ as 1.3bn people are transacting digitally, reshaping the continent’s technology sector.[2]

What does this mean?

The growth in the technology sector is primarily driven by start-ups, with the continents’ governments’ just looking on. Based on the current trend, it is predicted that nearly half of Africa’s $100bn annual economic growth will be driven by start-ups. The essential goods and services sector is where the accelerating change is most profound, as 80% of the continents’ spending is within this sector. [3]

The introduction of social restrictions has enhanced the adoption and development of cashless service providers and the ecommerce sector. Firms, such as Mastercard and Jumia are creating platforms to enable and incentivise the transition to cashless payment on the continent. Governments are similarly incentivising the move towards a cashless society. Shown as the Senegalese government launched a country-wide e-commerce platform for Small and Medium Enterprises (SMEs).[4] The overall impact of start-ups and government incentivisation has culminated to the point where Kenya now has the best developed consumer mobile market. ^[5]

Currently, there is a lack of government engagement in the technology revolution. Due to African governments still fighting the keep the pandemic under control, as the average weekly increase in cases is over 7%.[6]

What does this mean for the legal sector?

With technology opportunities, there is the opening for further commercial potential. Boosting connectivity throughout the continent requires the relevant infrastructure such as power lines and national electrification. Law firms with interests in Africa, should look for project finance opportunities with they would aid through reviewing construction contracts, revenue contracts and creating due diligence reports for clients.

Areas of notable importance to consider are; the method of financing and the environmental impact of the construction.

The lack of global economic confidence, brought on by the pandemic, has made firms reluctant to fund large scale investments. Inflows of external private finance are predicted to fall by $700 billion dollars.[7] The financing of projects is likely to become more complex. Lenders may be willing to finance a smaller proportion of the necessary funds leading to there being more lenders in the transaction. The increased complexity of the financing arrangements would mirror the increased complexity of liability due diligence required.

Furthermore, in South Africa there has been a push for renewable energy to be at the heart of infrastructure projects. The Renewable Energy IPP Procurement Programme (REIPP) has constructed 3 different infrastructure projects at a value of $10 billion including, transportation infrastructure projects and electricity plants.[8]

Although, there is necessary construction to increase connectivity within Africa, there have been clear signs of the quiet tech revolution occurring. During the height of the Pandemic the newest Teraco data centre was finished, which acts as the largest independent data centre in Africa. Yet, the rapid increase in technology in Africa as meant that work on a 38-megawatt facility just down the road from the newly completed Teraco centre has begun. [9] It is clear that African Governments and entrepreneurs understand the commercial importance of rapid construction to facilitate the advancement of African technology.

Another aspect for is the expansion of legal advice available due to better connectivity. Greater access to digital platforms increases the availability of legal aid across borders. Coupled with improved digital literacy, more individuals on the continent are able to understand their legal rights and will have better accessibility to legal aid.[10]

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[1] Samuel Ajadi, ‘ COVID-19 and West Africa’ (GSMA, 20 July 2020) https://www.gsma.com/mobilefordevelopment/blog/covid-19-and-west-africa-six-key-technology-trends-driving-change/ accessed on 12 December 2020

[2] Victor Basta, ‘Covid is accelerating a quiet technology revolution in Africa’ (Financial Times, 8 December 2020) https://www.ft.com/content/8845a8fb-ae12-423b-a7c9-6cfb5c149827 accessed on 11 December 2020

[3] IBID

[4] Samuel Ajadi, ‘ COVID-19 and West Africa’ (GSMA, 20 July 2020) https://www.gsma.com/mobilefordevelopment/blog/covid-19-and-west-africa-six-key-technology-trends-driving-change/ accessed on 12 December 2020

[5] Victor Basta, ‘Covid is accelerating a quiet technology revolution in Africa’ (Financial Times, 8 December 2020) https://www.ft.com/content/8845a8fb-ae12-423b-a7c9-6cfb5c149827 accessed on 11 December 2020

[6] Peter Mwai,’ Coronavirus: What’s happening to the numbers in Africa?’ (BBC news, 26 November 2020) < https://www.bbc.co.uk/news/world-africa-53181555> accessed on 10 December 2020b

[7] OECD, ‘The impact of Coronavirus (COVID-19) crisis on development finance’ (OECD, 24 June 2020) http://www.oecd.org/coronavirus/policy-responses/the-impact-of-the-coronavirus-covid-19-crisis-on-development-finance-9de00b3b/ accessed on 10 December 2020

[8] The Chamber Student, ‘Becoming a Project Finance Lawyer’ (The Chamber Student, October 2018) < https://www.chambersstudent.co.uk/legal-practice-areas/projects-and-energy/becoming-a-project-finance-lawyer> accessed on 3 February 2021

[9] Joseph Cotterill, ‘Cabling Africa: the great data race to serve the last billion’ (Financial Times, 31 January 2021) < https://www.ft.com/content/adb1130e-2844-4051-b1df-a691fc8a19b8> accessed on 3 February 2021

[10] Naima Kane, ‘Legal tech offers lessons for digital COVID-19 solutions in Africa’ (LSE Blogs, 20 July 2020) https://blogs.lse.ac.uk/africaatlse/2020/07/20/legal-tech-lessons-digital-covid19-solutions-innovation-africa/ accessed on 10 December 2020