NATE D. F. ALLEN, NANJIRA SAMBULI.
Why US tech giants need Africa
Large-scale investment is one thing, but there is also a need to show interest in people's needs. China recognizes the potential
Comment by others / Nate D.F. Allen Nanjira Sambuli
May 29, 2023, 11:00
Investing in citizenship would be key to unlocking the continent's vast economic potential, write Kenyan researcher and policy analyst Nanjira Sambuli and Nate D. F. Allen of Stellenbosch University in South Africa in their guest commentary.
Last year, Google's Equiano submarine cable began transmitting terabytes of data per second to and from African shores. Valued at $1 billion, Equiano stretches from Western Europe to South Africa and has twenty times the capacity of the previous cables that connected the continent. Google projects that the new cable has the potential to transform the African economy by creating millions of jobs, reducing data costs by nearly 20 percent, and enabling a five-fold increase in Internet speeds.
Other prominent U.S. technology companies are also investing heavily in Africa. Amazon is in the process of building its African headquarters in South Africa, while Microsoft recently launched an initiative to bring Internet access to 100 million Africans by 2025. Meanwhile, Meta (formerly Facebook) is building "2Africa," a submarine cable that will be the longest in the world when completed in 2024.
Enormous potential
Triggering these investments is the growing realization that the future of the U.S. technology industry depends on expanding its African customer base. Today, just over one-third of Africa's 1.4 billion people use the Internet, which is a small fraction of the world's Internet users. But the continent's population is expected to grow to 2.5 billion by 2050 - a quarter of the world's population. By then, the vast majority of Africans are expected to use the Internet, creating opportunities for technology companies that no other region can match.
Still, there is no guarantee that investments by Google and other U.S. tech companies will pay off. Foreign competitors, especially Chinese companies, have also recognized Africa's immense potential for the technology sector, which has led to intense competition for market share.
China's strength
Currently, no single player dominates African markets. While Chinese companies lead in some sectors such as telecommunications hardware, U.S. companies dominate in software platforms, operating systems and search. Meanwhile, African-owned fintech companies and startups are growing rapidly.
The most persistent challenge facing large tech companies in Africa is their ignorance of Africans' preferences and needs. For example, some U.S. analysts have expressed concern about the rise of Chinese companies; Transsion, for example, dominates the smartphone market. However, the main reason companies such as Apple and Google cannot compete is that their products are considered luxury goods in terms of price and are not suitable for consumers in low-income countries. The base price of the iPhone 14, the best-selling phone in the United States, is $799, nearly half the per capita GDP of sub-Saharan Africa. Transsion's phones, on the other hand, sell for as little as $20.
Poor pay
The labor and hiring practices of major technology companies are another example of their disregard for Africa's needs and interests. African politicians, for example, are concerned that the trend of technology giants poaching highly-paid top talent could undermine the growth of their domestic industries. Meanwhile, these companies are threatened with legal action for exposing content presenters, many of whom live in Nairobi, to traumatizing experiences and inadequate pay.
Comment by others / Nate D.F. Allen Nanjira Sambuli
May 29, 2023, 11:00
Investing in citizenship would be key to unlocking the continent's vast economic potential, write Kenyan researcher and policy analyst Nanjira Sambuli and Nate D. F. Allen of Stellenbosch University in South Africa in their guest commentary.
Last year, Google's Equiano submarine cable began transmitting terabytes of data per second to and from African shores. Valued at $1 billion, Equiano stretches from Western Europe to South Africa and has twenty times the capacity of the previous cables that connected the continent. Google projects that the new cable has the potential to transform the African economy by creating millions of jobs, reducing data costs by nearly 20 percent, and enabling a five-fold increase in Internet speeds.
Other prominent U.S. technology companies are also investing heavily in Africa. Amazon is in the process of building its African headquarters in South Africa, while Microsoft recently launched an initiative to bring Internet access to 100 million Africans by 2025. Meanwhile, Meta (formerly Facebook) is building "2Africa," a submarine cable that will be the longest in the world when completed in 2024.
Enormous potential
Triggering these investments is the growing realization that the future of the U.S. technology industry depends on expanding its African customer base. Today, just over one-third of Africa's 1.4 billion people use the Internet, which is a small fraction of the world's Internet users. But the continent's population is expected to grow to 2.5 billion by 2050 - a quarter of the world's population. By then, the vast majority of Africans are expected to use the Internet, creating opportunities for technology companies that no other region can match.
Still, there is no guarantee that investments by Google and other U.S. tech companies will pay off. Foreign competitors, especially Chinese companies, have also recognized Africa's immense potential for the technology sector, which has led to intense competition for market share.
China's strength
Currently, no single player dominates African markets. While Chinese companies lead in some sectors such as telecommunications hardware, U.S. companies dominate in software platforms, operating systems and search. Meanwhile, African-owned fintech companies and startups are growing rapidly.
The most persistent challenge facing large tech companies in Africa is their ignorance of Africans' preferences and needs. For example, some U.S. analysts have expressed concern about the rise of Chinese companies; Transsion, for example, dominates the smartphone market. However, the main reason companies such as Apple and Google cannot compete is that their products are considered luxury goods in terms of price and are not suitable for consumers in low-income countries. The base price of the iPhone 14, the best-selling phone in the United States, is $799, nearly half the per capita GDP of sub-Saharan Africa. Transsion's phones, on the other hand, sell for as little as $20.
Poor pay
The labor and hiring practices of major technology companies are another example of their disregard for Africa's needs and interests. African politicians, for example, are concerned that the trend of technology giants poaching highly-paid top talent could undermine the growth of their domestic industries. Meanwhile, these companies are threatened with legal action for exposing content presenters, many of whom live in Nairobi, to traumatizing experiences and inadequate pay.
"For years, Facebook ignored the fact that organized criminal gangs were using its platform to lure Africans into domestic slavery."
Moreover, the reputation of social media such as Facebook has suffered severely, as disinformation and incitement spread through these platforms have fueled violent conflict in Ethiopia and provided fertile ground for extremist groups such as Al-Qaeda-backed Al-Shabaab. For years, Facebook ignored the fact that organized criminal gangs were using its platform to lure Africans into domestic slavery. Only when Apple threatened to remove Facebook and Instagram from its App Store did the company take action.
It's no wonder, then, that African governments have begun to seek alternatives. Nigeria, for example, imposed a seven-month ban on Twitter in 2021 and lifted it only after the company agreed to open a local office, pay taxes and cooperate with national security agencies. Other countries, such as Kenya, have threatened similar bans.
Values and profits
With their unparalleled expertise and cutting-edge technology, U.S. companies are well positioned to benefit from the growth of the African technology market. To maximize this opportunity, however, they must be responsive to the needs of African users. Building closer partnerships with the emerging African technology industry could greatly benefit these companies by allowing them to tailor their technologies to the preferences of underserved users and mitigate the effects of disinformation. By fostering relationships with African-based researchers and civil society groups, U.S. tech companies could support the creation of a healthy digital ecosystem that promotes prosperity, security, and accountability for all users.
In recent years, the failure of major tech companies to address privacy and combat disinformation has sparked a growing debate about the apparent conflict between their stated values and their profits. To succeed in Africa, however, U.S. technology companies must come to understand that this dichotomy is false. While investing in African companies can yield financial benefits, investing in African citizens is key to unlocking the continent's enormous economic potential. (Nate D. F. Allen, Nanjira Sambuli, translation: Andreas Hubig, copyright: Project Syndicate, 5/29/2023)
It's no wonder, then, that African governments have begun to seek alternatives. Nigeria, for example, imposed a seven-month ban on Twitter in 2021 and lifted it only after the company agreed to open a local office, pay taxes and cooperate with national security agencies. Other countries, such as Kenya, have threatened similar bans.
Values and profits
With their unparalleled expertise and cutting-edge technology, U.S. companies are well positioned to benefit from the growth of the African technology market. To maximize this opportunity, however, they must be responsive to the needs of African users. Building closer partnerships with the emerging African technology industry could greatly benefit these companies by allowing them to tailor their technologies to the preferences of underserved users and mitigate the effects of disinformation. By fostering relationships with African-based researchers and civil society groups, U.S. tech companies could support the creation of a healthy digital ecosystem that promotes prosperity, security, and accountability for all users.
In recent years, the failure of major tech companies to address privacy and combat disinformation has sparked a growing debate about the apparent conflict between their stated values and their profits. To succeed in Africa, however, U.S. technology companies must come to understand that this dichotomy is false. While investing in African companies can yield financial benefits, investing in African citizens is key to unlocking the continent's enormous economic potential. (Nate D. F. Allen, Nanjira Sambuli, translation: Andreas Hubig, copyright: Project Syndicate, 5/29/2023)
- Nate D. F. Allen is an associate professor of security studies at the Africa Center for Strategic Studies and a nonresident research fellow at Stellenbosch University in South Africa.
- Nanjira Sambuli is a Ford Global Fellow and a Fellow in Technology and International Affairs at the Carnegie Endowment for International Peace.
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