A for-profit company that is providing mobile phone connectivity for the first time to people living in ultra-remote villages in the Democratic of Congo and Cameroon has received 24 million euros ($27 million) in scale-up funding from the European Investment Bank, it was announced last week.
An additional 4 million people will soon be able to make and receive calls, send messages and access basic internet services as a result of the multi-million dollar investment in Africa Mobile Networks — a commercial company that builds solar-powered mobile network base stations in ultra-rural communities across sub-Saharan Africa.
The investment by the European Union's bank will pay for 1,000 new base stations, helping to bridge the growing digital divide between urban and rural areas, which development experts say could increase inequality if left unaddressed.
It represents a new and growing trend within the EIB of using impact finance to take on riskier projects in fragile countries — something the bank says its shareholders have been calling for.
Speaking to Devex during last week’s European Development Days summit in Brussels, where the investment was announced, Africa Mobile Networks Vice CEO Jim Lunn said that the new base stations will bring vital services and opportunities to people who are without phone and internet access.
“These places currently have no means of communication at all, so it’s very hard to contact people, move money around and pay for services,” he said.
AMN’s infrastructure will not only provide communication technology, but will also act as an “enabler” for other beneficial initiatives, which rely on basic connectivity, including e-health and education services, and weather and price information used by farmers, he said.
He added that it can also provide business opportunities for local people selling mobile credit and charging phones.
EIB Vice-President Pim van Ballekom said that having access to mobile connectivity was especially important to those living in conflict areas, potentially making them safer, and also helping to boost women’s economic empowerment.
While mobile phone coverage has been growing rapidly across sub-Saharan Africa in recent years, estimates from the GSMA, the trade body for mobile operators, still put mobile phone uptake in the region at only 44 percent, with the majority of service concentrated in towns and cities.
Rural and remote areas often remain unserved by major mobile phone operators due to high capital expenditure costs and low revenue streams.
Africa Mobile Networks is able to fill the market gap through a business model that involves building low-cost, fully solar-powered base stations, offering a cost-effective way of serving small populations. The smallest of the company’s sites can be constructed in six hours and can serve up to 2,000 people.
AMN then partners with a mobile phone operating company that uses the station to provide coverage to the community and pays AMN a share of the revenue generated, Lunn explained.
The London-based company — which started its work in Cameroon and DRC with seed funding from Facebook to build more than 100 pilot stations — hires and trains local staff to run its in-country operations, he said.
“It is profitable as a business, but at the same time it provides all these benefits so it’s inherently sustainable,” he added.
The company already runs services in Côte d’Ivoire, Nigeria and Guinea, and plans to build more than 5,000 rural base stations across at least 10 African countries by 2020, according to its website.
The investment to scale up AMN’s work represents a new direction for the EIB, which is growing its efforts in fragile countries, according to Heike Ruettgers, head of impact finance at EIB.
The money comes from a $500 million revolving fund — the Impact Financing Envelope — set up by the EIB in 2014 to support projects in fragile countries within Africa, the Caribbean and the Pacific region. These countries have higher risk ratios than the bank’s core portfolio is able to tolerate.
“For us it is considered a flagship project because it is really engaging the private sector to create an enabling environment for sustainable economic growth,” she said.
She explained that impetus for the fund came from the EU’s member states who “asked us to make special efforts to go into fragile countries and not only look for private sector investments in the obvious places.”
The bank is planning to launch a similar envelope for the MENA region, Ruettgers said.
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