Opinion: Renewed support for Africa's digital economy

About three weeks ago, something big happened. The European Investment Bank, together with the African Development Bank, launched a project that both had been crafting intensively for a few years. There was little in the way of fanfare, but over the next five to 10 years the results could set Africa and its young people down a new path to a sustainable and prosperous future.

The project, under the Boost Africa initiative that was agreed upon in 2016, calls for a joint investment in the TLcom Technology and Innovation for Developing Economies Africa Fund, a plan to offer venture capital and advice where it is needed the most: to 10-15 tech startup companies run by young and female entrepreneurs who are creating African solutions to African problems. These young people represent one of the biggest bright spots for the future of Africa and they are part of its rising digital economy, which is why we at the EIB and Afrika-Verein der deutschen Wirtschaft, alongside the Federal Ministry for Economic Cooperation and Development, are calling for more support for them.

In the next few years, it is expected that Boost Africa, a joint African Development Bank and EIB initiative, will reach 1,500 small businesses across sub-Saharan Africa and create 25,000 jobs. But of course, the benefits will be felt by many more people and the impact on the real economy will be much broader.

As the bank of the European Union, the EIB started its work in Africa back in 1963 and since then a lot has changed. Investors such as the EIB are stepping up their support, providing technical assistance, local presence and expertise. They are also adapting and expanding to use new financial instruments, looking more closely at what is needed and where the real opportunities lie. It isn’t just about how much is being invested, although the EIB alone deploys over 2 billion euros per year on the African continent.

It is crucial to support more and more of these startup companies and digital initiatives that are riding the wave of Africa’s increasingly prevalent mobile infrastructure and digital connectivity. They are serving areas where there is the biggest need — financial services, agriculture, health care and education. This is not just an economic focus, but also a social and human one, with organizations such as the EIB and Afrika-Verein helping to promote opportunities and carry out the 2030 Agenda for Sustainable Development. The issues are completely intertwined: the continent needs better infrastructure to support development and promote clean energy, water, sanitation and transport. The digital economy is serving all these sectors and scalable new businesses are among the strongest assets allowing them to thrive.

We in Europe are supporting a number of ways to address the migration challenge. The EIB has been doing so in Europe and also in transit countries, and most importantly, tackling the root causes in countries most affected by this phenomenon. We need to create jobs and opportunities for people in their home countries. Helping to build long-term resilience in Africa is one of the best ways to do exactly that, reversing the so-called brain drain and helping to create the chance for young people in Africa to put their talents to work. This is also the goal of the EIB’s new Economic Resilience Initiative for North Africa and the Middle East.

The G-20’s Compact with Africa, under the German presidency, offers another fresh opportunity. Not just for Africa’s economies but for Europe and European businesses as well. The lack of financing from large organizations that are cautious about investing in African startups is a big challenge. Our organizations can help to put the right packages together and promote opportunities and mitigate elements of risk. Partnerships with others have a clear role to play in crowding in the private sector and helping to absorb that risk.

Young African companies could become global players, but they never get the chance because of a lack of seed capital. We must find this financing.

The most important asset of a country or continent is its people and Africa’s young people are ambitious, tech savvy and ready to take control of their destiny. Our organizations shape bankable projects, from providing the financing to connecting people. There are plenty in Africa. This is why the European Union and its investment bank, the EIB, are ready to catalyze investment for Africa, enabling more projects to get off the ground and improving the investment environment. And this is why Afrika-Verein is forging connections between German businesses and African ones. Investing in Africa’s digital economy makes complete sense. It is the necessary link and is what underpins sustainable development overall.

As you read this, around 1,000 solar-powered mobile telecom towers are being rolled out in Cameroon and the Democratic Republic of the Congo. A 24 million euro investment to African mobile networks under a new financing instrument supported by the EU’s 28 member states, including Germany, will connect nearly 4 million people living in remote communities to mobile for the first time. That opens up possible solutions to a whole set of challenges these communities face, for example, by offering services in e-health, education, commerce and agribusiness. What is crucial is that several technology firms are now expressing willingness to work in the region as a result of the increased coverage that local people are expecting to receive.

Supporting the evolving digital sector in Africa promises opportunities not just for African business but for European business and investors too. That of course means good jobs and flourishing, stable communities — but much more can be done. Building on a more reliable, rigorous, economically driven approach to development, we need to open new avenues and strengthen partnerships between the public and private sectors above all, and also between European and African businesses. The digital economy thrives on communication and human networks; we must help build these networks and strengthen links between individuals, businesses, communities, regions and countries. We all share the same goal: a stable and sustainable future.

For more information on the EIB Africa Day and the work being done to improve the region’s economy, click here.

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