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Venture capital and private equity investors believe increased innovation in the delivery of internet connectivity in Africa will help drive dramatic expansion in connecting the continent, research from blockchain-based mobile network operator World Mobile has revealed.
The study, conducted by independent research company PureProfile, interviewed 100 senior private equity and venture capital executives based in the US, UK, Saudi Arabia, the United Arab Emirates, France, Germany, Hong Kong and Singapore in June 2022.
Fundamentally, the study found that 78% of venture capital (VC) and private equity executives say innovative approaches by new firms were the biggest factor in improving connectivity in Sub-Saharan Africa, where, according to a study from mobile trade association the GSMA, only around 28% of the population is connected to the internet. It warned that failure to support innovation risks causing improvements to connectivity to stall.
World Mobile believes the research also demonstrates the need for innovation, as around 70% of VC and private equity executives questioned said a lack of infrastructure for traditional telecoms was holding back connectivity, while three-quarters pinpointed a lack of innovation among traditional suppliers. Other key gating factors included lack of investment, cited by 64%; bureaucracy and red tape, 63%; and a lack of political stability, 28%.
But the senior VC and private equity executives were also optimistic – 86% expect improvements over the next five years, with 59% predicting dramatic improvements. This, said the operator, would translate into increased investment by venture capital and private equity firms over the next five years. As many as 83% say improved connectivity will increase investment, with more than half (53%) predicting dramatic increases as more people become connected.
“Improvements in internet connectivity and increased investment go hand in hand, as the research demonstrates, with venture capital and private equity firms more willing to invest the more that connectivity improves,” said World Mobile CEO Micky Watkins.
“That said, there are hurdles to cross to achieve improvements in connectivity, and a lack of infrastructure and innovation from traditional providers is a major issue identified in the research,” he added. “But increased innovation, backed by investment, will help drive connectivity and more investment in the economy as a whole. The importance of internet connectivity will only grow in the future, particularly for areas where delivering affordable and reliable connectivity remains an issue. World Mobile’s network based on the sharing economy sells affordable network nodes to local business owners, so they have the power to connect themselves and others while sharing the rewards. This will enable more people to access the opportunities that internet connectivity creates.”
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As part of its drive to introduce innovation in connectivity, World Mobile is working with the government in Zanzibar to introduce what it calls a unique hybrid mobile network, delivering connectivity supported by aerostats, backed up with a range of technologies including mesh networking, hybrid spectrum, renewable energy and blockchain.
It plans to expand the network throughout the continent, and is in discussions with government officials in Tanzania and Kenya, as well as other territories underserviced by traditional mobile operators.