Infrastructure rollout in Africa can be costly - CNBC Africa

Infrastructure rollout in Africa can be costly

Technology

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Convergence Partners announced the launch of a fund dedicated to telecommunications, media and technology. PHOTO: Getty Images

“If you look at the African story around ICT, there is a massive infrastructure deficit. By that I mean there’s a significant amount of capital that needs to be deployed to the get the African continent to the same level as, say, the rest of the world,” the chief executive of Convergence Partners, Brandon Doyle told CNBC Africa.

“Current estimates of 20 billion dollars per year need to be spent on ICT infrastructure to get Africa to start bridging the ‘digital divide’. Part of the challenge is not just the spend but the nature of the continent itself – it’s still a significantly rural population. Laying infrastructure across the continent is much more expensive than elsewhere and that’s a fact that is often missed by people.”

Convergence Partners, an investment management firm focused on the telecommunications, media and technology sector in Africa, has announced the launch of a fund dedicated to the sector.

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“The backers of the fund have been the global development finance institutions – the World Bank through its IFC arm, the European investment Bank, CDC out of the UK, FMO out of Holland, DBSA here in South Africa – they’re our backers for this first close,” Doyle indicated.

“We’re looking to go to a broader audience hereafter and we ourselves, as sponsors, are also significant investors into our own fund.”

Doyle added that the fund is more regional than country-specific but that they are looking at some of the individual emerging economies on the continent.

“This infrastructure, by nature, starts looking like it’s across borders. If you look the undersea fibre projects we’ve done in Seacom, the satellite venture that we had – these are very much pan-Africa or pan-regional pieces of infrastructure. There are certain in-country opportunities we are looking at,” he explained.

“The nature of the assets we look for are more wholesale, broadband, open access-style networks and they require a certain level of consumption. It will predominantly be the larger economies – Nigeria, Ghana, Kenya, South Africa. We’re starting to see opportunities in the slightly smaller economies as the rapid uptake of smartphones, broadband, data services starts to unfold.”

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