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Africa the Last Infotech Frontier

See pictures from trip to Ghana, Africa here

A recent two week visit to Ghana, Africa offered scenes frozen in time from the moment of the country's independence in 1957 and even from the period before European powers arrived circa 1500. Most of the buildings and infrastructure date to the 1950's before seven military coups over thirty years made investment impossible. Open sewers remain the norm and modern paved roads the exception. The use of English as the official language traces to the colonial period, but an intricate system of village chiefs controlling local government and ownership of land traces to the period before the arrival of European powers. Yet, Ghana like a number of other countries in Africa generates among the highest mobile phone growth rates on Earth.

Ghanaian's have access to very nearly the same devices, features, and pricing as people in Europe or the USA a mere eight years after mobile phones first arrived. The timing coincides with the relative stability of Ghana after democratic elections in 1999. The success of mobile phone companies illustrates the opportunity a stable Africa presents for the larger infotech and communication industries. Vodafone acquired the state owned telco incumbent Ghana Telecom for $900mn in August 2008. The deal along with promised $500mn investments in fiber infrastructure represents a fresh start for Ghana. Government leaders understand keenly continued stability means investments in support of a jump to middle income and, eventually, first world status.

The government of Ghana has an explicit plan to move away from merely providing raw materials and toward a knowledge economy. Information, communication, and technology (ICT) projects already represent among the highest priorities for government and aid organizations, but there remains significant work to do in attracting attention to commercial sector opportunities. The 850 million people distributed across the 53 countries in Africa represent 11% of world population. The opportunity for economic growth remains tremendous with consumption of consumer goods, electricity usage, and per capita income a mere 5% of the levels in developed countries.

The 500 year track record of trade and conquest in Africa was shaped by the desire to extract the resources sought by more developed countries. Sustaining a knowledge economy requires precisely the opposite strategy where advantage depends on avoiding war and working to help move Africa toward full participation in the global economy. A successful transition to a knowledge economy can make Africa a sustainable economic engine for the entire planet. Ghana represents a greenfield opportunity relative to investments flowing toward China and India. The nature of Africa as a cash economy leaves the continent relatively untouched by the credit market turmoil in the developed world.

Africa deserves a fresh look, but investments still require a plan incorporating the realities of history. While the people of Ghana covet education as the key to upward mobility, this mobility frequently means the elite leave the country in search of opportunity. Any renaissance in Ghana needs to include convincing Ghanians to stay. There exist very few large employers in the country, so 75% of the population depends on self employment. Boot strapping Ghana's knowledge economy will need to start with external demand, but the country's potential as a gateway to Africa should create the demand for information technology in financial, health care, industrial, transportation, and government sectors.

Companies and entrepreneurs interested in participating in a renaissance of Africa also need to negotiate a number of risks and build first world amenities from scratch. Travel to Ghana includes a mandatory Yellow Fever vaccination and precautions regarding the risk of contracting Malaria. Relatively poor sanitation infrastructure means applying significant caution to avoid health problems arising from unsafe food and water. A Chinese company went so far as to import all the food, water, and workers necessary to complete the construction of a stadium in the country, but the main issue is controlling the conditions of food preparation. Inadequate capacity and unpaved roads make travel in and out of and between cities arduous. Outages make backup power a requirement for deployment of information processing and communication equipment.

Six competing mobile phone companies make communication an important exception to the list of infrastructure deficits. Broadband penetration remains less than 2%, but competing fiber builds connecting the country's cell towers promise cheap and ubiquitous wireless broadband. Enterprising Ghanians already talk about the country's potential to become Africa's "Silicon Valley". The parallels between Ghana and California look rather substantial in terms of population size, natural resources, and coastal location. The direct economic comparisons may only fit with California in the mid 1800's, but the rapid spread of mobile phone technologies suggest it will not take 150 years for Ghana to catch up.

posted by Daniel @ Friday, October 17, 2008