Covid-19 as Africa’s technology bump – Digital transformation and its impact on cloud services, streaming and start-ups

17 December 2021

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Dear readers, viewers, contributors and advertisers

At the end of every year before the holiday season, I write a look back over the year, trying to provide something of more long-term significance than the usual weekly look at what’s happening. This year, this e-letter goes out to both broadcast and telecoms readers because for the first time the converged ‘moment’ that has been a conference topic for at least two decades is beginning to happen.

However, with Covid-19 this has been a year like no other and although many Sub-Saharan African countries have escaped some of the worst of the pandemic, its impact has made itself felt. The future remains uncertain and Africans have not yet had access to vaccinations in the way that they should: the Omicron variant is testament to what happens when too few people are vaccinated. Economies have been disrupted and cost of covering these disruptions will be harder to find in Africa than elsewhere.

That said, Covid-19 has provided a technology bump like no other, forcing people to change their behaviors. Working from home and for the lucky ones, schooling from home has meant many have had to sort out home connections that were more robust. The need to entertain everybody placed a greater emphasis on having a connection that would support streaming services.

If they hadn’t already done so, companies needed to provide their workers with access to the information, documents and processes that would allow them to work from home. Some already had this in place, others scrambled to provide it. Productivity shot up without the commute (think Nairobi or Lagos jams) but tended to go down as home provided things competing for people’s attention. Those who went back to the offices now might find themselves doing so in ‘one-on, one-off’ teams: flexibility has become the watchword. There has been a move back to office working because some of us actually like talking to our colleagues and old-fashioned bosses just like to be able to see whether their staff are really working.

But like it or not, Covid-19’s social upheavals have been tutorial event (or should I say webinar) in how to use a whole different range of services. As always, the caveat is that the usual social ‘digital divides’ apply. The most obvious changes have been:

* P2P calling: Those in business now use or have access to at least one of the many popular calling and messaging platforms. In a year when I seem to have spent hours gazing at often slightly jerky images of people in their kid’s bedrooms, I have used WhatsApp, Zoom, Teams and Google Meet (in descending order). Yes, there have been bad connections but these have been in a minority and I have had crystal clear calls with places as different as Burkina Faso and DRC. All this use of P2P platforms has to have some medium to long-term impact of the volume of old-fashioned paid calls.

* Price and quality of connectivity: Telcos and ISPs have told me that the overall volume of data sales increased substantially, sometimes doubling, before falling back as people have returned to their offices. Two things have happened that have largely gone unremarked: prices for connectivity (both wholesale and retail) have gone down and the quality of the connections has gone up. Sub-Saharan Africa has not suddenly entered connectivity nirvana but it has gone up a step. More cables are coming and with a clearly stated business policy of connecting through open access data centres. Places like Ethiopia (no, I don’t know what will happen to the civil war) and Djibouti are edging towards telecoms liberalization and the list of those doing the same with broadcast liberalization shows similar slow progress. The DRC will soon have more kilometres of fibre than paved roads.

* Cloud services: For many companies, this one used to be the ‘let’s investigate’ line in their technology road map. Now, it seems like almost at warp speed, companies are ‘lifting and shifting’ to cloud before beginning the more difficult task of actually working out how to innovate their work processes. The ‘hyperscalers’ (AWS, Azure, Google Cloud and Huawei Cloud) are increasingly present and with better local presence and connectivity. African start-ups – which have nearly always been cloud-first – have suddenly found that the idea of delivering groceries and meals (which seemed so American and European) became much more essential. Whether these behaviors stick is an open question.

* Innovation as a cloud company: For broadcast owners and managers, the lockdown has provided a new clarity. Remote working has often revealed how unproductive traditional working practices are. Social media provided new sources of both news stories and entertainment. The challenge now is to work out how a broadcast company becomes in the rather unedifying jargon, a ‘multi-channel provider’. How do you make money from content across the different channels without giving it all away to Facebook or YouTube? For the telcos, OpenRAN is just a taste of the future. The focus has gone from endless iterations of proprietary hardware to the software that controls it. A network that is geared to deliver data services (even for voice) is far more likely to require cheaper, more widely available IP network equipment than high-cost proprietary upgrades. Cloud services have the potential to deliver new digital services far more quickly. Will the MNOs have the chutzpah to rid themselves of the proprietary mentality and become the platforms that enable?

* Streaming: Behavior takes time to shift but Covid-19 has accelerated the process. What do you do with a room full of fractious children during lockdown? You get a phone or iPad and access something that will keep them quiet free from YouTube. More African adults are watching Netflix (and yes, Showax) than ever before and Amazon will be much more visible shortly. Local streaming services continue to be launched. Even some MNOs like MTN with music streaming and Vodacom with video streaming are beginning to get larger active subscriber numbers. African broadcasters still dominate the content space but often the talent and new content ideas have been bubbling up from online platforms. Nowadays with so many online content aggregators, broadcasters will need to go the extra mile if they are to retain their market share.

Investment in digital transformation: Follow the money. One estimate puts investment in African start-ups as high as US$5 billion in 2021: you don’t have to believe this high end estimates to know that it runs into the low billions of dollars. The fourth wave of investment in digital transformation infrastructure like data centres is – on the basis of announced commitments, well over US$2 billion. Unpacking the term digital transformation infrastructure, it means that cloud based services – for both customer-oriented services and business processes – can be in the ‘cloud’ in a local data centres that can be accessed swiftly and cost-effectively by fibre. Several companies are already operating largely digital-only banks and financial service providers outside Africa. Digital financial ecosystems continue to make huge strides, making national, inter-African-country and more global money transfers more effective. The challenge is whether this will be the slow road of African traders using Facebook and WhatsApp as a digital storefront or whether they will eventually leapfrog to more trusted marketplaces with a wider audience address.

The above describes the future but as ever there is always a fight about the future. Africa’s rulers like local data rules because it means they can close down a local data centre if they want to. They won’t do it, you say? They’ve already closed down the internet in a significant handful of countries. Literacy and income will erode the opportunities described. Yes, but an economy is not a fixed point. The innovation that can be possible if you want it, will provide new opportunities, even for those on low-incomes: seizing the future is not a choice. The African countries that will be most disadvantaged are those that do not have a plan to improve their future and technology is one tool that can make a difference in that plan.

 

This year we have carried out a number of research and consultancy projects - both large and small - for a range of clients. Because we operate discreetly, you may not be aware that we offer these services. If you think you have needs or requirements of this kind, talk to us about them. In what will be a year of great change, we will have both data and ideas to help you change your circumstances. Just email me on: info@balancingact-africa.com

News Update will return in the New Year with issue 1068 on 28 January 2020.

All the best

Russell Southwood

CEO

Balancing Act