Last week I wrote about the need for a Y Combinator (a tech-only angel investment fund) in East Africa. The Time article below describes why such a fund is timely. If you’re interested in investing in something like this, ping me.
For weeks, it had been impossible to ignore the quiet revolution coming to East Africa. Across Nairobi, work crews could be seen unspooling thousands of meters of black cable into freshly dug trenches along the city’s roads. The flurry of work was all done in anticipation of what was heralded as the dawn of a new era: At long last, East Africa would be connected to an undersea fiber-optic Internet cable, and with it, to the planet’s cheap, high-speed information superhighway.
On Thursday, after many delays, it finally happened. Officials announced they had flipped the switch on a cable that gets its name from the Mauritius-based telecoms company that owns it, SEACOM. The 10,560-mile (17,000-km) line running from Europe and India down the East African coast can deliver 1.28 terabits of data per second, good enough for streaming video, Internet phone calls, gargantuan downloads and all the other services people have so long done without in these parts. (See photos of struggle and triumph in Africa.)
“Today is a historic day for Africa and marks the dawn of a new era for communications between the continent and the rest of the world,” SEACOM Chief Executive Brian Herlihy said in a statement marking the launch. “Turning the switch on creates a huge anticipation but, ultimately, SEACOM will be judged on the changes that take place on the continent over the coming years.”
With the arrival of SEACOM, which cost some $600 million, East Africa will no longer be dogged by the rather ignominious distinction of being the last place on Earth without access to a high-speed submarine fiber-optic cable. Until now, it has had to rely on vastly more expensive — and less dependable — satellite connections for Internet and international phone service. (Read: “Kenya’s Mobile Gold Mine.”)
After famine, now comes the flood. SEACOM is the first of three fiber-optic cables that will connect East Africa, via the Kenyan port of Mombasa, to the rest of the world. Analysts say that could lead to a more than 90% reduction in the cost of Internet access in years to come. The high price of using the Internet has up until now crippled the region’s nascent tech sector, denying jobs to millions of well-educated young Africans. (Read: “Kenya’s Blackboard Jungle.”)
In Kenya, a country where 40% of people live on a dollar a day, mobile phone operator Safaricom recently unveiled a deal that gives average consumers one gigabyte of data (only enough to satisfy the lightest of web surfers) for about $32 — and that was touted as a bargain. Other firms offer unlimited but extremely slow Internet connections, barely capable of making Skype calls, for about $40 per month. “No one can [guarantee] there will be a 90% drop next year, but hopefully there will be,” says Christopher Stork, senior researcher at Research ICT Africa, a technology analysis firm based in South Africa. “That’s the minimum we would expect, but in the long term, it would be much, much cheaper.”
What effect will this have on East Africa? A recent World Bank report found that countries experience 1.3% economic growth for every 10% increase in high-speed Internet connections, but sub-Saharan Africa has some unique challenges. Only 5.9% of Africans are connected to the Internet, and most are in North African countries such as Egypt and Algeria. That compares to 26.9% for the rest of the world. To put those numbers in perspective, consider this: Just 17% of people in sub-Saharan Africa have access to electricity.
But those statistics don’t take into account the fact that people will use the Internet over their mobile phones, which are seemingly ubiquitous even in the poorest African villages. Nor does it measure the myriad ways in which people will take advantage of speedy Internet access to create businesses or offer services that, before Thursday, would have been too costly to fund. “The demand for bandwidth can’t be based on current prices and current demands,” says Stork. “As soon as prices drop, many more applications come up and create more demand.”
Now some businessmen hope to establish East Africa as an outsourcing center. Soon enough, instead of asking an operator in India to cancel your stolen credit card, you might get a Kenyan on the line. “It gets rid of the potential excuses for decision-makers not to consider Kenya, since we are now absolutely equivalent to anyone else in the world in terms of our connectivity,” says Eric Nesbitt, operations manager for Kenyan call center KenCall. “If you consider Kenya as a rural part of the world and we have little dirt tracks, all of a sudden someone’s building a big four-lane highway.”