The Promise of Telecom Infrastructure for Africa

A recent article by Richard Wray and Fahad Mayet of the Guardian analyzes the connection between Africa’s telecommunications infrastructure, in particular its growing mobile phone network, and the prospects for economic growth. According to the authors, in sub-Saharan Africa, “a mobile phone can be a passport out of poverty.” Telecommunications infrastructure reduces costs of interaction, expands market boundaries, and improves information flows.

Citing research by Professor Leonard Waverman of the London Business School and others, Wray and Mayet note that Africans use their cellular phones for various business needs: retailers call suppliers for price quotes, farmers check weather reports, traders call contacts to determine what is needed at the market. In addition, mobile phones help remote villagers access medical advice and help doctors in regional hospitals get advice from senior doctors in cities. The authors also observe that the cellular industry in Africa has spawned intermediary services, such as mobile phone recharging.

IBM Expanding Operations in Africa

In a wave of well-publicized recent announcements [Fortune, Voice of America, Forbes, MarketWire, MarketWire 2] IBM announced it will be greatly expanding its activities in sub-Saharan Africa in 2008. IBM’s plans include: (1) an $120 million increase in investment in Africa over the next two years; (2) an Africa Innovation Center housing a High Performance On Demand Solutions lab in Johannesburg; (3) hiring 100 new professionals to meet growing regional demand for services, global delivery, and software development; (4) donating a $1.5 million BlueGene/P supercomputer to the Center for High Performance Computing in Cape Town; and (5) a joint venture with CARE to create an Africa Financial Grid for microfinance institutions. IBM currently has offices in 20 African countries.

The Africa Innovation Center, scheduled to open in the second quarter of 2008, will provide advanced software development capabilities and access to high-end servers and storage equipment. The Africa Financial Grid will consist of a shared services and infrastructure model to help microfinance institutions expand into other services, such as micro-insurance, bill pay, credit scoring, and international remittances. IBM will design and manage the Grid’s technology platform and CARE will provide local resources and infrastructure. The BlueGene/P supercomputer will be hosted by the Meraka Institute, a nonprofit technology and economic development organization. According to Forbes, the supercomputer will be used for programs requiring extraordinary processing capability, such as modeling the local effects of climate change, identifying more efficient ways to process local minerals, and predicting the spread of infectious diseases. IBM also named Dr. Robert Mayberry as Vice-President, Emerging Markets, Sub-Saharan Africa.

The Business of Health in Africa

The Business of Health in Africa, a new study commissioned by the International Finance Corporation (IFC), surveys and analyzes sub-Saharan Africa’s rapidly growing private health care industry. The study was conducted by McKinsey & Company and largely financed by the Bill & Melinda Gates Foundation. The study notes that the private health care sector in Africa is surprisingly large and constitutes an important, diverse component of the region’s health care systems. The study estimates that total health expenditures in the region will increase from $16.7 billion in 2005 to $35 billion in 2016. In addition to chronicling the constraints facing the provision of health care in Africa, the study makes five key policy recommendations. The study urges stakeholders to: (1) develop and enforce quality standards, (2) foster risk pooling programs, (3) mobilize public and donor money to the private sector, (4) modify local policies and regulations to foster the role of the private sector, and (5) improve access to capital. In conjunction with the release of the report, the IFC announced that it is launching an initiative to mobilize up to $1 billion of investment and advisory services support over the next five years. IFC’s strategy includes creating an equity investment vehicle for health care entrepreneurs and businesses, partnering with local financial institutions to improve access to long-term debt for health care organizations, and supporting country assessments and a biannual report on the climate for health care investments.