Tech And Telecom Still Africas FDI Darlings

Africa may be underbanked but fintechs are changing that.

Technology and telecom investment projects in Africa have slowed, but experts say the two sectors are rebounding, with global finance streaming once again into data, fintech and mobile-entertainment companies.

According to EY’s 2018 Africa Attractiveness survey, technology, media and telecommunications (TMT) have lost appeal as destinations for global investment flows into Africa. According to EY’s survey, there was a decline of 43% in TMT foreign direct investment projects, while Africa’s automotive sector saw investment projects soar by 42%, in 2017.

Ovum, a digital-data and technology research company, says in its Africa Digital Outlook 2019, published in November, that “the most significant growth in revenues, [network] users [in Africa] and usage is coming from data access, with the continent’s existing telecom operators expanding the coverage and capacity of their broadband networks to take advantage” of that growth potential.

Telecom operators in Africa, such as Vodacom, saw data revenues for Q2 2018 increase by 9.6%, while Orange Africa’s 5.2% increase in data for the same period was driven by data and mobile-money services.

Joseph Otto, an African telecom investment specialist with London-based investment advisory Mayer Brown, told Global Finance that global investment is flowing into Africa’s telecom and fintech sectors in parallel. “You have an increased middle class in Africa that is demanding mobile technology, more financial technology platforms, more data. And in that regard, investment will remain strong in IT and telecoms as well as in fintech,” he says.

Ovum’s report further states that investors in Africa’s telecom and technology sectors are looking to expand further into fintech, while more financing is expected in other key digital-service segments such as digital media, the Internet of Things (IoT) and enterprise ICT services.