5G SERIES: Africa's 5G race: what role for the EU and China?

This article is the 4th article of the series of 5G developed by the Technology and Media Working Group of the European Guanxi Editorial Team. Every month we dive into a different aspect of 5G regarding the EU-China dynamics. You can read the rest of the articles here.


© Bulent Uner / Public Domain / Pixabay


In our last article, we compared the level of accessibility to 5G in both China and the European Union. The EU seems to be at disadvantage due to the difference in structural development between the Member States, and the lack of common mandatory regulations. In the case of China, it has achieved far more milestones in terms of coverage, despite the persistent challenge of closing the digital divide between urban and rural areas. In this article, we try to discover how the 5G race between China and the EU is materialising in Sub-Saharan Africa to become the continent’s largest economic partner in their 5G journey.


African countries have often been dismissed as failing economies, unable to fight poverty and reach equality. These problems are mostly generated by poor infrastructures and investments as well as poor education and health systems. However, the continents have great potential. “Africa has a massive opportunity as a low-cost provider of services,” says Yasmin Kumi of Africa Foresight Group (The Economist, 2020).


Data from The Economist (2011) show that some of the fastest growing economies in the world during the period from 2001 to 2010 were in Sub- Saharan Africa: Nigeria, Ethiopia, Mozambique, Angola, Chad, and Rwanda. In more recent years, the economic recovery of sub-Saharan African economies surprised observers in the second half of 2021, despite the pandemic of Covid-19, stimulating a revision of the estimated growth from 3.7 to 4.5 per cent. The 2022 economic growth, however, is threatened by the geopolitical instability generated by the Russian invasion of Ukraine (International Monetary Fund, 2022).


Internet usage in Africa is very low with only 22 percent of the population having access to it. The main difficulties are represented by the lack of adequate infrastructure which translates to high costs of data transmission (Nepad, 2022).


To make the most of its potential, the Agenda 2063 of the African Union (AU) set the standard for transforming the African continent to be the global powerhouse of the future. The 50-year long-term development plan for Africa requires undergoing important structural transformations. The AU poses great importance to the digitalisation of the continent to spread economic growth as well as the interconnection among African countries (AU, n.d.) In particular, the AU Digital Transformation for Africa (2022-2030) will build on the existing initiatives and frameworks to encourage the development of a Digital Single Market (DSM) for the continent. The main aim is to connect digital technologies to promote Africa's integration, generate inclusive economic growth, stimulate job creation, break the digital divide, and eradicate poverty (AU, 2020).


According to GSMA (2019) 1G, 2G and 3G mobile technologies were broadly voice oriented with their primary circuit-switched network architecture. The introduction of 4G revolutionised the system, introducing the first fully packet-switched network - the foundation of data services. However, 4G still represents a problem in Africa. For example, most Southern African Development Community (SADC) countries use 4G internet with a speed of up to 100 Megabytes per second (Mbps). Due to unreliable bandwidth, these countries cannot fully utilise the 100 Mbps capacity. It is even worse in those countries that still use 3G connections due to the maximum 14 Mbps speed capacity. 5G will be capable of performing all the functions of 4G with considerable improvement in terms of bandwidth speed and network capacity. The 5G internet connection allows users to access up to 100 Mbps speeds (Nepad, 2022).


5G is therefore seen as a necessary technology to deliver high-speed and reliable internet access to all African users, transforming the network experience and allowing for economic and technological development.


Which Countries in Africa Have Turned to 5G?


Ethiopia joined more than a dozen African nations that are either testing or have rolled out the next-generation network, when it announced on 9 May 2022 that it would begin trials for its first 5G mobile network in Addis Ababa – its capital city (Tekle, 2022). In particular, the country has matched the efforts of Botswana, Egypt, Gabon, Kenya, Lesotho, Madagascar, Mauritius, Nigeria, Senegal, Seychelles, South Africa, Uganda, and Zimbabwe. And like their predecessors, the road ahead does not seem easy. On one hand, African governments are hopeful that 5G will one day be used to undertake large-scale agriculture with drones, introduce autonomous cars to the highways, connect to the metaverse, activate smart homes, and boost cyber security. According to some estimates (Ezeja, 2022), 5G would boost Africa's GDP by US$2.2 trillion by 2034. On the other hand, the reality is much more complex, and many of these projects are experiencing delays. For example, Kenya - Ethiopia's southern neighbour - has been testing the technology for over a year, becoming the second country in the continent to roll out 5G (Mureithi, 2021). However, internet users will have to wait until the end of 2022, when the country's telecommunications authority is anticipated to award 5G licences to mobile phone carriers. In 2026, the nation is predicted to account for more than half of Africa's 5G mobile subscribers (Ngila, 2022).


Nigeria, the continent's largest economy, issued spectrum licences in March and expects to have the continent's largest 5G network in 2022 (Udegbunam, 2021). Indeed, the issuance of the final letters of award to the two winning companies, MTN and Mafab Communications, were issued by the Nigerian Communications Commission (NCC) after the 3.5GHz spectrum auction in December 2021. The Nigerian Communications Commission (NCC) has confirmed issuance of the final letters of award of the fifth generation (5G) spectrum licences to MTN and Mafab Communications, winners of the 3.5GHz spectrum auction conducted by the Commission in December 2021. The commercial rollout is planned for August 2021.


South Africa was the continent's first 5G adopter, but because of the pandemic's significant demand for networks, local network suppliers – Vodacom, Rain, and MTN – were compelled to shut down, which had serious consequences on the viability of 5G-enabled technologies. Still, the rollout of fifth-generation broadband services remains a key component of South Africa's National Development Plan, notwithstanding the fact that previous spectrum roll-outs did not go as quickly as the mobile network operators, businesses, and government had hoped. To speed up the entire process, in May 2021 the Ministry of Communications stated the government's plan to extend the 4G network and roll out 5G to rural regions in South Africa during the budget vote for 2021/2022 (CMS, 2022).


These are just a few examples of early 5G adopters in the continent, and where they stand in the implementation process. In addition, several countries have also partnered up with foreign companies and suppliers in an attempt to accelerate their 5G rollout.


In the following sections, we focus on projects and deals carried on by the EU and China.


The European Green Deal to recoup the lost economic influence


In the last decade, China has overtaken the EU and become Africa’s first economic partner - followed by several other countries. In particular, the EU’s lack of investment in the tech sector is due to European companies’ reluctance to introduce tech innovations in the African market, contrary to what Chinese companies have done (Tanchum, 2022). The lack of market presence in Africa translated into the loss of political influence in the continent (Tanchum, 2022).


The EU is trying to return to the race of investments in Africa with the new Green Deal, the European response to the Belt and Road Initiative (BRI). The European Green Deal is the most important European institutional effort toward the creation of the first climate-neutral continent by 2050.


The aim of building a green economy is not the prerogative of Europe alone. In Africa, the market growth in the last few years was driven by the same goal. The green turn is leading several sectors, from energy to automotive, from agriculture to ICT. The International Energy Agency (IEA, 2017) has foreseen that, by 2030, renewable energy sources will grant access to energy for over 60 per cent of the population who could not access electricity up to now in the region.


With particular regard to ICT, the GMSA (2021) estimated that by 2025 the number of mobile internet users in Sub-Saharan Africa will grow to 475 million. The rising number of users requires growth in 4G and 5G rollout which in turn requires more energy. The adoption of green energy to power 5G infrastructures generates a circle of growing economic opportunities that require more green energy.


European companies must be ready to operate now inside the green framework because if they lose the chance to participate in the 5G transition, it will be harder for them to join later. A report from Huawei (2019) explains that the power consumption of a 3G site is 4,808W. The values go up to 6,877W for 4G and 11,577W for 5G. The conversion from 4G to 5G implies a 68 per cent rise in power consumption.


Significant investments are needed. The International Monetary Fund (2019) foresees that to reach full 4G connectivity, the required capital and operational costs are approximately US$14 billion by 2025 and US$57 billion in 2040 for 5G connectivity, presuming the whole Africa has reached full-scale 4G by 2025.


The earliest 5G rollouts started in 2020. As seen above, the first 5G networks in sub-Saharan Africa were launched in South Africa by Vodacom and MTN. Vodacom - mostly owned by the UK Vodafone - used Nokia 5G technology (Tomás, 2021) whilst MTN used Huawei technology (Huawei, 2020).


The EU structural problem of lack of coordination among the Member States is also reflected in the work of European network companies in Africa. The main European vendors operating in Africa are Ericsson, Nokia and Orange, the French telecoms giant that has up to 130 million subscribers in Africa (Reuters, 2018).


Ericsson and Nokia are not making significant investments in infrastructure in the African continent. On the contrary, Orange is making several investments, both at the national and international levels. However, due to the lack of European companies to cooperate with, Orange is working with several non-European vendors, in particular Huawei. At the 2021 Mobile World Conference, Orange CEO Stéphane Richard stated that in Europe the company will only operate with European network providers, but in Africa, the company is open to collaboration with Huawei to invest in the 5G rollout (Reuters, 2021).


Orange is not the only case of intercontinental cooperation in any case. In March 2021, Kenya’s 5G for public use was developed by Safaricom using Nokia and Huawei network technology combined (Tanchum, 2022). European companies must do more in this industry, starting with investments in renewable energy power plants. For instance, Ericsson installed low-power consumption base stations that run on solar power to avoid emissions and high costs to run the rural network coverage in Benin in 2015 (ibid.).


China Africa 5G


Following the launch of China's Digital Silk Road in 2015 (Eder et al., 2019) and subsequent worries about cybersecurity threats linked with Chinese vendors' network gear, the US and European governments have turned their attention to China's role in Africa's digital infrastructure. The intrusion into the African Union (AU) headquarters from 2012 to 2017 (Cave, 2018) remains one of the few smoking guns pointing to a link between Huawei's inadequate cybersecurity standards and Chinese government intelligence collection to this day. Meanwhile, fears about the rise of digital repression have been exacerbated by Chinese exports of monitoring equipment to African countries.


The difficult relationship with countries such as the US has only boosted the penetration of Chinese firms in the African market. The US government has placed Huawei and dozens of other Chinese tech companies on its Entity List, effectively shutting them off from vital supplies (Tamny, 2020). As a result, Chinese tech giants are focusing more on Africa and other emerging markets for their expansion.


However, China's Information and Communication Technology (ICT) involvement with Africa is not a new business. China has sponsored and developed much of Africa's digital infrastructure since the late 1990s. Chinese enterprises – some sponsored by the government – are increasingly well-positioned to control the digital ecosystems through which Africans interact, do business, make payments, and access public services, having captured markets owing to low prices.


At the beginning of 2022, for instance, Huawei partnered with Zambia's mobile telecom provider MTN in a trial program to bring out the African country's first 5G network, marking a watershed moment in China's technology pledges to Africa. Beijing observers argue that Chinese technology products have played a critical part in Africa's digital economy development, citing decades of strong China-African relationships as a reason for the appeal of Chinese-developed technologies across the continent (Global Times, 2022).


As the COVID-19 pandemic has hampered trade flows and increased the need for digital services, technologies and services that are critical for digital prowess will be a pivotal area of cooperation between China and African countries. There is an urgent drive to modernise Africa's digital infrastructure. The tightening of China-Africa relations and the expansion of Chinese IT businesses' on the continent seem to make Chinese solutions preferred in local markets.


China has now inked government-to-government tech cooperation agreements with 16 African countries.


Another successful case is Transsion, the Shenzhen-based handset maker Transsion, dubbed the "smartphone king of Africa", which has blazed a trail in putting the continent on track to having a freely available mobile connection. According to statistics from IDC, a market research firm, smartphone sales in Africa fell 2.3 per cent in the third quarter of 2021 compared to the previous quarter, as component shortages faced by manufacturers masked indications of recovery in the local smartphone industry.


Despite this, Transsion topped the continent's smartphone shipment rankings in the quarter, with a 47.4 percent share, followed by Samsung with 21.3 percent and Xiaomi with 6.1 per cent, according to IDC figures. Transsion, formed in 2006, listed its shares on the STAR Market in Shanghai in 2019, backed by its performance in the African market.


Chinese technology is also at the heart of the rising popularity of digital wallets in Africa, which allow locals to send money via smartphones. M-Pesa, a leading mobile money service provider in Africa, relies on Huawei's business solution program. Opera, a web browser developed by Beijing Kunlun Technology, is the brainchild of OPay, a Nigerian e-commerce and payment company.


Huawei and ZTE, among other Chinese tech giants with established footprints on the continent, are likely to pivot toward the African market, where Chinese enterprises are not yet subject to strict regulations – unlike other regions.



Conclusions


From the perspective of Chinese firms, they have moved forward from introducing inexpensive broadband to progressively changing the entire digital ecosystem across Africa. While this has the ability to boost development and progress, the competitiveness of Chinese enterprises may also provide Beijing with additional economic and political clout.


Given the blurry lines between corporate behaviour and state interests, the Chinese government could gain influence over the architectures, rules, and norms underpinning Africa's digital transformation. From smart city networks to e-payment platforms, Chinese companies' handy services are expected to furnish the Party-State with massive amounts of data. Economic potential for African governments will have to be balanced against the risk of new entanglements that might jeopardise their nations' sovereignty, security, civil liberties, and technical capabilities.


China's digital footprint in Africa poses a two-level threat to European businesses and governments: a competitive problem and a foreign policy one. If European players are serious about competing with China on the continent, they must provide alternatives now and participate in the digital transformation ensuring green energy supplies through investments. Although the Chinese government's emphasis on reducing the digital divide in the Global South may appear rhetorical, it is backed up by action.



Noemi Capelli is currently pursuing a master’s degree in Forecasting Innovation and Change at the University of Bologna. She holds a master’s degree in China’s Politics and Economics at Shanghai Jiao Tong and a bachelor’s degree in Asian and African Languages and Cultures at the University of Torino. She is the co-founder of Chinaly, a daily press review of Chinese newspapers. You can find her on Instagram and on LinkedIn.


Giulia Interesse is currently pursuing a PhD at Peking University, focusing on public management and innovation policy research. Her goal is to identify effective and impactful solutions to social issues surrounding international technology transfer and innovation efforts for development. Aside from her interest in Chinese politics and policy-making, she is keen on learning about different cultures and exploring opportunities for global cooperation. She is the co-founder of Chinaly, a daily press review of Chinese newspapers. You can find her on LinkedIn and Instagram.



The opinions expressed here are those of the writers and do not represent the views of European Guanxi.


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