(Ecofin Agency) - The report explores the choice between public and private investment for developing quality telecom infrastructure in Africa. Private operators have shown reluctance to invest in less profitable areas, prompting some governments to step in, despite facing financial and technological constraints. The report advocates for public-private partnerships to combine resources and expertise, leading to a more inclusive and sustainable development.

Direct public investment in African telecom infrastructure serves as a powerful catalyst for economic development and digital inclusion, especially in a context marked by a certain lethargy among private operators. However, it also presents numerous challenges, primarily related to the limited financial resources of states, rapid technological advancements, and the lack of technical expertise among government actors, according to a report published on October 10 by Ecofin Pro, the platform of the Ecofin agency dedicated to professionals.

Titled "Who Should Invest in Telecom Infrastructure: Public or Private?" the report highlights that African telecom regulators have spent the last three decades urging operators to comply with quality service standards. Despite repeated warnings, threats, and financial penalties, the results have fallen short. While telecom companies pay the fines imposed on them, they often express concerns that these unexpected costs disrupt their investment plans. Ultimately, these companies prefer to invest where they can ensure profitability.

This situation has motivated some governments to take decisive action by constructing their own national telecom infrastructure and encouraging operators to connect to it. For instance, in August 2023, Ghana announced plans to create a shared neutral national network infrastructure compatible with 4G and 5G, allowing telecom operators to connect seamlessly.

This initiative aims to tackle the long-standing issue of insufficient investment from telecom operators. Ghana plans to deploy 3,200 4G sites and 1,200 5G sites across the country over the next three years. This effort seeks to improve both network coverage and service quality. Through its shared neutral infrastructure, which will also incorporate technologies such as fiber optics, Ghana hopes to provide high-quality telecom services to 37 million consumers by 2028. The objective is to boost the current 4G penetration rate of 15% to at least 80%.

The document emphasizes the numerous benefits of government involvement in developing telecom infrastructure. By investing in mobile infrastructure, governments can expand network coverage and enhance access to valuable services for their citizens. This investment is also crucial for fostering human, social, and economic development.

An increase in public investment yields advantages for the state as well. Besides generating revenue from providing infrastructure to telecom operators, these investments will accelerate the growth of the digital economy. Various sectors could also benefit from state-supported telecom infrastructure. For example, digital technologies can enhance agricultural yields by 10.5% to 20% and increase profits for farmers by 23% in Sub-Saharan Africa, according to estimates from the Global System for Mobile Communications Association (GSMA). In trade, this could lead to a potential increase of 15% in GDP and a 7% rise in ICT export value.

Small and medium-sized enterprises could see productivity improvements ranging from 2% to 4%. More broadly, improved internet access will promote digital inclusion, providing everyone equal access to information, knowledge, and economic opportunities. The International Telecommunication Union (ITU) estimates that a 10% increase in mobile broadband penetration in Africa could result in a 2.5% rise in GDP per capita. Enhanced connectivity will also improve efficiency and transparency in public administration.

However, the report notes that public investment faces several obstacles and risks in Africa. Many African countries have limited financial resources, and costly telecom infrastructure often competes with urgent priorities like defense, health, and education. Governments frequently rely on foreign investments or international loans for major projects, which limits their control over infrastructure development.

Moreover, rapidly evolving technologies such as 4G, 5G, and fiber optics make long-term investments risky. States fear that new infrastructures might become outdated before they can recover their costs. The lack of clear, stable policies in the telecom sector further complicates investment and delays public initiatives. Additionally, too much government involvement in telecom infrastructure without independent regulatory bodies raises concerns about excessive control over telecommunications and internet freedom.

Finally, a local skills gap poses a significant risk to the viability of government-built telecom infrastructure.

Given these challenges, the report recommends promoting a collaborative investment framework through increased public-private partnerships (PPPs). Such partnerships could play a crucial role in the success of these projects by mobilizing necessary financial and technical resources. Additionally, simplifying regulations can encourage competition among telecom operators and attract foreign capital, while tax incentives or subsidies can support companies investing in infrastructure.