African tech trends – the rollout of 5G, the need for broadband infrastructure, the rise of fintech, and increasing data privacy and cybersecurity risks
Trending topics in the African technology and telecommunications space include the rollout of 5G, the dire need for telecommunications infrastructure and access to broadband spectrum, the steady rise of the fintech sector despite global economic turbulence, the development of cybersecurity and privacy laws across the continent and the rising number of disputes that are driven by data and cybersecurity issues.
5G rollout and infrastructure
Janet MacKenzie, Partner and Head of the IPTech Practice at Baker McKenzie in Johannesburg, says that the rollout of 5G continues to gain momentum across the globe, as new opportunities in immersive and connected metaverses arise. Exponential growth in data usage, new technologies, edge computing, higher densification and the availability of affordable handsets are all driving 5G rollout. Telcos are again looking at a range of ways to fund 5G investments and are pursuing M&A strategies and network sharing arrangements to gain market share and access to network equipment, radio frequency spectrum licences, towers and other key elements required for the roll-out of 5G services.
“Once the Internet of Things (IoT) becomes a reality through the rollout of 5G, Africa’s transformation will be meaningfully accelerated through access to the enhanced capabilities of smart cities, homes and agriculture, asset tracking, connected shopping and energy monitoring. However, it is essential to ensure that policy and legislative frameworks are in place to enable roll out of telecommunications infrastructure and access to the required broadband spectrum. Consumer access to affordable data services and smart devices is also a necessity,” she notes.
“Despite the turbulence amongst global economies and the aftermath of the pandemic, the African fintech ecosystem has remained on a steady rise. The resilience of fintech investments in the first quarters of 2022 have surprised analysts, and continue to demonstrate the credibility of use cases for fintech in Africa. With new regions coming in west-coast and Francophone Africa, and growth opportunities in established fintech hotbeds such as South Africa, Kenya, Egypt and Nigeria, the continent has been accelerated into the second fastest market for global banking and payments businesses. Seven out of Africa’s nine notable tech unicorns are fintech companies, with companies like OPay recently taking the single largest investment round secured by an African-based startup at USD 570 million,” explains Ashlin Perumall, M&A Partner at Baker McKenzie Johannesburg.
“Across 2020 and 2021, the region also saw the majority of fintech investment capital coming from various offshore money markets, including west-coast United States, the United Kingdom and China, as confidence in African financial innovation has risen. African fintech startups are also able to do more with dollar-based capital raises if they have locally based operations. In the first quarter of this year, Africa was the only region to record triple digit growth, according to some databases monitoring venture funding, and the bulk of this is pouring into fintech. The party clearly isn’t over just yet and it looks like there is still plenty of room for new entrants,” Perumall says.
Cybersecurity Security and Data Privacy
Darryl Bernstein, Partner and Head of the Dispute Resolution Practice at Baker McKenzie in Johannesburg, says that for businesses across Africa, there has been an increased focus on due diligence and risk mitigation around compliance with regards data privacy and cyber security legislation. Disputes are becoming increasingly frequent and complex in Africa, as corporates and institutions continue to enter new markets against a backdrop of tighter regulatory scrutiny, increased digitisation and higher accountability.
Baker McKenzie’s recently released Global Disputes Forecast 2022 revealed that digital transformation was driving around 30% of global disputes, followed by cybersecurity/data issues (25%). In terms of the types of disputes expected to be a risk going forward, 57% of respondents said that cybersecurity issues were going to be a major cause of risk in their organisations in the next 12 months. Data disputes were cited as a risk for 46% of respondents. The report also combined the responses for cybersecurity and data disputes, and found that 72% of respondents considered these issues to be a risk, making it the standout disputes riskfor most companies in the next twelve months. The report shows how the increase in employees working remotely means more business is carried out on the cloud, bringing an increase in cloud attacks. The direct risks to organisations include loss of IP and confidential information, theft and fraud, disruption to business and reputational damage. Legal risks flow from these, including regulatory and law enforcement action, claims for breach of contract, and class actions for breach of privacy.
Bernstein adds that legislation governing the digital economy is essential to protect African citizens in terms of both their digital privacy rights and cybersecurity threats, while at the same time also ensuring that their online freedoms are not threatened. Countries including Ghana, Kenya, Madagascar, Mauritius, Nigeria, Rwanda, South Africa, Togo and Uganda have been implementing new measures to protect and secure the personal information of their citizens. Regionally, the Southern African Development Community and the Economic Community of West African States have data protection policies in place and the continent is also covered by the Convention of the African Union on Cybersecurity and Personal Data.