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IFC invests in Convergence Partners’ fund for digital access in Africa

29 Jul 2021
Financial Nigeria

Summary

Africa is ready for high throughput pervasive fibre networks, independent hyperscale data centres, edge, AI, 5G and IoT. Connectivity is at the foundation of 4IR, said Andile Ngcaba, Chairman of Convergence Partners.

IFC’s Managing Director Makhtar Diop

To strengthen broadband infrastructure and improve online access to digital services for individuals and businesses in more than 12 countries in sub-Saharan Africa, International Finance Corporation (IFC), the private sector financing arm of the World Bank group, has announced that it invested in a new fund by Convergence Partners Africa, an investment management firm focused on the technology, media and telecom sectors in Africa.
 
The COVID-19 pandemic has accelerated the adoption of digital technologies and the demand for digital infrastructure which are helping to connect businesses with customers and suppliers, creating new channels to access health and education services, and enabling entrepreneurs. IFC said that this has also exposed the digital divide in Africa.
 
IFC’s equity investment of $25 million in Convergence Partners’ Digital Infrastructure Fund will promote improved digital connectivity and access to digital services by investing in independent operators and service providers in sub-Saharan Africa. The fund has a target size of $250 million. IFC invested in Convergence Partners’ previous fund, Convergence Partners Communication Infrastructure Fund.
 
Investments made through the Digital Infrastructure Fund will support critical digital infrastructure companies and projects including broadband networks, fibre cable systems, mobile towers, digital service provider platforms and data centres, adding new connectivity and data centre capacity in many countries in Africa where such infrastructure is currently limited, according to a joint statement by the two financiers.
 
“We are very pleased to extend our relationship further with IFC, who were also investors in our last fund and co-investors with us in underlying portfolio companies,” said Andile Ngcaba, Chairman of Convergence Partners. “We share a joint ambition to invest in those businesses on the African continent that are contributing meaningfully towards addressing the digital inclusion gap that exists.

Ngcaba said Africa is ready for high throughput pervasive fibre networks, independent hyperscale data centres, edge, AI, 5G and IoT. Connectivity is at the foundation of 4IR. He said the new Digital Infrastructure Fund is the platform for building Digital Africa for future generations.
 
Internet access in Africa relies largely on mobile networks. Mobile broadband penetration stands at only about 34 per cent and fixed broadband at less than five per cent across most of sub-Saharan Africa, excluding South Africa.
 
Africa also experiences a large urban and rural connectivity divide, with 28 per cent of urban households having access to the internet compared to only six per cent in rural areas, according to the International Telecommunications Union.
 
“Increased broadband connectivity supports economic growth, job creation, and quality of life. Together, we can help connect more homes and businesses in Africa by supporting funds such as the Convergence Partners Digital Infrastructure Fund to bridge the $100 billion digital infrastructure financing gap to reach universal connectivity by 2030,” said Makhtar Diop, IFC’s Managing Director.
 
IFC said it invested $22 billion in private companies and financial institutions in developing countries in fiscal year 2020. Convergence Partners, founded in 2006, invests as “value-adding partners” into private equity and infrastructure opportunities in technology and digital sectors across sub-Saharan Africa. They have an asset base in excess of $400 million across Southern, East and West Africa through three funds – Convergence Partners Investments, Convergence Partners Communications Infrastructure Fund and the recently launched Convergence Partners Digital Infrastructure Fund.


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