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Microsoft, IBM, Google, Intel Eye Africa as Growth Sector

MicrosoftWhen Microsoft announced recently that it was starting a big push to grow its market in Africa, it cited the continent’s big growth opportunities, calling Africa a “game changer in the global economy.”

Similarly, IBM, Google, Intel, Hewlett-Packard and other tech companies in recent years also have expanded their presence in Africa.

As the growth of tech hardware, software or services flattens or declines in mature markets such as the U.S. and Western Europe, and markets in China, India and Russia grow increasingly competitive, many of the largest tech companies are looking to Africa.

“The U.S. and Europe are stagnant. China is growing but plateauing, as is India,” said Roz Roseboro, principal Middle East and Africa analyst at research and consulting firm Analysys Mason.

“You’ve got these big multinational companies looking at Africa and saying: ‘You’ve got growth here,’ ” she said.

Though situations vary from country to country, some factors have coalesced to make the continent attractive to major tech firms. The political situation in many countries has become more stable, with governments open to cooperating and forming joint projects with foreign, multinational corporations.

More tech infrastructure is being built, including undersea fiber optic cable systems bringing faster broadband connections to Africa’s coasts and terrestrial cables to extend the networks inland.

China’s government and some of its companies have invested in African infrastructure, such as electricity grids, in return for natural resources such as oil and minerals.

There is a growing middle class and rapid urbanization. And the population of the continent, as a whole, is young — with an average age under 20 in some countries, Roseboro said.

“They’re the ones who want this [tech] stuff and the most willing to pay for it,” she said. “And they’re the ones evangelizing — it’s going to be the 16-year-old student who shows his mom how to use it.”

But before all that can happen, there are challenges to overcome.

More education and more skilled labor are needed to help build the economy and the tech ecosystem, to say nothing of the consumer and business markets.

Basic infrastructure is lacking. While strides have been made in increasing broadband access, most people in Africa still don’t have online access. For those who do, the connection can be slow or costly.

“For Microsoft to sell software, for Google to sell ads, you have to get people online,” Roseboro said.

In other words, to have a market to sell to, the tech companies must first invest in building the market.

Toward that end, many of the strategies launched by tech companies expanding their footprint in Africa also include investments in infrastructure as well as increasing Internet access, developing people’s skills and education and establishing research and technology hubs.

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