Since last week, Africa has faced unprecedented internet outages. Reports from Netblocks, an internet observatory, revealed that the disruptions are due to several damaged subsea cables. The damage has impaired essential subsea fibre networks, notably WACS, MainOne, SAT3, and ACE, leading to a significant downturn in the telecom sector. The affected countries include Benin, Burkina Faso, Cameroon, Cote d’Ivoire, Gabon, Gambia, Ghana, Guinea, Lesotho, Liberia, Namibia, Niger, Nigeria, South Africa, and Togo. This prolonged disruption adds a layer of complexity to the array of mobile network and internet outages over the past year. These disruptions signal a critical point in the continent’s digital infrastructure crisis. 

The economic repercussions of these internet disruptions are profound. Businesses across various sectors, from finance to manufacturing and e-commerce, rely on internet connectivity to conduct operations, communicate with clients and customers, and facilitate transactions. In 2019, when many African countries suffered multiple internet shutdowns, it cost Africa, $5.29 billion. The continuity of these internet and mobile network interruptions will affect productivity and revenue, amplifying the operational difficulties for businesses within an already challenging economy. Here is a breakdown of some of the industries heavily affected by the internet disruptions.

Technology and IT Services

This is perhaps the most obvious sector affected by internet disruptions. The sector is the backbone of the modern economy. Technological consulting firm, Gartner predicts that IT spending in Africa will reach $86.4 billion by 2024, highlighting the sector’s significance in driving growth and innovation. Hence, IT leaders globally consider internet outages a major business risk. During internet downturns, companies providing cloud services, software as a service (SaaS), and other internet-based solutions face significant challenges in delivering their services. These disruptions can cause significant slowdowns that hamper productivity, hinder collaboration, and frustrate employees and customers. This can significantly impact critical business functions like data storage, remote work capabilities, and access to crucial applications. According to Gartner, 60% of digital businesses will suffer major service failures due to the inability of IT security teams to manage digital risk.

The impact isn’t limited to immediate service delivery. Disruptions can also hinder ongoing maintenance and support for existing customers. According to GSMA, the cloud computing market in Africa is projected to reach $8.4 billion by 2025. Disruptions like this can significantly impact this growth trajectory. For IT companies developing and deploying new software solutions, internet disruptions can cause setbacks. Delays in testing, deployment, and updates can impact project timelines.

Retail

Online businesses are particularly vulnerable to internet disruptions. A study by McKinsey & Company found that a one-hour internet outage can cost a large online retailer an average of $1.7 million in lost sales. This vulnerability stems from the dramatic rise of e-commerce, where consumers now shop for almost anything online. Even traditional brick-and-mortar stores have had to adapt by developing their online presence and offering omnichannel experiences that combine online and offline shopping.

B2C e-commerce sales in Africa are expected to reach $82 billion by 2025—E-commerce giant Jumia, processed over 3 million orders in 2022 alone. The volume of online transactions highlights the potential losses during outages. Even a short-term internet outage could translate to a significant loss or delayed orders, potentially leading to lost revenue. The impact is more daunting for smaller online retailers, who may have fewer resources to manage disruptions. Last year, when a similar internet outage occurred in Kenya, online retail sales dropped by an estimated 72% within the first 24 hours.

Finance

Last year, when Nigeria suffered a cash paucity, mobile money emerged as a crucial lifeline. According to the Central Bank of Nigeria (CBN), the value of mobile money transactions in Nigeria surged by 72% during the cash shortage. This shows how the internet has made it easier for people to manage their finances online. Online banking, investment platforms, and mobile payment apps have all become increasingly popular. The World Bank reports that mobile money accounts in Sub-Saharan Africa have grown to over 340 million, signifying the crucial role of internet-based financial services. Online banking platforms, investment apps, and mobile payment solutions like M-Pesa have become ingrained in everyday life, facilitating easier money management, faster transactions, and wider financial inclusion. A study by GSMA found that mobile money transactions in Africa contribute over $1.2 trillion to the GDP annually. In 2021, fintech startups accounted for nearly $3 billion, or two-thirds of all the investment raised by startups across the continent. 

Consistent internet outages disrupt these critical services, for traditional banks and tech-based financial institutions. This disruption can have a cascading effect; the outage interferes with efforts to promote financial inclusion, particularly for the population who rely on mobile money for basic financial services. Businesses, from small vendors to large corporations, may face delays in receiving payments or managing their accounts, potentially impacting cash flow and daily operations. Consistent disruptions not only create inconvenience for millions but also have the potential to impede ongoing financial inclusion efforts, particularly in regions with limited access to traditional banking infrastructure.

The gig and creator economy 

Africa’s gig and creator economy has seen significant growth in recent years. According to GSMA, over 23 million mobile internet users in Sub-Saharan Africa actively participate in the gig economy. For these individuals, the internet is not simply a tool; it’s the lifeblood of their livelihood. They depend on digital platforms for a variety of services, including freelance work, content creation, ride-hailing, delivery, and other forms of online income generation. Disruptions in communication and service outages impede their ability to connect with clients and complete assignments.

The reliance on particular online platforms intensifies these challenges. For example, content creators who depend on live streaming services like TikTok would find themselves at a standstill without internet access. Last November, Kenya faced an unexpected eight-day shutdown of Telegram, a widely used social media platform. This interruption had a profound economic impact, with estimated losses of around $27 million. The consequences of such outages go beyond financial loss. They also affect gig workers’ ability to regain momentum and restore trust with clients after experiencing delays or cancellations.