Late month, Google announced plans to pump $1 billion into the African continent over a period of 5 years, to support enterprise and link the continent with a subsea internet cable.
Google CEO Sundar Pichai is optimistic about Africa.
“Increasingly, we are seeing innovation begin in Africa and then spread throughout the world. For example, people in Africa were among the first to access the internet through a phone rather than a computer,” Pichai said in a message. “And mobile money was ubiquitous in Kenya before it was adopted by the world.”
The mobile money Pichai is referring to is MPESA. This phone-to-phone money transfer system has made it easier for Kenyans to transfer money and conduct business without carrying cash.
Pichai predicted that African technological progress would grow faster with more creative young and entrepreneurial Africans coming online.
“This momentum will only increase as 300 million people come online in Africa over the next five years,” Pichai said.
The two massive plans, which aim to bring about ‘digital transformation’ and ‘improve investments in startups’ in Africa, have excited Kenyans who are ready to tap into them.
Google plans to collaborate with Kiva, a San Francisco-based non-profit organization, to provide $10 million in low-interest loans to entrepreneurs in several African countries, including Kenya.
Joseph Macharia, a recent graduate in business and founder of TLG Trade e-commerce company, welcomed the plan and termed it ‘timely.’
“I will definitely apply for the loans to get capital to improve the company’s infrastructure and bolster its marketing front,” Macharia said.
“The subsea internet cable will also be a great step to improve the various technology-dependent businesses such as TLG Trade because it will bring closer and more immediate connection between the sellers and customers.”
Mishi Boraafya, the Malindi-based Mayungu High Vision Women Group chairperson, also got excited about the plans.
“We sell fish, and we need more money to expand our business empire. We want to operate past Malindi and Mombasa. We definitely would love to get the loans, even though we have never taken a loan. All that we have achieved so far has been through hard work, goodwill and grants,” she said.
Boraafya added that the twelve-member women group would like expert financial advice before applying for the loan.
“There are things that we would like to be told more about, such as repayment periods and terms and conditions. As much as we dearly need the money, we don’t want to take a loan that will turn out to be a liability,” Boraafya said.
The women group plans to buy a bigger fishing boat, a transport vehicle fitted with a refrigerator to preserve the fish, and venture into aquaculture.
“We are relying on fish from the sea, but we would like to diversify into fish ponds. We have identified a plot where we can set up a fish pond to rear freshwater fish, but the cost is high for us. We definitely need more money,” she said.
Kenneth Kathurima, a mobile app developer based in Nairobi, expressed optimism in the business sector.
“The loans will boost the country’s economy, especially now that they are aimed at business startups. More employment opportunities will surface. It is also a good thing that Google will link the beneficiaries of the loans with mentors,” he said.
That notwithstanding, Kathurima, a beneficiary of the Google African Developer Scholarship, was skeptical if the subsea internet cable would be of any consequence to the Kenyans.
“Already Safaricom is planning to roll out its 5G network next year, and that will boost internet connectivity in the country significantly. Thus, even if the cable internet comes in, its effects on Kenyans may not be as big as anticipated. However, it will make the prices of the internet go down,” he said.
Meanwhile, Ian Okonu, a university student and founder of Hut Tech, a technology solutions startup, welcomed the idea.
“It is a good move, especially now that banks shun small businesses in giving out loans. Again, the loans from banks and other financial institutions come at high-interest rates, which discourage small enterprises from taking them up,” he said.
“However, I can’t apply for the loan now because I am yet to go fully into business. I don’t need huge sums of money to inject into the business for now. Perhaps I may apply for such loans next year when I plan to swing fully into action.”
Despite the loans initiative looking rosy, John Amimo, the head of programs at AFRACA (African Rural and Agricultural Association)- a regional association of Sub-Saharan financial and non-financial institutions, foresees problems.
“There are quite several low-cost catalytic funds in Africa that many startups are unable to access due to a myriad of reasons,” he said.
“Google is not a bank, and thus it may still need to partner with local financial institutions to disburse the funds- and this is where I foresee a problem. Administrative costs demanded by banks are likely to drive up the cost of these funds, and stringent loan requirements may still apply.”
Amimo added that it would only be better if Google would issue grants to African startups instead of loans.
Pichai said Google investments would support the continent’s digital transformation in four key areas:
- Enabling affordable access and building products for every kind of African user.
- Helping businesses with their digital transformation.
- Investing in entrepreneurs to spur next-generation technologies.
- Supporting non-profits working to improve lives across Africa.
Nitin Gajria, Google’s Managing Director for Africa, said the investment would boost Africa. The subsea cable connecting Africa and Europe will provide Africa with approximately 20 times more network capacity, significantly reducing Internet costs in some African countries.
Speaking from Nairobi, Google’s Director of Platforms and Ecosystems Miriam Abdullahi, struck an optimistic tone.
“My role at Google is to help bring the power of computing and the Internet to every person in Africa,” Abdullahi said. “Now more than ever is the time for Africa’s digital transformation.”
To achieve these goals, Abdullahi said Google will invest in three key areas.
To achieve connectivity, she described a new Google initiative known as Project Taara that would wirelessly connect Kinshasa and Brazzaville Congo across the powerful Congo river and drastically reduce internet costs by eliminating laying down cables across an area of 400 km.
To bring down the cost of smart devices, Abdullahi said Google has partnered with Kenya’s Safaricom, where customers can have access to high-quality smartphones costing $35. To pay for the phones, subscribers deposit kshs 500 ($5) and then make daily payments through a program known as lipa mdogo mdogo until they pay off the phone.
Below find Google’s video announcement.