WEB 3.0 AFRICA
SCALING INTERNET ACCESS ON THE CONTINENT THROUGH DECENTRALIZATION
The internet’s current design involves the use of devices to access centralised servers by way of internet protocol addresses that direct those devices to the webpages or mobile applications of the services being accessed. This is commonly referred to as “Web 2.0”. In the world of web 2.0 giant corporations manage farms of data centers and back up data centres through which the billions of internet users access their services.
The significant amount of capital required to provide these services (particularly the underlying network infrastructure on which it is all built) has been worth the investment in the advanced markets as the revenues generated over the last two decades have been significant enough to bring attractive returns. This model has proven difficult to replicate in Africa due to the existing physical infrastructure deficits and difficult macro-economic conditions that have made demand for these services slow to grow and generally stagnant in most cases.
Web 3.0 is now here, and its growth and adoption has been (and continues to be) exponential. Why does this matter for Africa? Because its architectural (and philosophical) design provides potential solutions for the global south (Africa especially) to leapfrog web 2.0 and put itself in a position to compete and possibly even surpass the advanced world – in GDP growth terms, and then possibly even in absolute GDP terms. Web 3.0’s design emphasises decentralisation, which is arguably the key to solving the primary challenges that have stunted economic development in Africa; namely centralised governance (in extremely diverse environments), corruption, and lack of trust and education.
What is web 3.0? Recall the earlier definition of web 2.0, but imagine that all the servers are no longer owned/operated by centralised entities but by a growing and dispersed number of people distributed around the world that choose to utilize their computing power towards maintenance of the network – and being economically rewarded for doing so. Add a further layer of immutability given that information is processed and stored across this distributed network of “servers”, and cannot be changed or tampered with in anyway. Add yet another layer of automation that enables contracts and transactions to be executed on the network without the requirement for third-party input thereby allowing for trust-less and permission-less economic activity.
These key features of web 3.0 solve some of the major underlying philosophical, socio-economic and cultural challenges that have traditionally prevented emerging economies (those in Africa especially) from fulfilling their potential and achieving significant economic progress – despite their abundant human capital and other resources, and the liberalisation of information through technology. Applying web 3.0 principles to solve these challenges, including in the development and expansion of internet access, could be the key to changing mindsets and improving outcomes.
Centralised means of governance and authority have not provided optimum results in Africa, as evidenced by the level of development of the average country on the continent to date. This is largely due to the diverse nature of the African continent (and within African countries themselves) – in terms of terrain, ethnicity, culture and language. Issues of corruption – that still form a significant part of GDP – have equally hampered the expansion of innovation and formal economic activity. This also drives and facilitates the continued reliance on cash and use of informal channels for the overwhelming bulk of transactions on the continent. Lack of trust and education, largely stemming from the former two challenges and the resulting slow industrial/technological progress, has been the primary hinderance to the adoption of more efficient means of conducting business and facilitating social relationships.
A web 3.0 mentality can solve these issues and help Africa leapfrog decades of development into becoming an economic powerhouse that can and will compete with the largest economies in the world within the next 5-10yrs. The challenge with focusing on the web 2.0-route in Africa is the absorbent costs of acquiring, deploying and maintaining the required technological infrastructure – due mainly to power/electricity challenges – needed to drive wider and deeper internet access. Couple this with the low disposable income and declining purchasing power of the average domestic citizen and the unit economics of scaling internet access in Africa are extremely uncompetitive.
For internet access (using a web 2.0 model) to scale in Africa it would take benevolent entities that are willing to lose a few tens of billions of dollars over the next decade (on network equipment and frequency licence acquisition, upstream bandwidth licensing, and power/maintenance costs), and with little to no chance of seeing returns till macro-economic improvements result in increased average disposable incomes and a cultural disposition towards technology adoption.
Distributing the costs of providing the required infrastructure to expand and deepen internet access may be the most realistic way of accruing the capital required to achieve this goal. Technology advancements have now reduced both the size and costs of deploying last-mile internet access. Plus, blockchain applications have been developed to run on top of such networks that facilitate bandwidth allocation and payment systems in an automated (and again decentralized) manner.
Decentralising network infrastructure, even if under an umbrella franchise model with existing major players in the telecommunications space, provides a realistic means through which those in un/under-connected areas can gain access to the internet and expand the digital economy. Localised service provision will also reduce the cost (and increase the success) of payment reliability and collection – similar to the dynamics that have made local savings cooperatives (ajo, eso etc) so longstanding and pervasive. Such network services are already being tested and deployed in Nigeria and around the continent.
Such a system would also be consistent with a wider desire for increased decentralisation across a range of areas to solve social, governance and economic challenges in Nigeria. For example, agent banking is the primary means through which the currently unbanked population of the country are increasingly being served with financial services. Equally, at the recent Constitutional Reform hearings held by the National Assembly across the country, the most common reform cited is the desire for decentralisation of governance powers to State and Local Government units.
Web 3.0’s design also includes built-in mechanisms that encourage exponential growth through network effects resulting from the economic incentives available to those that choose to participate in its running and maintaining decentralized networks. So those that undertake the risks and responsibilities of providing/facilitating the infrastructure to deploy internet access in local areas have a means of receiving economic reward (and thus motivation) for providing these services. This brings a realistic means of incentivising such people and attracting others thereby making the system self-sustainable.
Africa needs to find a means of scaling internet access to capture the estimated 800-900m people on the continent that are currently un/under-connected. How to achieve this, despite the aforementioned macro-economic challenges, is the real question. A decentralized mentality towards solving this, and wider issues, is the way to go about it.
Thank you Olumide. This is a good read and highly informative .