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China-Africa Trade

Africa in the Midst of the US-China Trade War

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Africa is the biggest consumer of Chinese smartphones in the world with more than 250 million smartphone owners.

While Huawei, Xiaomi and other manufacturers have succeeded in penetrating a market where more than 747 million people have a SIM card, but only a third of them own a smartphone due to cost, Chinese companies have managed to adapt their prices, much lower from their American counterparts. 

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However, the US-China trade war might have durable consequences on the market as the US Department of Commerce established a list of Chinese companies “at risk”, ranking Huawei at the top of its list.

According to BBC analysts, it is likely that African countries will have to choose in the near future between US and Chinese technology, putting the recent continent’s technological advancements in jeopardy. 

747 million potential clients

Due to its lack of infrastructure, Africa is still developing mobile network. At the beginning of 2018, six new 4G networks were launched; they were more than 120 by the end of last year.

As the network is developing, getting online comes at a great cost. A study published by the Pew Research Center considers that “purchasing a handset and 500MB of data costs an average 10 percent of monthly income”.

In other words, being a smartphone owner is particularly expensive in Africa. Only 34% of South African own one and 27% in Nigeria, while the median percentage of the country is only 15%.

About 250 million people own a smartphone on the continent, money services are the most sought after. More than 135 remittance applications were available in 40 countries with 122 million active accounts, reports Pew.

In addition, 747 million people own a SIM card, which represents a tremendous potential for smartphone companies. But due to lack of coverage, 400 million people cannot access to a high speed connection – such as 4G, which makes smartphone usage very limited.

With a potential billion user market, Chinese smartphone manufacturers came to develop the data and the network across the continent, in order to increase their clientele.

Read on Alvexo: “US Tech Giants Cut Ties With Huawei”

Huawei spied on its African users

Analysts told the BBC that “most Africans connecting to the internet today are likely to be using a Chinese smartphone, powered by a Chinese-built network, and at least half of the time, it was built by Chinese tech giant, Huawei.”

But according to an investigation published by Le Monde, this infrastructure came at the great cost as “the computer system at the African Union headquarters in Ethiopia’s capital, Addis Ababa, which was installed by Huawei, had allegedly been compromised”.

As the BBC reports, Le Monde‘s investigation showed that for more than five years, “between the hours of midnight and 0200, data from the AU’s servers was transferred more than 8,000 km away – to servers in Shanghai”, stealing private data from several million users.  A scandal that might severely hinder Huawei’s reputation in Africa.

Not only Huawei is suspected to have spied on the African continent, but it has also been suspected to do the same in western countries, blocking its project to develop Europe’s 5G network.

China, a strategic competitor

However, Chinese manufacturers are still the most popular in the region. So much so, that in January 2018, the US National Defense Strategy described China as a “strategic competitor”, as Quartz reports.

When asked, African telecommunications CEOs are very satisfied when it comes to their partnership with China.

As the BBC reported, telecom giant Safaricom’s CEO Bob Collymore said that Huawei has been a “great partner for many years” and described the US-China trade war as “worrying” for the continent.

“Huawei built huge swathes of Africa’s current IT infrastructure and if the US is successful in crippling the company, the aftershocks could be very painful for Africa’s burgeoning tech sector that now relies on a company in Washington’s crosshairs,” Eric Olander, from the South Africa-based China Africa project, says.

As example, Huawei has invested $175 million in a data centre at Konza technocity and has built more than 3,500 mobile base stations in Kenya only. It has also created thousands of jobs, only to reinforce its reputation in the region, far from spying concerns.

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Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.