Why African Leadership Must Stop Chasing "Bandwidth" and Start Fixing "Ping"

President William and His French Counterpart Emmanuel Macron at University Of Nairobi where they engaged with innovators as part of the Africa Forward Summit. [PCS]

The Kenyatta International Convention Centre is a familiar sight. This week, you have seen President Ruto and President Macron shake hands for the cameras, an inspiring speech about the 'Nairobi Declaration' made, followed by billions in commitments flashed across large screens as a show of support.

We celebrate these announcements. We herald them as breakthroughs. But if we are going to be honest about a marathon split-time then we are not celebrating the correct metric whatsoever.

The issue with African development is not a shortage of commitments made. It is the long delays between commitment and delivery. We do not have bandwidth issues, we have terminal latency issues.

Using tech language, bandwidth describes how large the capacity of a pipe to carry data; while latency, or ‘ping’ in general language, describes how long it takes for data sent via a pipe to actually start moving across that pipe. Global capital flows into Africa are like a high bandwidth/high latency network; plenty of flow capacity with poor response time.

According to the UNDP, there is an arbitrary cost associated with the fact that African projects appear to be more risky than they actually are which is known as the ‘African Risk Premium’. Additionally, these factors increase the sovereign debt cost by $74.5 billion/year simply by adding additional costs in forming and negotiating contracts with investors.

The ‘African Risk Premium’ creates long delays in any transaction by way of increasing the cost of forming, negotiating, and from transferring money through the financial markets as a result of the increased interest rates that are applied to borrow for investment.

Western infrastructure projects have a very quick timeline—they go from funding commitment to ground-breaking in just six months. This is compared to a typical African infrastructure project which can take as long as 3 to 5 years stuck in "due diligence." Often, by the time the investment capital arrives, the opportunity could have disappeared.

Money does ultimately show up, but the timing is significant. When a billion dollars is deployed today, jobs are created and infrastructure is built; when this same billion dollars is deployed in 2029, after 3 years of performing feasibility studies, it is only an expensive press release, rather than development financing.

Recent research has documented what academic researchers now refer to as the "Institutionalized African Risk Premium." In the international regulatory environment, banks are required to set aside more capital for projects in Africa than for projects of equal risk with the same expected return in other geographic locations. Therefore, while the projects are of equal risk profile and expected return, the different geographic location creates differing sets of requirements among banks.

This institutionalized premium has a tremendous impact on development in Africa; it is not about capacity but rather the amount of weight that we are forced to carry as compared to every other location that does not have this requirement.

This is the first Africa Forward Summit to take place in a country with an English-speaking population, and it is also co-hosted by France. This is also a way of creating interoperability between the 54 African economies that operate in different ways.

At present, the 54 African markets use different operating frequencies, tax codes, artificial intelligence regulations, and fragmentation of trade laws. Because of this fragmentation, every cross-border transaction has to go through translation, reconciliation, and delay; in other words, the process creates latency.

One of the things I've noticed with respect to African summits is the announcement of the total dollar amount of their pledges. The biggest amount wins; that is not the right measure.

Are there ways to establish standardized frameworks for projects that have to go through due diligence every time they enter a new jurisdiction? Are there financing vehicles that will move at the same speed as commercial financing, rather than the speed of bureaucratic financing? And can the regulatory burdens on African projects be removed so that they will only have to prove themselves once, rather than three times, which is what is required of non-African projects?

It is time for African leaders to stop requesting "head starts" and, instead, to work on perfecting their aerodynamics. In addition, rather than complaining about the existence of the African Risk Premium (which is real and discriminatory), we should be developing projects with enough transparency that the risk premium cannot be justified. And we can do this without fighting against regulatory biases, but rather by demonstrating such an extremely high level of standardization that regulatory bias can no longer be hidden or concealed.

This is more about changing the way in which we view unfair rules than it is about accepting the rules as they currently exist; we will ultimately be able to prove that the unfairness of the rules is so egregious that the rules have to be modified.

African leadership must demand not just more capital, but faster capital. Not just bigger pledges, but shorter deployment timelines. Not just partnership declarations, but standardized frameworks that eliminate delay.

We have the capacity. We have the projects. We have the potential. What we need is to fix the ping.

-The writer is the Communications and Partnerships Manager at Emerging Leaders Foundation – Africa