Finnfund, the Finnish development financier, is doubling down on its bet on South African telecoms firm Fibertime Group, injecting a further €2m ($2 million USD) into the company to expand its fibre internet access to the country’s underserved townships. The investment hints at the intensifying focus on bridging the digital divide in South Africa, where an estimated 80% of households remain unconnected to fast and affordable broadband.
This second tranche of funding, following an initial €2m injection in 2023, will enable Fibertime to extend its reach beyond the affluent suburbs traditionally served by fibre providers. The company’s innovative approach hinges on a pay-as-you-go model, designed to overcome the affordability barriers that exclude many in lower-income communities. Crucially, the model is underpinned by technology from Finnish telecoms giant Nokia, which provides both the fibre network infrastructure and customer modems.
South Africa’s digital divide remains stark. While fibre internet access is readily available in wealthier urban areas, it is prohibitively expensive and geographically limited for the majority of the population, particularly those residing in townships. This disparity is compounded by the high cost of micropayments, a common mode of transaction in these communities, due to elevated bank transaction fees. This often reinforces a reliance on cash, further complicating digital adoption.
Fibertime, through its subsidiaries fibertime™ and VulaCoin, offers a solution that tackles both affordability and accessibility. Its time-based pay-as-you-go pricing model allows users to purchase internet access in small increments, while its digital wallets facilitate micropayments, potentially circumventing expensive bank charges. Nokia’s contribution extends to providing the critical hardware: fibre access nodes for the network exchange and fibre modems that create local WiFi networks within homes.
Tuomas Vaulanen, Investment Associate at Finnfund, highlighted the fund’s satisfaction with Fibertime’s rapid progress. “Finnfund is very pleased with Fibertime’s rapid growth and expansion enabling more townships in South Africa to get access to the internet,” he said. “As a Finnish development financier and technology-driven impact investor, we are of course proud that Nokia’s technology plays such a vital role in making this happen.”
Alan Knott-Craig, Founder of fibertime™️, framed the investment as a broader vote of confidence in South Africa. “Finnfund doubling down is a vote of confidence in Fibertime and South Africa,” he stated. “Our country is attracting foreign direct investment, and those funds are going towards building physical infrastructure in townships so that all South Africans can have access to affordable uncapped fiber internet.”
The developmental impact of expanding internet access is well-documented. Beyond personal enrichment, increased connectivity is widely recognized as a catalyst for economic growth, fostering job creation, enhancing educational opportunities, and improving access to vital information and services.
Toni Pellegrino, South Africa Managing Director and Head of Network Infrastructure for Southern and Eastern Africa at Nokia, emphasized the shared vision driving the collaboration. “Our collaboration with Fibertime underlines our common vision to digitally enable people in highly-dense populated areas in South Africa with secure, affordable, and abundant data while delivering a long term sustainable business,” he said. “Nokia is committed to driving the country’s digital goals by bridging the connectivity gap in numerous underserved regions throughout South Africa and is looking forward to supporting this disruptive model beyond South Africa.”
Finnfund, which invests €200-€250 million annually in developing countries, focuses on sectors including renewable energy, sustainable agriculture, and digital infrastructure. Its current portfolio totals €1.22 billion, with half of its investments directed towards Africa. This latest investment in Fibertime leverages a guarantee from the European Fund for Sustainable Development Plus (EFSD+), a financing instrument of the EU’s Global Gateway strategy, which promotes sustainable investments in partner countries. The EFSD+ guarantee falls under the Africa Connected program, specifically designed to support rural connectivity and digital solutions in sub-Saharan Africa.
For Finnfund, the investment aligns with its broader mission to generate lasting impact by investing in businesses that address global development challenges. For South Africa, it represents a tangible step towards narrowing the digital divide and unlocking the economic and social potential of its underserved communities. However, the long-term sustainability and scalability of the pay-as-you-go model in the face of economic headwinds and infrastructure challenges within townships remains to be seen.