Finnfund, the Finnish development financier, is significantly increasing its investment in the South African telecommunications company Fibertime Group by injecting an additional €2 million (approximately $2 million USD). This funding aims to expand Fibertime’s fibre internet access to underserved townships in South Africa, highlighting a growing commitment to bridging the digital divide in a country where an estimated 80% of households lack access to fast and affordable broadband services.
This latest investment follows an initial €2 million injection made in 2023, allowing Fibertime to extend its services beyond the affluent suburbs that have traditionally been the focus of fibre internet providers. The company employs an innovative pay-as-you-go model, which is specifically designed to address the affordability challenges that many lower-income households face. This model is supported by technology from Finnish telecom giant Nokia, which supplies both the fibre network infrastructure and the necessary customer modems.
The digital divide in South Africa is stark, with fibre internet access readily available in wealthier urban areas but often prohibitively expensive and geographically limited for the majority of the population, particularly those living in townships. This issue is exacerbated by the high costs associated with micropayments, a common transaction method in these communities, due to elevated bank transaction fees. As a result, many residents continue to rely on cash transactions, complicating the adoption of digital services.
Fibertime, through its subsidiaries fibertime™ and VulaCoin, offers a comprehensive solution that addresses both affordability and accessibility. Its time-based pay-as-you-go pricing model allows users to purchase internet access in small increments, making it more manageable for lower-income households. Additionally, its digital wallets facilitate micropayments, potentially bypassing costly bank charges. Nokia’s contribution is crucial, providing essential hardware such as fibre access nodes for network exchanges and fibre modems that create local WiFi networks within homes.
Tuomas Vaulanen, Investment Associate at Finnfund, expressed satisfaction with Fibertime’s rapid progress. “Finnfund is very pleased with Fibertime’s rapid growth and expansion, enabling more townships in South Africa to gain access to the internet,” he stated. “As a Finnish development financier and technology-driven impact investor, we are 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 endorsement of South Africa’s potential. “Finnfund doubling down is a vote of confidence in Fibertime and South Africa,” he remarked. “Our country is attracting foreign direct investment, and these funds are being directed towards building physical infrastructure in townships, ensuring that all South Africans can access affordable, uncapped fibre internet.”
The developmental impact of expanding internet access is well-documented. Increased connectivity is 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 partnership with Fibertime underscores our common goal of digitally enabling densely populated areas in South Africa with secure, affordable, and abundant data while establishing a sustainable business model,” he said. “Nokia is committed to advancing the country’s digital objectives by bridging the connectivity gap in underserved regions throughout South Africa and looks forward to supporting this disruptive model beyond the country.”
Finnfund, which invests between €200 million and €250 million annually in developing countries, focuses on sectors such as 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 is backed by a guarantee from the European Fund for Sustainable Development Plus (EFSD+), a financing instrument under the EU’s Global Gateway strategy that promotes sustainable investments in partner countries. The EFSD+ guarantee is part of the Africa Connected program, specifically designed to support rural connectivity and digital solutions in sub-Saharan Africa.
For Finnfund, this investment aligns with its broader mission to create lasting impact by supporting businesses that address global development challenges. For South Africa, it represents a concrete 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 challenges and infrastructure issues within townships remain to be evaluated.
