Basic service infrastructure is considered a bedrock for sustainable development. Despite consistent efforts to build up such infrastructure, large gaps persist in low and lower-middle income countries. For example, in sub-Saharan Africa, 600 million people, or 43% of the total population, currently lack access to electricity (IEA, 2022).

However, this infrastructure gap does not exist for telecommunication and mobile services. A whopping 93% of people living in sub-Saharan Africa have access to cell phones and cell phone service (AfroBarometer, 2016). More recently, the expansion of mobile internet access has rapidly outpaced growth of other types of infrastructure (World Bank, 2018).

This difference in penetration rate constitutes a puzzle, as the two industries – telecommunications and electricity – at first glance share a lot of similarities. On the supply side, they both require large capital investments to build necessary infrastructure, such as cellphone towers or electricity distribution grids. On the demand side, both types of services are selected by individuals and individual households and are arguably necessary for everyday life.

Nevertheless, the “business case”, which is a function of internal business logic and external conditions, for providing mobile network services in sub-Saharan Africa is seemingly more attractive than that for electricity. That appeal to investors results in more efficient financing and resource mobilization, thus leading to its implementation first, over electricity and even other types of infrastructure, such as clean water or sanitation (World Bank, 2018; IEA, 2023).

To solve this puzzle, SEI’s Finance for Sustainable Development (FSD) program hosted four students pursuing their master’s degrees at the Cambridge Judge Business School, to analyse and contrast the differing progress in the development of the telecommunication and electricity industries in sub-Saharan Africa and the implications for economic development. This is the third year in a row that SEI Headquarters (HQ) was chosen to host the Cambridge Global Consulting Project (GCP), which allows MBA students to apply their acquired academic knowledge and skills through practical consultancy work.

Chiristin Hutabarat, Chizara Lawson, Luna Han and Ujjwal Pandey constituted this year’s team of MBA consultants. The students have diverse geographical and professional backgrounds, from financial services over engineering to consulting, which they brought to bear as they tackled the research questions over the course of four weeks, working with Maximillian Bruder, an SEI research fellow.

The team analysed a breadth of secondary data and collected data through interviews. The MBA consultants provided industry-specific insights across four sub-Saharan countries: Kenya, Nigeria, Ethiopia and Rwanda.

In a comprehensive presentation at the end of their stay, the team shared key findings with SEI HQ staff:

• On the supply side, the electricity sector requires considerably higher capital investment and has higher implementation efforts, whereas telecommunications is marked by lower costs, rapid technological innovation and consequently more diversified capital sources, allowing for a more dynamic growth pattern.
• On the demand side, the electricity sector faces challenges in terms of affordability and perceived advantages, whereas the telecommunications industry benefits from greater accessibility, social-cultural integration, and higher willingness to pay among populations in the region.

The MBA consultants’ analysis yielded valuable insights into the different industries and their functioning in several countries in sub-Saharan Africa. Using the analysis as a base, further research will be conducted by the FSD program to flesh out their findings and to provide specific recommendations for policymakers and practitioners to enhance the viability of the business case in these challenging market contexts and enhance interest for investing into industries essential for economic development.