Just 30 years ago, up to 80% of people across Africa didn’t have a phone. Today? About 85% have a mobile phone, and those phones are a huge driver of commerce. But there are still plenty of people left out when it comes to internet access. Hardy Pemhiwa, president and CEO of Cassava Technologies, is working to change that.
“It’s about making sure that that child who goes to an elementary school in a village in the northeastern corner of Kenya has got access to broadband connectivity, as well as a kid who goes to the best school in Sandton in Johannesburg,” Pemhiwa says. “The problem that we’re solving as Cassava Technologies is really around universal access, ensuring that that universal access comes in at an affordable price and comes in with quality.”
On this week’s episode of Fortune‘s Leadership Next podcast, co-hosts Murray and Ellen McGirt talk to Pemhiwa about Cassava Technologies’s push to connect all of Africa through broadband, data, and other tech solutions. Listen to the episode or read the transcript below to learn about Cassava’s work so far—and what’s to come.
Alan Murray (00:18): Leadership Next is powered by the folks at Deloitte, who, like me, are super focused on how CEOs can lead in the context of disruption and devolving societal expectations. Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray, and I’m here with my fantastic cohost, Ellen McGirt. Hi, Ellen.
Ellen McGirt (00:43): Hi, Alan. I love those intros, and I love world travel, and we get to do both today.
Murray (00:49): We’ve got a real treat. This week we’re joined by Hardy Pemhiwa, who is the CEO of Cassava Technologies, which was launched by EcoNet, the Pan-African telecom group that was started by Strive Masiyiwa. Cassava has massive ambitions to essentially become the first totally integrated tech company to connect all of Africa, broadband, data, networks, super apps, all of that. And so we’re looking forward to this conversation and Hardy, thank you very much for taking the time to be with us.
Hardy Pemhiwa (01:20): Thank you. Thank you, Alan. I’m really excited and great to meet both of you. You guys are famous in Africa. Believe it or not.
McGirt (01:37): That is the best… [crosstalk]
Murray (01:39): We will take you at your word. Look, let’s start with just a primer. Explain to us the state of technology in Africa, across Africa today, and why a company like Cassava makes sense to you.
Pemhiwa (01:53): So in many ways, you know Africa confounds many people as far as technology is concerned. You know, if you go back to 1993, more than 80% of Africans had never had a phone. Fast forward to today, you have perhaps 85% of the people on the continent using a mobile phone. So we literally leaped from having nothing to now having a situation where every other person has a mobile phone in their hand.
The device of choice across Africa is really the mobile phone. The mobile phone penetration rates are incredible, and the growth rates on the continent are really incredible. Internet connectivity, you know, which is something that in the last 10 years, has really grown. Seventy-five percent of Africa has got broadband coverage, but coverage is not equal to usage, and we can go into the reasons why people don’t use internet even though they are within the coverage area. And we, you know, the mobile phone industry on the African continent today, and even the internet industry today, we are the biggest competitors to Coke, because the person has to decide, do I buy a bottle of Coke? Or do I spend the money on data? Personally, I am glad to say that data wins most of the time.
McGirt (03:28): Since we’re famous in Africa, which is wonderful to hear, I want to send a shout-out to a person I met on my first reporting trip to Africa in Malawi. It’s related to all the issues that you raised. Mr. Matika, who I’m sure is listening, and I miss you. But he was a central figure in a small family farm, and when I met him, climate change had already become an issue. And he knew to the day when they were going to run out of food, because the growing season had been shortened by nearly a month. And he knew that because of the feature phone that he had, that had been outfitted with all kinds of access to information and financial services. But now I’m also thinking about, this was I don’t know, eight, 10 years ago, but now I’m thinking about his children who are now close to the median age of Africa. How does the vision for your financial inclusion and digital connection impact families like the Matikas, and where are we going to make sure that his kids have access to your vision?
Pemhiwa (04:32): So Ellen, fantastic question. Africa is a young continent, median age of 19. You know, half of Africans will still be below the age of 25 by the year 2050. So really, the vision that we have as Cassava Technologies is of a digitally connected future that leaves no African behind. So whether you talk about the primary school or the elementary school student, who we discovered during the pandemic, wasn’t learning anymore, because they didn’t have access to the internet. That’s really what our vision is about. It’s about making sure that that child who goes to an elementary school in a village in the northeastern corner of Kenya has got access to broadband connectivity, as well as a kid who goes to the best school in Sandton in Johannesburg. The problem that we’re solving as Cassava Technologies is really around universal access, ensuring that that universal access comes in at an affordable price and comes in with quality.
Murray (05:51): And so, how do you do that, Hardy? I mean, we talk a lot in this country about 5G networks and the massive investments necessary to build out those 5G networks. Again, your ambition is huge. It’s not just for one country, it’s for the entire continent. And it’s to provide a full range of broadband services, data services, data security. How do you do that at a quality level without making it so expensive that it’s not affordable?
Pemhiwa (06:23): Alan, thank you for that question. So Cassava Technologies today already has more than 100,000 kilometers of fiber broadband networks across the African continent, literally from Cape Town to Cairo. Now to put that into perspective, Alan, that’s enough to go around the Earth at the equator and have some change leftover. So our fiber broadband networks can go around the Earth twice, and we will still have some fiber left.
Murray (06:55): This was all laid by EcoNet.
Pemhiwa (06:59): This was all laid by us. So within Cassava Technologies, we essentially have six business segments. Fiber broadband networks is the underpinning of what we do. It’s literally the digital railroad that’s connecting over 300 towns and cities across the African continent. Next to that, you can’t really talk about digital transformation in Africa without power. So we’ve got a renewable energy business that’s ensuring that we can power these networks and also provide energy to our customers. We then have a data center business that is the largest one on the African continent by footprint, with nine data centers across the whole of Africa, with another 10 either under construction or in planning phase. So that’s the digital infrastructure side of our business.
Then on top of that, we’re overlaying our digital services, starting with fintech, and really the best way to bring people into becoming real economic actors is to make sure that you can bring them into the financial inclusion agenda. When people can pay for goods and services, without some of the bottlenecks that the traditional banking industry has put over the years, then you’re starting to have the women in the village being able to pay as easily as the executive that is sitting in the city. So that’s why fintech for us is an integral part of our digital services.
We then have digital platforms. You spoke about your friend in Malawi, and that’s a basic digital platform, you know, providing weather services, providing the price of goods at the market today, making sure that we can connect farmers with people who own trucks, making sure that we can have you know, people with tractors being able to hire their tractors out using an Uber-like platform. So that’s our digital platforms business.
And then, last but not least, with all that, we have seen a move to the cloud and also cybersecurity. So that is how we are able to provide and to drive this vision of a digitally connected future that leaves no African behind.
McGirt (09:24): I was also encouraged to hear about the amount of investment that’s been flowing into Africa. At the end of the year I read a report, there was something like $5 billion flowing into startups there. Obviously, what you’re working on is going to be essential to let businesses thrive. And I’m curious, I know you have a long history in banking and investments and funds and all of that good stuff. How do you see the entrepreneurial class playing out and in Africa? And my second question, because investment money’s great, but do you think that there’s an opportunity to expand access to investor pool? There’s pools of capital, like pension funds, for example, that have been hesitant to invest in the way I think they may want to in the future. How do you see that all playing out?
Pemhiwa (10:13): Clearly you you’ve been on the continent, so you know the entrepreneurial spirit. You know, there’s a saying in Africa which says, in Africa, when the lion wakes up, it has to outrun the slowest gazelle. And in Africa when the gazelle wakes up, it has to outrun the fastest lion. So what’s the moral of the story? In Africa, when you wake up, you run, and that really is a moniker of the entrepreneurial spirit on the continent. Because for many years, people waited for governments to do things for them, and that didn’t come. So really, you’ve got the entrepreneurial spirit being alive and well.
The biggest issue has been access to technology, access to tools, but that’s really just one part of the story. We spoke about the $5 billion that is coming to the continent. A lot of that has not yet trickled down to the small entrepreneurs. One of the things that we have done is to start to power incubation centers. So we’ve got incubation centers in Kenya, you know, where we provide support ,where we provide free access to the internet, where we provide tools, because if we don’t do that, we don’t prepare this young man or this young woman in the long way to be able to receive the money that we’re starting to see, chasing these massive opportunities across the country.
Murray (11:51): I’m here with Joe Ucuzoglu, who is the CEO of Deloitte US, and had the good sense to sponsor this podcast. Thanks for being with us and thanks for your support.
Joe Ucuzoglu (12:01): Thanks, Alan. Pleasure to be here.
Murray (12:03): So this new wave of business technology, artificial intelligence, Internet of Things, the ability to make intelligence out of data, is creating huge opportunities for companies. But a lot of the CEOs I talked to feel daunted by it and it’s like, where do they get the imagination to rethink their entire corporation? How do they deal with that?
Ucuzoglu (12:23): The opportunities are immense, particularly when you look at not just any one of these technologies individually, but the convergence of all of them collectively creating the opportunity to truly transform business models. And I know it can seem daunting, but the reality is, taking a first step in actually produces huge benefit. Because what we’re finding is that many of the cutting-edge applications are not coming out of the corporate headquarters. They’re coming out of putting the technology in the hands of our people on the frontlines, they find new and innovative uses. We then funnel them back up and leverage them across the entire client base. It really gets to the importance of a culture of innovation at the company.
Ucuzoglu (13:07): It is essential that our people feel empowered to take the latest and greatest and to find new and innovative ways to use it for productive purposes.
Murray (13:15): Thank you, Joe.
Ucuzoglu (13:18): Alan, it’s a real pleasure.
Murray (13:21): Hardy, who was your competition in this effort? Do you have competition? Is it mostly national competition? Is anybody else taking a Pan-African approach?
Pemhiwa (13:33): We have competition at a national level. We have competition at a regional level. But we really don’t have a competitor at a Pan-African level. There just isn’t somebody that can replicate the digital railroad that we’ve built over the last few decades. It’s cost us $2 billion to build the fiber broadband network that we have built. By our estimates, you would need $3 billion to replicate.
Murray (14:02): Do you have consistent regulation across all the countries that enable you to do this efficiently?
Pemhiwa (14:08): Regulation has dramatically improved. We’re starting to see regulators that are well informed, that are well educated, that have got resources. And that’s also a function of the fact that the industry has succeeded, and therefore, we are able to fund the budgets of these regulators from the fees and the royalties that we pay. And I must say that across the continent, you really have seen a real change in the state of regulation. It’s not all at the same level. You’ve got some regulators that are a lot more advanced than others. And I would say that one of the things that they have allowed us to do is to allow technology to lead policies. You just would never have had the mobile money revolution that you have had, where in one of the markets that we operate in, our mobile money platform carries almost 60% of the GDP of the country, in terms of the value of transactions that are, you know, that we process. If regulators had not allowed technology to lead us.
Murray (15:17): We all cheered the growth of technology in the U.S. and Europe as it was expanding and consolidating. And now you have a very active antitrust movement against the big tech players. Are you worried that somewhere down the road people say, okay, thank you very much for all of this, but now we think you’re too big, and we need to break you up.
Pemhiwa (15:40): Ah, not really, Alan. I think we are. You know, as much as I paint this picture of what Cassava Technologies has done, there is still a lot of places that we are not touching. We still think that there is another 10 years of hard work and investment that we need to do in order to bring technology to everybody on the continent. So really driving the digital inclusion agenda doesn’t actually allow us to almost be distracted with an antitrust conversation.
McGirt (16:19): So you may have some time before you’re too big to fail. But you said tech informing policy, and as you said that, it struck me that you are and your team are in a position of enormous influence. As you’re operating across a continent which has varying histories, languages, cultures. It’s highly differentiated in ways that people don’t always understand and very complex. What is your philosophical work that you do? You really have to think about ethics and values and inclusion, and some of the big things that tech here, in other parts of the world, haven’t gotten right. How do you think about that? And how do you make sure that you’re prepared to make sure that the policy advice that you are giving is really the right one?
Pemhiwa (17:10): So the starting point for us in it is really always, is it the right thing for the customer? Does this drive the inclusion agenda? If I go back to 25 years ago, when our chairman and founder started eConnect and fought that code battle, the argument was that the monopolies, that our government still had at the time, were taking away a basic human right, and it is the right to communicate. The reason why, in the today, as I speak, we’re building an additional 2,600 kilometers of fiber broadband networks across the Congo, either through the Congo forest, the second largest rainforest in the world, is because we recognize that that child who goes to school somewhere in the Congo forest has a right to communicate. So really, when we sit with policymakers, our starting point is always, is this going to improve access? Is this going to drive down price? Is this going to enable economic demand? And if we can answer yes to those things, then we believe that we have given the right advice.
Murray (18:31): So Hardy, paint a picture of the next decade on the continent. I mean, you made a fascinating point at the beginning of this interview that people in Africa are having to make the choices between, do I buy a Coca-Cola, or do I buy data for my phone, and they’re choosing data. Give us the pitch: If you can connect the continent with quality, low-price connectivity, what changes?
Pemhiwa (18:56): Okay, when we provide—and I use when rather than if, because we will get there. When we provide universal affordable access to the internet, we expect Africa’s economy to add an additional 2% in terms of GDP. So that’s a macroeconomic level. That’s the kind of impact that we expect Cassava Technologies and other players in the digital transformation journey to bring. So that’s one. The second thing is that we are seeing that as people have access, universal affordable access to the internet, there is a 10% higher chance of people getting gainfully employed, regardless of their education. And that, for us, is inclusion.
So that’s it in macroeconomics. But if you think that, in between now and the year 2050, Africa is going to have 90 cities with more than 1 million people, with 50% of the population below the age of 25. Seventeen African cities will have more than 5 million people, and of the world’s mega cities, six of them are going to be in Africa—you know, Lagos, Dar es Salaam, or Kinshasa. And we don’t believe that the challenges of urbanization that come with that kind of a change can be solved except by really powering digital transformation. It allows us to offer, you know, health care at a lower cost. It allows us to offer education. So really I see, you know, I tend to be on the hopeful side that we will benefit from the African demographic dividend, because we are investing in this technology revolution.
McGirt (20:53): Before we let you go, we’re asking all of our guests the season three rapid-fire leadership questions to help us chart what’s top of mind for leaders through the course of this year. First question, what is top of mind for you when you think about COVID? What are you worried about?
Pemhiwa (21:14): So you know, when I think about COVID, I really think about the ability for Africa to live beyond COVID and to be able to drive resilience, particularly for small- and medium-sized enterprises and being able to offer them technology solutions where they can build back better. That’s really for me as a technology leader in Africa, that’s what’s top of mind.
McGirt (21:42): Top of mind for you, when it comes to the economy.
Pemhiwa (21:45): I think two things really, you know, inflation and the supply chain disruptions. I think that you know, we are seeing that on the African continent. You know, the cost of logistics in Africa, is three to four times higher than anywhere else in the world. So you really have a multiplier effect when you get the supply chain challenges. You know, I was listening to some economic commentators this morning talking about, you know, a 10% effect in the U.S., for example, in Africa, multiply that by four.
McGirt (22:20): And last question, when you think about the challenges and opportunities facing you personally as a leader, how are you thinking about 2022?
Pemhiwa (22:30): I think two things really. Bringing purpose to the center of everything that we do, and ensuring that our vision of a digitally connected future that leaves no African behind lives in the hearts and minds of all the team members that I lead. That really is what I’m thinking about in 2022. And making sure that when we wake up in the morning, we are thinking about Mr. Matika’s grandchild, and we are thinking about the SMB business owner and how we can use technology in order for them to participate meaningfully in the global economy. And Africa can do it.
Murray (23:10): I’m going to slip in one last question before we go because I did see that there were rumors that you might go public through a SPAC transaction, and I know on Leadership Next we probably have some listeners who are listening to this and say, hey, I want a piece of that action. Is that a possibility?
Pemhiwa (23:31): And here’s what I would say, the vision that we’re prosecuting—
Murray (23:39): Alright, we’ll take it.
Pemhiwa (23:40): The vision that we’re prosecuting is expansive. It requires capital. We’re constantly raising capital. We’re constantly reviewing our options for raising capital, you know. So I can only say, watch this space. I think that, for people that have capital to deploy, Africa is ready. Cassava Technologies is here. Come join us. We’re doing transformative things.
Murray (24:07): Ellen, I’m going to take that as a yes. What do you think?
McGirt (24:10): I’m going to take it as a yes. Watch this SPAC. Yes.
Murray (24:15): Hardy, thank you so much. What a fascinating conversation. Thanks for taking the time to be with us.
Pemhiwa (24:20): Thank you. Thank you very much, Ellen, thank you very much, Alan. Great to meet you guys. Your reputation precedes you. I’m very honored.
Murray (24:29): We’re very honored. Leadership Next is edited by Nicole Vergalla, written by me, Alan Murray, along with my amazing colleagues, Ellen McGirt and Megan Arnold. Our theme is by Jason Snell. Executive producers are Mason Cohn and Megan Arnold. Leadership Next is a production of Fortune Media.
Leadership Next episodes are produced by Fortune’s editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.
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