Digital Infra Africa: ESG funds should turn attention to digital divide

13 April 2021 | Melanie Mingas

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ESG funds – equities and bonds that focus on environmental, social and governance factors – should be leveraged to provide a solution for South Africa's digital divide.

According to Kumbirai Gundani, TMT exec at Standard Bank South Africa, the country's digital divide is a social issue of such importance the responsibility for bridging it cannot fall to service providers alone.

Speaking at the Digital Infra Africa day one session The development of FTTx in South Africa, Gundani was joined on the panel by Kobus Viljoen, CFO, CIVH; David Cooke, partner, ACTIS; Alan Knott-Craig, founder, Herotel; Jan-Jan Bezuidenhout, deputy CEO, MetroFibre; and Abraham Van der Merwe, from Frogfoot Networks. The discussion was moderated by Juanita Clark, the chief executive of the Digital Council Africa.

Gundani said: " Kobus [Viljoen] said there are 10 operators here that have a play on solving the digital divide but I also think on the funding side, a lot also has to be done by the banks in assisting in this.

"If you see globally there is a lot of talk about ESG funds. A lot of that is climate-related right now and you see a lot of banks have come out with a position on things like funding coal and funding things that are going to damage the climate and environment. In our case, in South Africa, the digital divide is a big social issue particularly in a very divided country with very limited economic opportunities for people without qualifications, so I think there is a part there where lenders have to come in and assist," he continued.

In proposing the solution, Gundani  said Standard Bank South Africa has previously used ESG frameworks to facilitate partnership that link interest and risk rates to ESG performance. "Then we reward them for meeting that target," he explained.

"Once we get to a technical solution that works there's a lot for funders to also assist in. A lot of the burden can't only be on operators to deliver internet into the areas, it also has to come to lenders, and we have to be open minded in assisting in that," Gundani said.

"It doesn't mean I am willing to get a lot of calls asking for ESG funding," he joked, but "I think we should all sit around a table and find a way to solve it".

To catch up on all day one sessions and register for the rest of the event, visit the Digital Infra Africa website