Liquid Telecommunications Holding Limited

East Africa,Africa Communications and IT Services

Liquid Telecom is a leading technology and digital solutions provider in eastern, central and southern Africa. Liquid Telecom is the largest independent fibre and cloud provider in Africa. It has built Africa’s largest independent fibre network. It also operates state-of-the-art data centres in Johannesburg, Cape Town and Nairobi, and is a leading provider of cloud-based services across Africa.

  • Active
  • Exited

We are invested in Liquid Telecommunications Holding Limited through Ninety One Africa Credit Opportunities Fund (Investec), which is managed by Investec Asset Management.

We do not hold direct relationships with the companies that investment funds invest in. Instead, we hold relationships directly with the fund. When investing through investment funds, CDC takes an active role as a limited partner to the fund, working with the fund manager to ensure best practices, including in environment, social and governance matters, and investment management oversight.

For further information on the fund, the fund manager, and the expected impact of the fund’s investment, click here.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
Africa, East Africa
Countries:
Zimbabwe
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Communications and IT Services
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Intermediated investment
Fund:
Ninety One Africa Credit Opportunities Fund (Investec)
Fund Manager:
Investec Asset Management
Start date

For direct investments, this is the date CDC committed capital to the business or project.

For funds, this is the date that CDC committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
December 2016
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
Mauritius

Our investment

In 2018, CDC made a $180 million equity investment to improve access to affordable and quality connectivity in Africa. The investment will accelerate Liquid's expansion along its Cape-to-Cairo route and further into Central and Western Africa. In 2020, CDC made a further $40 million equity investment to support Liquid’s data centre expansion.

Impact
  • Improve access, quality and affordability of mobile broadband services (SDG 9C).
  • Improve economic opportunities from greater productivity of firms (SDG 8.2) and job creation (SDG 8.5).
How?
  • CDC’s investment will enable Liquid to build critical digital infrastructure to improve the availability, quality and affordability of connectivity services.
  • Economic enabler: Improving firm productivity through improved digital infrastructure, including outsourcing and localised data storage.
Stakeholder Geography Characteristics
Customers

Pan-Africa

Employees

Pan-Africa

Broad based as the productivity benefits will accrue to small and large firms in the formal economy benefiting the employees and customers of these businesses.

Scale Depth/Duration
  • Customers: Expected to help connect millions of users: for example, Liquid’s expansion in DRC and Sudan is expected to increase mobile penetration by 12 per cent in DRC and 20 per cent in Sudan, contributing 0.8 per cent and 1.2 per cent respectively over next five years GDP.
  • Employees: World Bank data from 2016 show that African firms using the internet have 3.7 times higher labour productivity than non-users.
  • Customers (depth): Expected that the price of data will drop and the quality of internet improve in the geographies with expansion of Liquid’s fibre network.
  • Customers (duration): Cloud adoption and outsourcing of data centres is sticky and therefore we expect the impact to be long-lasting.
  • Employees (depth): The data centres in South Africa and Kenya are estimated to generate tens of millions of dollars in direct and indirect income to the local economies.
Grid Score Contribution

3

To help us direct our investments, we use a tool called the Development Impact Grid. The Grid scores every investment we plan out of a score of four, based on two factors: the difficulty of investing in the country and whether investment in that sector will lead to jobs.

  • Financial: The commercial market does not offer capital in sufficient quantities to meet the company's plans / needs, and does not offer capital on the same terms.
  • Value-add: CDC’s support focuses on strengthening governance; environmental, social and governance management and energy efficiency interventions; as well as impact evaluation.
Risk
  • Execution: Fibre roll-out slower than anticipated.
  • External: Require sufficient competition in the mobile connectivity market to drive down prices as well as the risk of governments/regulatory bodies restricting access to internet and content.
  • Unintended: Negative effect on climate change as data centres are energy intensive.

Expected impact

Our investment will enable Liquid Telecom to build critical digital infrastructure to reach more countries in the continent, helping to connect millions more people and businesses. Improving the availability, quality and affordability of internet and digital services will increase labour productivity and improve access to information and services, enabling social and economic development.


Follow On Transaction

While the global cloud computing market was estimated at $400bn in 2020, Africa lags far behind. For example, it is estimated that less than 20% of potential enterprise demand is currently being served in Africa and as a comparison, London has about three times more cloud computing power available than the entire of Africa. Data centres provide a boost to economies by reducing IT costs for companies. They also reduce barriers to innovation by enabling SMEs to be able to afford data storage and SaaS applications at a small variable cost, instead of an uneconomically high fixed cost. Access to cloud based services has been one of the critical drivers of the growth of tech start-up ecosystems in developed markets. Our investment in Liquid Telecom will help to enhance data centre and cloud availability in Africa.

This transaction will contribute to the deployment of better information and communications technology (SDG 9C and 9A) to improve firm productivity (SDG 8.2) enabling economic development and supporting economic opportunities.

Environmental and social aspects

We are helping to ensure strong environmental and social governance systems.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
Africa, East Africa
Countries:
Zimbabwe
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Communications and IT Services
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Direct Equity
Start date

For direct investments, this is the date CDC committed capital to the business or project.

For funds, this is the date that CDC committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
December 2018
Amount

For direct investments, this is the total amount that CDC has committed to the business or project (it may be a combination of equity and debt).

For funds, this is the total amount that CDC has committed to the fund.

:
$220m
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
Mauritius