Africa embraces Huawei despite security concerns
Sunday December 23 2018
Chinese technology giants Huawei and Zhongxing Telecommunications Equipment Corporation (ZTE) have established their presence on the continent and become the foundation of Africa's telecom infrastructure.
And they are not slowing down, despite the US placing restrictions on investment by the two firms, and roping in its allies in Europe to force them out of the market.
The US has accused the firms of allowing the Chinese government to use their devices to mine data and spy on Americans. Yet despite these accusations, African countries have developed a relationship with the two firms, that has seen them win multibillion dollar technology contracts, some of which touch on sensitive security installations.
“The Chinese telecommunications giants Huawei and ZTE built most of Africa’s telecoms infrastructure,” a McKinsey report on Chinese investment in Africa published in June last year notes.
From Tanzania to Uganda, Kenya, Nigeria, Ghana and Zambia, the two equipment manufacturers, with the backing of Beijing, have established more than 50 third-generation (3G) telecoms networks in more than 36 African countries. They have also built national fibre-optic communications networks and e-government networks in more than 30 countries.
For African governments, getting a technology upgrade to 4G, with talks of 5G in the offing, seems to overshadow the data breach and security concerns that dog the two technology giants in other markets.
Already, the US, Australia and Japan have banned the firms from building their next generation 5G Internet networks. The US has been lobbying other countries including Germany and Italy to block the firms’ hardware from being used in building the network.
“We have seen no evidence that Huawei could use its equipment to spy for Beijing. For the US to push for a ban, we need concrete proof,” the head of Germany's Federal Office for Information Security Arne Schoenbohm said.
At a July meeting in Canada, intelligence chiefs from Australia, Canada, New Zealand, the UK and the US agreed to do their best to contain the global growth of Huawei.
Part of their security fear is the ease with which the Chinese Communist Party could possibly order Chinese telecommunication companies to participate in "national intelligence work" and in turn provide access to critical infrastructure. Already, the Pentagon has indicated that it stopped selling Huawei phones and modems on its military bases because they “may pose an unacceptable risk.”
But even as Washington pressurises its allies to isolate Huawei, in Africa, the firm and its Chinese competitors are welcome, and are rolling out key technologies and modernising the continent’s infrastructure.
Huawei is currently holding trials for 5G rollout with Africa’s largest telecommunication firm MTN, Vodacom, and with Safaricom, the region’s largest telco.
“Actions speaks louder than words,” Huawei's executive director, Ryan Ding, said last week. “So far, we have signed 22 commercial contracts for 5G, and are working with over 50 carriers on 5G commercial tests.”
Huawei is China's largest telecom equipment manufacturer and network solutions provider and the third-largest in the world, while state-owned ZTE comes second in the country, and is the fifth largest in the world. For both firms, African revenue accounts for almost a fifth of overall income, showing how deep- rooted they have become on the continent.
In 2017, Europe, Middle East and Africa were Huawei’s biggest regions for sales outside China, accounting for 27 per cent or $23.76 billion of total sales, the firm’s annual report shows. The continent’s largest economy Nigeria for example, saw China’s Exim Bank lend it $328 million to improve its telecoms infrastructure with Huawei equipment, brushing off concerns from US.
“We do not expect African governments to bow to US pressure to keep Chinese telecoms players out of any potential 5G rollouts or 4G network upgrades. The African operators will be keen to slash costs for 5G, and one area is to adopt cost-effective Chinese telecoms equipment,” Kenny Liew of Fitch Solutions told the Financial Times.
The two firms have invested heavily in the continent’s backbone infrastructure technology, where they have helped roll out data and phone connectivity for network providers. Over the past three years, Africa has commissioned more than 40 fibre projects valued at $13 billion, with more than half of them being undertaken by the two Chinses firms.
“In 2017, we partnered with carriers including Safaricom in Kenya, Pakistan Telecommunication Company Ltd, the Philippine Long Distance Telephone Company, and Omantel in the Middle East to implement value driven network deployment, and jointly build premium broadband networks. This has allowed these carriers to set themselves apart from the competition and achieve business success,” Huawei said in its 2017 financial statement.