Securing funding for e-Governance projects in Africa

Securing funding for e-Governance projects in Africa

In the face of the world rapidly going digital, Africa has no option but to invest in the digital economy, otherwise it will lag further behind their global peers due to infrastructure, technology, and skills gaps. At present, the region accounts only for 1% of the world’s digital economy. E-Government development (or rather building a digital government ecosystem) is facing the same financial challenges as digital transition in general. 

First of all, high costs are on the list. In 2019, The World Bank estimated the cost of reaching “universal, affordable, and good quality broadband internet access by 2030” at USD 100 bln, which the continent could hardly afford without external assistance. According to the Global Infrastructure Facility, meeting all the continent’s infrastructural needs over the next 20 years will cost about USD 1.7 trillion. Budgetary resources of most African countries are getting scarce and are not sufficient to fund digital infrastructural projects that are essential for implementing and improving e-Government. International financial institutions typically invest in larger projects with senior debt or venture debt. Funding for smaller projects or large projects with a high-risk profile is limited.

Among the largest contributors to the development of local digital ecosystems are both European and Asian global players. Development agencies and tech corporations are usually involved in the process from the initial planning stage. The following institutions have contributed to the development of digital strategies of African countries, consequently participating in the implementation of nationwide ICT projects:

• The World Bank
• Estonian e-Governance Academy
• GIZ
• EU
• United Nations Development Program (UNDP)
• African Development Bank Group (AfDB)
• United States Agency for International Development (USAID)
• International Finance Corporation (IFC)
• International Monetary Fund (IMF)
• Korea International Cooperation Agency (KOICA)
• The Commonwealth
• Huawei

The World Bank is actively participating in implementing digital initiatives both on the country and regional levels. Over the 2019-2024 period, 70 digitalization investment projects totaling USD 9 bln have been realised across 37 African countries. Among these, 24 projects costing USD 2.8 bln focused on developing network infrastructure and expanding digital connectivity in 23 countries. In 2023, The World Bank approved USD 266.5 mln to improve internet access in Gambia, Guinea, Guinea Bissau, and Mauritania, and to promote a single digital market in West Africa. Kenya’s Digital Economy Acceleration Project was granted USD 390 mln in funding “to expand access to high-speed internet, improve the quality and delivery of education and selected government services, and build skills for the regional digital economy”. 

As highlighted in the e-Government Strategy of Tanzania, current initiatives often lack sustainability after the end of the donor funding period. This derives from lack of local capacity, inadequate infrastructure, and institutional inefficiencies. A high failure rate of infrastructure projects is typical of the African investment landscape: only about 10 % of projects reach financial close, which can become a considerable financial burden for infrastructure developers. One of the reasons for this low success is indicated as governments’ or developers’ lack of “capabilities” and “budgets” to “design and implement projects with commercial potential”. 

Budget allocations for e-governance initiatives in Africa vary widely, influenced by national priorities, economic capacities, and external support. Nigeria e-Government Masterplan, published by the Federal Ministry of Communications, outlines that the Government aims to increase the resources allocated for e-government development so it will reach 1% of annual budget. On the contrary, the Kenya Digital Master Plan 2022-2032 envisions allocating 5% of the national budget to cover digital transformation initiatives, referring to the figures of international practices. Zambian ZICTA (Zambia Information and Communications Technology Authority) Corporate Strategic Plan 2022—2024 outlined an objective to reach the annual growth rate in Government grant allocation at 3%, with a baseline of 4%. 

Building an efficient digital ecosystem for e-Government purposes involves solving the problems of insufficient digital infrastructure, a lack of digital skills and literacy, promotion of digital financial services, and development of digital platforms among others. In order to fund the sector African governments either mobilise budgetary resources or attract investors (e.g. international and regional financial institutions, the private sector within Africa, and foreign partners). 

Based on the Nigerian 2025 Budget Executive Proposal, the Federal Ministry of Communications and Digital Economy is mandated to receive ~NGN 483 bln (~USD 320 mln). The Budget Proposal does not identify the total sum allocated for digital transformation, as each ministry receives a certain amount of money on digitalization procedures. Digitization of ministerial records is among the pivotal aspects regarding the total digitization of activities. 

In Nigeria, the figures differ considerably depending on the ministry. In 2025, NGN ~40,000,000 mln (~USD 26.6 thousand) is estimated for digitization of records and establishment of e-registry for citizenship activities at the Ministry of Interior. Approximately the same sum is required for digitization of records of the Federal Ministry of Police Affairs. Federal Ministry Of Information And National Orientation required NGN 19.8 mln (~USD 13.2 thousand) for digitization of vote books, cash books, fixed assets registers, etc by Finance And Accounts Department, while NGN 70.7 mln (~USD 47 thousand) will be allocated for digitization of Ministry’s processes and Enterprise Content Management (ECM). The year-long budget for digitization of the National Inland Waterways Authority is estimated to be NGN 200 mln (~USD 132.8 thousand). 

The 2024 Budget of South Africa estimated that R 47.9 mln (~USD 2.6 mln) was planned to be allocated for the Centre For Public Service Innovation in the 2024/25 fiscal year. The department’s budget was set to increase at an average annual rate of 4.5 per cent, from R45.9 mln (~USD 2.5 mln) in 2023/24 to R52.4 mln (USD 2,8 mln) in 2026/27. 

The sums required for the full rollout of activities, as outlined in the digital transformation plans, also vary widely across the continent. In Uganda, the total funding requirement of the strategic plan (2018-2023) was estimated to be UGX 1.44 trillion (~USD 392 mln). Within the Plan, excessive funding was needed for the IT Shared Platform Project of UGX 1.3 trillion (~USD 354 mln). According to the Plan, the Government had agreed to provide 35% from the total funding. The funding gap covered neither by the Government nor by the international agencies comprised approximately UGX 940BN (~USD 256 mln). The funding for the previous Plan (2013/14 – 2017/18) was completed at 49%. 

Total resource requirement to fund the Kenyan Master Plan 2022-2023 stood at Ksh 0.5 trillion (~USD 3.4 bln). The Strategic Plan, 2023-2027, elaborated by The Ministry of Information, Communications and the Digital Economy to achieve the goal of Kenya’s transformation into a digitalized knowledge-based economy, estimates a resource gap of Ksh. 287,5 bln (USD 2.2 bln) together with the Ministry’s projected allocation of Ksh. 168,3 bln (USD 1.3 bln) and presents a resource mobilisation and management strategy. During the 2024/25 fiscal year, USD 8.5 mln was allocated on development and maintenance of government shared services.

Common challenges, as identified in national e-government strategies of African countries include:

• an inability to spend the allocated budget within the fiscal year, which leads to the projects being classified as non-productive, despite that the issues of longevity of the projects might be applied to infrastructural and personnel challenges;
• Lack of skill capacity hinders the implementation of e-government projects and effective allocation of funds, as the latter are done per department. Thus, the departments receiving the funding for digitization might fail to implement the projects due to the lack of internal capacity;
• Low project sustainability after the end of the donor funding period;
• Over reliance on Government funding which is not sufficient;
• Deconsolidation of funding and distribution across several players involved in the process of digital transformation;
• Absence of a dedicated ICT Fund with a dedicated budget for e-Governance, which is then separately allocated to each ministry in order to enhance cross-agency integration and linkage.

A significant issue to be considered is a lack of an investment regulatory framework. That can hamper Africa’s ability to attract investors and funding projects due to the threats of uneven competition and property rights violation, as well as to the absence of transparency and accountability. Because of complex regulatory environments and currency controls global corporations investing in Africa (e.g. Airtel Africa, a leading telecommunications provider) can face a challenge of trapped cash, the threat of which leads to stifling potential investments. 

As for investment models used on the continent, they are public-private partnerships, joint ventures (e.g. South African operator MTN and connectivity and cloud solutions provider Liquid Telecom’s giving each other access to their network infrastructure to provide their services in more African countries), and asset-lease models. Despite being the most preferable option for e-Government purposes, public-private partnerships are not widespread across the continent (in Sub-Saharan Africa they account for only 10% of global investments in infrastructure projects). As an example, Ghana’s public-private partnership contract to re-engineer business registration processes, totalling USD 60 mln. One third of the costs was financed by the government through resources from the World Bank; the rest was contributed by the private sector.

Solutions

The Governments of African countries declare diversification of funding instruments as a viable strategy to resolve the issues of insufficient funding. Based on the analysis of e-government strategies of African countries, the Governments propose the following measures to resolve the issue of limited resources:

• Issuance of bonds for domestic or international capital markets: Governments can issue bonds to raise funds for e-governance projects. Bonds attract institutional investors who are willing to fund long-term digital transformation initiatives. 

Rwanda has effectively utilized sovereign bonds to finance its Information and Communication Technology (ICT) infrastructure, thereby advancing digital governance and expanding broadband access. In January 2023, the Government of Rwanda, through the Central Bank, floated a RF 20 bln (~USD 20 mln) Treasury bond. The primary objective of this bond issuance was to fund critical infrastructure projects, notably the expansion and modernization of the national fiber-optic network.

• Private Finance Initiatives (PFI) with full Private Capital funding: In PFI models, private investors fully finance projects, and the government pays for the service over time. This reduces the immediate financial burden on the public sector. Nigeria’s National Identity Management Commission (NIMC) has collaborated with private companies for the technical development of the multipurpose electronic ID card. French-based Thales Group, in cooperation with its local partner Auspoint Limited, was selected to supply the new e-ID cards. These cards are equipped with microprocessors that store personal and biometric data, enabling various e-services and applications. To capture data of Nigerians living abroad, NIMC has licensed several private companies to conduct enrollment services.
• Outsourcing of production activities with monthly charges for platform use: Governments can outsource e-governance services to private companies, which operate and maintain platforms while charging monthly service fees. Kenya’s eCitizen portal, launched in 2014, was developed through a public-private partnership (PPP) between the Kenyan government and Webmasters Kenya, a local ICT firm. To sustain operations and maintain the platform, a nominal ‘convenience fee’ of Ksh 50 is charged per transaction, in addition to the standard service fees. This fee is intended to cover administrative costs associated with processing electronic payments and maintaining the platform’s infrastructure. The introduction of this fee was formalized through a Gazette Notice in December 2014 by the National Treasury. Nevertheless, the fees were subject to public criticism, as transactional discrepancies were noted. During the financial year 2019/20, a difference of Ksh 171 mln during a transfer to the State Department of Interior, and Ksh 28 mln during a transfer to the National Transport and Safety Authority.   
• Resource generation from commercialization of the infrastructure: Public ICT infrastructure can be commercialized to generate revenue, as governments can lease underutilized fiber-optic networks, data centers, and software to the private sector. Broadband Infraco, a state-owned enterprise in South Africa, has effectively commercialized its fiber optic network by adopting a wholesale, carrier-of-carriers business model. This approach involves providing high-capacity long-distance transmission services to licensed fixed and mobile network operators, internet service providers (ISPs), and other value-added network service providers. These clients can then utilize or resell these services to their end customers, thereby enhancing the overall telecommunications infrastructure. In 2017, Broadband Infraco partnered with Coriant to upgrade its nationwide backbone network. The deployment of the mTera Universal Transport Platform enabled the company to offer high-speed services, including 100G connectivity, thereby enhancing network scalability and efficiency. By 2019, the company had expanded its fiber optic network to approximately 15,000 kilometers, covering all nine provinces and connecting to neighboring countries. 
• Software Leasing Model: Governments can lease software instead of outright purchasing, reducing initial costs and allowing for updates and maintenance under contract agreements, or opting for acquiring a licence at a predetermined price afterwards. The success of Ghana’s e-Government platform derives from the use of a software leasing model, as it allowed the government to access sophisticated digital services without bearing the high upfront costs typically associated with purchasing software and hardware outright. The government opted for a software-as-a-service (SaaS) model via a public-private partnership (PPP). It leased the software and digital infrastructure needed to deliver online services to citizens, paying on a subscription or usage basis. This approach ensures continuous updates, scalability, and lower maintenance costs.
• Centralized budgeting and expenditure for ICT Optimization: A centralized approach ensures coordinated investment in ICT projects, avoiding duplication and enhancing efficiency. 
• Financial Models: Public Private Partnerships (PPP), Build, Operate and Transfer (BOT), Build and Lease (B&L), Community Financing, Operator Subsidy (Gap-Funding): Different financial models can attract investment, ensuring sustainable project execution. Tanzania’s e-Government Agency adopted a PPP model for its electronic tax system, improving efficiency and revenue collection. 
• Development of Incentives and Tax Breaks for the Private Sector: Providing tax relief encourages private investments in e-Governance projects.
• Fee Revision for Number Resources: Governments can revise telecom number allocation fees to generate additional revenue. The Nigerian Communications Commission (NCC) has adjusted its numbering fees to support digital infrastructure development. In 2021, the NCC implemented an annual operating regulatory levy to ensure equitable assessment of all licensees, aligning with current industry realities and sustaining the communications sector’s contributions to Nigeria’s GDP. In 2022, the NCC introduced a new tariff regime for Special Numbering Services (SNS). These adjustments aimed to revitalize the SNS market segment, which had been hindered by high interconnection tariffs and subscriber charges. The NCC engaged stakeholders to establish a cost-based determination addressing these challenges. 
• Review and implementation of investment strategies to establish and maintain Universal ICT funds: universal ICT funds support rural and underserved areas;
• Introduction of a levy on ICT services to replenish ICT funds: levying ICT services ensures continuous funding for digital transformation;
• Enhanced financial compliance and revenue collection through ICT: In 2024, Kenya’s domestic VAT collection reached Kshs. 314,157 bln, surpassing the target of Kshs. 307,823 bln, marking a 15.3% increase from 2023. This growth is credited to the introduction of the Electronic Tax Invoice Management System (eTIMS), which has improved compliance among VAT-registered taxpayers. eTIMS has reduced VAT fraud and boosted tax revenue. Additionally, 280,663 VAT-registered taxpayers joined the system, contributing to the total remittance of Kshs. 314,157 bln.
• Grants, concessional loans and assistance: outlining policy priority areas of international partners and donors;
• Demonstration of successes to attract more funding: showcasing achievements at donor conferences. 

• Collaboration with universities for research and development: Kenya has significantly enhanced its public healthcare delivery through strategic partnerships with local universities, fostering the development and implementation of e-health solutions. A notable example is the collaboration between the University of Nairobi, University of California San Francisco (UCSF) Health Informatics Hub and the Kenya Ministry of Health, which led to the establishment of the Kenya National Health Terminology Service (KNHTS). Launched in 2023, KNHTS aims to standardize health terminology across the country, improving data quality and interoperability among health information systems. Additionally, the Academic Model Providing Access to Healthcare (AMPATH), a partnership between Indiana University School of Medicine and Moi University School of Medicine, has been instrumental in integrating electronic medical records in Kenya. Since 2006, AMPATH has utilized the Open Medical Records System (OpenMRS) to manage patient data, enhancing the efficiency and effectiveness of healthcare services.
• Local leaders’ engagement to demonstrate the success to the general public and raise awareness: Community leaders in Nigeria have been instrumental in promoting digital literacy programs, thereby enhancing adoption rates. For instance, David Onilude, a Nigerian software developer and social entrepreneur, collaborated with local leaders to establish a three-week digital training program in underserved communities, empowering over 10,000 individuals by 2020.