The Africa Finance Corporation (AFC) has revealed a significant disparity in the cost of powering telecommunications infrastructure between urban and rural areas, with rural base stations costing up to 37% more to operate. This disparity stems primarily from the dependence on diesel generators in rural areas due to inadequate grid connectivity. This reliance on diesel not only inflates operational costs for telecom operators but also contributes to increased carbon emissions, exacerbating Nigeria’s existing energy poverty challenges. The heavy financial burden, coupled with security risks associated with diesel theft and operational disruptions in remote locations, poses a major obstacle to expanding digital inclusion in underserved regions. Nigerian telecom operators consume over 40 million litres of diesel monthly, amounting to an annual energy bill exceeding $350 million, highlighting the urgency of transitioning to more sustainable energy solutions.
The AFC report emphasizes the detrimental impact of these high energy costs on efforts to bridge the digital divide in Nigeria. The financial strain discourages investment in expanding network coverage to remote and underserved areas, perpetuating the cycle of digital exclusion. Furthermore, the reliance on fossil fuels undermines sustainability goals and reinforces a dependence on an expensive and volatile energy source. The report underscores the need for immediate action to address these challenges and calls for collaborative efforts between government and private stakeholders to implement sustainable energy solutions and promote rural connectivity. A key recommendation is the adoption of specialized infrastructure providers known as Telecom Energy Services Companies (TESCOs).
TESCOs offer a viable solution by installing, managing, and operating power systems for telecom towers, allowing operators to outsource energy management and transition to more efficient hybrid energy systems. This approach reduces the financial and operational burden on telecom operators, freeing up resources for network expansion and improvement. TESCOs specialize in deploying and maintaining renewable energy sources, such as solar-hybrid systems, contributing to a cleaner and more sustainable energy footprint for the telecom sector. By incorporating diesel generators or battery storage as backup, these hybrid systems ensure consistent uptime even in off-grid environments, mitigating the reliability issues associated with relying solely on grid connectivity.
The report further explores alternative fuel options like liquefied petroleum gas (LPG) in areas where solar deployment is impractical due to adverse weather conditions or land constraints. This diversification of energy sources is crucial for ensuring reliable power supply across diverse geographical locations. The AFC also commends the progress made through infrastructure-sharing agreements between major tower companies like IHS Towers and American Tower Corporation. These agreements facilitate co-location of equipment, significantly reducing both capital and operational expenditures, particularly in rural areas. Sharing infrastructure optimizes resource utilization and promotes cost-effectiveness in network rollout and maintenance, crucial aspects of expanding rural connectivity.
Despite these positive developments, the AFC acknowledges that bridging Nigeria’s digital infrastructure gap requires a sustained and concerted effort. The report estimates that tripling the national backbone fibre network is essential to achieve universal broadband access and cater to the demands of a burgeoning digital economy. This expansion requires substantial investment, estimated at $7 billion annually for Africa as a whole, with Nigeria playing a pivotal role due to its large population and high data consumption rates. The report emphasizes the need for coordinated investment strategies, smart regulation, and scalable energy solutions to accelerate progress towards digital inclusion.
The AFC’s State of Africa’s Infrastructure Report 2025 provides a comprehensive overview of the challenges and opportunities in critical infrastructure sectors across the continent. In the context of digital connectivity, the report emphasizes the urgent need to address energy-related barriers hindering rural network expansion. The focus on sustainable energy solutions, infrastructure sharing, and strategic investment highlights the importance of a multi-faceted approach to bridging the digital divide and unlocking the transformative potential of digital technology for all Nigerians. By fostering collaboration between government, private sector actors, and specialized service providers like TESCOs, Nigeria can pave the way for a more inclusive and sustainable digital future.
