Isizwe, a South African internet service provider that provides Internet access to low-income areas, has received US $460,000 in funding from the Global Innovation Fund (GIF) to help de-risk its business and attract further investment.
Isizwe, which began as Project Isizwe in 2013, provides low-cost, pay-per-use unlimited Wi-Fi connectivity in townships and informal settlements. Users pay ZAR5 (US $0.33) for 24 hours of internet connection, compared to ZAR100 (US $6.63) per gigabyte in South Africa.
Isizwe creates Wi-Fi Zones with Wi-Fi gear that links to internet service providers to give the service (ISPs). This allows the company to give internet connections to low-income areas without having to invest in costly backhaul infrastructure.
As a result, Wi-Fi Zones are located within walking distance of every home, with each Wi-Fi Zone encompassing about 100 residences.
Isizwe has established 80 Wi-Fi Zones since switching to this technique in 2020, including zones for an education group aiming to promote remote learning during the COVID-19 epidemic, and it expects to roll out over 25,000 Wi-Fi Zones in South Africa by 2022.
The viability of public WiFi as a viable, scalable business model serving bottom-of-the-pyramid customers has yet to be proven, but the US$460,000 investment from UK-based venture capital firm GIF at this early stage will help de-risk Isizwe’s model and potentially catalyze commercial capital in subsequent investment rounds, allowing the company to test core assumptions about operational, social, and financial viability.
The investment is made as part of GIF’s ADVANCE relationship with Anglo-American, which aims to unleash private sector investment to develop new business models for the UN Sustainable Development Goals.
“This is a great investment for Isizwe and shows us that the world really cares about connectivity in Africa. Over 90 percent of homes in Africa only have mobile data as the way of connecting to the internet – this is on a per-gigabyte billing basis, so it is incredibly expensive to connect. The cost is similar to the cost of bathing in bottled water. Governments in developed countries understand the dangers of a digital divide and give significant investment to connect their rural communities. Connectivity is the new key to unlocking the poverty trap, so it is great to see GIF and Anglo-American applying this to Africa,” said Tim Genders, Isizwe’s chief executive officer (CEO).
“We have seen the benefits of last-mile connectivity in India, Latin America, and parts of Africa, and aim to show that our investment can sustainably provide internet access to those living in South Africa’s rural and peri-urban areas while generating both large-scale social benefits for users and attractive financial returns for investors,” said GIF investment director Khuram Hussain.