Isizwe, an internet service provider that offers online access to low-income communities in South Africa, has raised US$460,000 in funding from Global Innovation Fund (GIF) to de-risk its model and encourage further investment.
Launched as Project Isizwe back in 2013, Isizwe offers unlimited Wi-Fi access in townships and informal settlements on a low-cost, pay-per-use basis. Users pay ZAR5 (US$0.33) for 24 hours of internet access compared to the average cost in South Africa of ZAR100 (US$6.63) per gigabyte.
To deliver the service, Isizwe builds Wi-Fi Zones with Wi-Fi hardware that connects to internet service providers (ISPs). This enables the startup to provide internet access in low-income locations without having to invest in building expensive backhaul infrastructure. The result is Wi-Fi Zones within walking distance of every home, with one Wi-Fi Zone covering approximately 100 homes.
Since pivoting to this approach in 2020, Isizwe has set up 80 Wi-Fi Zones, including zones for an education group working to facilitate remote learning during the COVID-19 pandemic, and it anticipates the rollout of more than 25,000 Wi-Fi Zones in South Africa by 2022.
The public provision of WiFi as a viable, scalable business model serving bottom-of-the-pyramid customers remains unproven, but the US$460,000 investment from UK-based VC firm GIF at this early stage will help de-risk Isizwe’s model and potentially catalyse commercial capital in subsequent investment rounds to enable the company to test core assumptions around operational, social, and financial viability.
The investment is made under ADVANCE, GIF’s partnership with Anglo American that aims to unlock the private sector investment needed to scale 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 per cent 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 unlock 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.