Universal Service Funds (USFs) are financial resources set up by governments to help extend telecommunication services—such as mobile networks and internet access—into underserved and remote areas. In Africa, USFs are playing a role in bridging the connectivity gap, accelerating Africa’s digital transformation, which is key to improving access to education, healthcare, and economic opportunities.

Despite the rapid growth in mobile broadband access across the continent—rising from 114 million to nearly 400 million users between 2012 and 2022—Africa still faces the largest connectivity gap globally. According to GSMA report,  as of December 2022, more than 1 billion people in Africa, or 72% of the population, were still unconnected. This not only highlights the deep digital divide but also underscores the urgent need for action.

“Africa still has the greatest connectivity gap of any region in the world, highlighting the impact of barriers to mobile broadband adoption.”
– Angela Wamola, Head of Sub-Saharan Africa, GSMA

Although service provider investments in network infrastructure have made significant progress, reducing the mobile broadband coverage gap from 56% in 2012 to just 13% by the end of 2022, challenges persist. The question then becomes: what is preventing Universal Service Funds (USFs) from potentially fully closing this connectivity gap and what can be done to make USFs more effective?

In this TechTalk Thursday article, we’ll examine how USFs can be better managed expand mobile broadband access, and drive Africa’s digital transformation. We’ll also look into the challenges they face and the recommendations for improving their efficiency.

What is the current state of Universal Service Funds in Africa?

According to the GSMA’s survey , at least 51 out of 54 African countries have already set up or are in the process of launching a USF. Of the 40 countries surveyed, 37 have fully established a USF, while others like Ethiopia, Gambia, and Namibia are working towards it.

These funds are legally backed in nearly all surveyed countries, either through acts of parliament or decrees. The legal frameworks define the various aspects of USFs, including roles and responsibilities of stakeholders, and outline the governance structures that impact their effectiveness. Most USFs in Africa are funded by levies on the annual revenues of telecom service providers while some countries also receive supplementary funding from government budgets or other sources.

The management of USFs varies across the continent. In most cases, around 70% of countries manage their funds through a unit within the national regulatory authority (NRA). For instance, Uganda’s UCUSAF is run by the Uganda Communications Commission (UCC), which helps reduce administrative costs. However, in some countries, such as Ghana and Côte d’Ivoire, separate agencies handle the funds, providing more autonomy and representation from multiple stakeholders, including telecom service providers. This model, like Ghana’s GIFEC, potentially improves decision-making and fund management.

Despite the widespread establishment of USFs, the implementation and disbursement methods differ significantly, and this variation often impacts their effectiveness. For example, monitoring and evaluation systems are a point of concern. While 78% of authorities claim to have a monitoring system in place, only 11% of service providers share this view, revealing a disconnect between regulators and service providers on the operational transparency of USFs.

While there are variations in structure, management, and implementation across the continent, all these show that USFs are undeniably active in Africa and have the potential to close the connectivity gap, playing a significant role in promoting digital inclusion in most African countries.

“Insights from the GSMA report on Universal Service Funds in Africa indicate that the funds are underperforming and have become ineffective tools to close the coverage gap, signaling the need for reforms”

– Caroline Mbugua, HSC, Senior Director, Public Policy and Communications, Sub-Saharan Africa, GSMA

So, what are the challenges?

Universal Service Funds (USFs) were established with a clear objective: to extend network infrastructure into remote and underserved areas that private operators often overlook due to low commercial viability. Yet, despite this goal, a significant coverage gap persists across many African countries. To address this, it is crucial for USFs to prioritize deploying infrastructure such as radio access networks and backhaul in excluded areas, enabling connectivity for populations that remain on the margins of the digital revolution.

However, findings from the GSMA Universal Service Funds in Africa Survey  reveal a growing shift in how these funds are utilized. A notable portion of USFs is being directed toward non-infrastructure projects. While these initiatives vary in scale, purpose, and legal frameworks across countries, they often lack a structured, data-driven approach. The absence of clear strategies and evidence-based decision-making limits the efficiency and impact of these investments.

Also, many countries face challenges related to monitoring and evaluation systems. Without proper mechanisms to track progress or measure outcomes, it becomes difficult to determine the effectiveness of funded projects. This lack of accountability undermines the potential of USFs to create meaningful change.

Another critical issue is the overly broad and sometimes undefined scope of non-infrastructure projects. This lack of focus risks diverting attention from the core mission of building connectivity infrastructure. Without a systematic framework to guide these projects, USFs may fall short of their potential to address Africa’s connectivity challenges. Solving these issues requires a shift toward more targeted and transparent approaches to fund management and project implementation.

How then can they be made more efficient?

There are several strategies to address the factors limiting the effectiveness of USFs  across the continent, recommended by the GSMA. To improve performance, it recommends adopting mechanisms that incentivize fund disbursement, implementing evidence-based contribution rates, and ensuring regular monitoring and reporting of performance. Also, prioritizing stakeholder consultation throughout the entire project lifecycle and engaging with local communities about the benefits of connectivity are key steps in ensuring that USFs are aligned with local needs. Exploring alternative funding mechanisms is also crucial, as it could provide a more sustainable and diversified source of support for USF initiatives.

However, the most critical step in enhancing the impact of USFs lies in complementing these recommendations with comprehensive policy reforms.

Policy Reforms are instrumental for USFs performance

USFs are a vital tool, but they cannot singlehandedly resolve Africa’s connectivity challenges. To effectively close the coverage gaps, particularly in areas where market forces fall short, USFs must operate in synergy with comprehensive policy reforms and innovative market-driven solutions. For meaningful progress in underserved regions, African governments should prioritize critical policy interventions that complement USF efforts  and promote sustainable connectivity.

“Political will among governments and policy makers in the region is an important first step towards the journey of USF reforms. This will ensure the core principles of an effective and successful USF hinged on accountability, clarity, service neutrality, transparency, sustainability and visibility are realized.”

– Caroline Mbugua, HSC, Senior Director, Public Policy and Communications, Sub-Saharan Africa, GSMA

Therefore, this calls for policy reforms in conjunction with USFs to enhance connectivity in Underserved Areas:  

• Taxation: Reduce tax burdens on telecom providers and users and consider establishing tax-free zones in rural areas to encourage investments.

• Spectrum Management: Allocate adequate spectrum early, with reduced or waived fees for rural sites, to drive network expansion and lower operational costs.

• Infrastructure Deployment: Simplify processes for base station approvals, streamline rights-of-way, and support infrastructure sharing to improve coverage.

• Technology-Neutral Licensing: Adopt technology-neutral licensing to enable quicker and more cost-effective network rollouts.

• Unified Licensing Regime: Implement unified licensing to streamline resource planning and service delivery.

• SIM Registration: Simplify and make SIM registration processes inclusive to ensure accessibility for vulnerable groups, including women and rural populations.

• Fibre Rollout Liberalization: Liberalize restrictions on fibre network rollout to foster competition, drive innovation, and reduce infrastructure costs in rural areas.

• Supporting Infrastructure Investment: Invest in essential infrastructure like grid electricity, security, and roads to reduce deployment costs and provide social benefits.

By addressing these key policy areas, African governments can create a more enabling environment for connectivity expansion. When coupled with the strategic use of Universal Service Funds, these measures can drive meaningful progress in bridging the digital divide, fostering greater inclusion, and accelerating the continent’s digital transformation.