DeepSeek, a Chinese artificial intelligence (AI) model, has announced that its introduction will have a significant impact on African businesses by reducing the cost of AI technology in comparison to the services offered by its competitors in the United States.
The recent release of DeepSeek’s open source “R1” model as a competitor to market leaders like OpenAI’s ChatGPT has sparked a market rout amid concerns that major US tech firms may be undermined.
Most importantly, DeepSeek’s AI models are purportedly more cost-effective than those manufactured by ChatGPT because they necessitate significantly fewer sophisticated processors.
DeepSeek asserts that it was capable of training its model for a mere $6 million, in contrast to the over $100 million that OpenAI expended on the development of ChatGPT-4.
On Monday, the American chipmaking behemoth Nvidia experienced the largest single-day loss in US history, losing nearly $600 billion in market value during trading on the Nasdaq, which was prompted by concerns regarding the future demand and value of processors.
Nevertheless, the apparent emergence of a more affordable alternative to current AI models is instilling optimism in Africa that the continent may be able to leverage the technology to address fundamental social and economic challenges.
Alexander Tsado, co-founder of the Johannesburg-based activist group Alliance4ai, previously stated to African Business that AI-related tools could contribute to the improvement of healthcare access in rural areas, the promotion of financial inclusion by enabling banks to reach underserved communities, and the identification of diseases on crops and plants by farmers, resulting in increased crop yields.
“The potential of AI in Africa is to revolutionize the lives of hundreds of millions of individuals,” he stated. “Cost has been one of the most significant barriers to AI adoption in Africa,” stated Kennedy Chengeta, an AI-focused entrepreneur and academic based in Pretoria.
Despite the pervasive recognition of the potential benefits of AI, she stated. “Significant upfront investments in computing infrastructure, software, and skilled personnel are frequently necessary for the implementation of AI solutions.”
Businesses are compelled to depend on expensive cloud services from international providers due to the absence of local data centers and advanced computing facilities in numerous African countries.
In addition to increasing operational costs, this dependence also restricts scalability, according to him. However, DeepSeek and other less expensive AI models have the potential to significantly reduce these expenses.
“DeepSeek enables businesses to adopt AI without the need for significant investment in infrastructure or talent by providing affordable, pre-trained models that require less computational power,” Chengeta informs African Business.
“This has the potential to level the playing field for SMEs and entrepreneurs, enabling them to create innovative solutions that are specifically tailored to the needs of the local community.”
Chengeta observes that “Africa is becoming a battleground in this rivalry.” China has already made substantial investments in Africa’s digital infrastructure, which includes telecommunications networks and data centers.
Although the United States has been reluctant to engage, it is increasing its efforts by investing in infrastructure and forming partnerships with African innovation ecosystems.
A strategic, neutral stance must be adopted by Africa in order to effectively navigate this competition, according to Chengeta.
“African governments and businesses can gain access to a wide variety of AI technologies and expertise by collaborating with both nations.”
“At the same time, Africa should prioritize the cultivation of indigenous capabilities, the investment in local talent, and the promotion of regional collaborations through platforms like the African Union.”
