African Hopes Raised by DeepSeek’s Cheaper AI Claims

The emergence of DeepSeek, a Chinese AI company, has sparked interest in the African business community due to its claims of offering more affordable AI solutions. This development could potentially revolutionise the landscape of African entrepreneurship, opening up new opportunities and challenges for the continent’s innovators and business leaders.

With DeepSeek’s new R1 model, the AI space has gone wild. The Chinese company not only produced an AI model that directly competes with OpenAI’s GPT models, but it also managed to produce it at a fraction of the cost. DeepSeek-R1’s $5.6 million training cost — using cheaper H800 GPUs — represents 7-14% of ChatGPT-4’s expenses and 3-18% of Gemini’s budget. Furthermore, DeepSeek’s operational efficiency stems from its compact model architecture and reliance on cost-effective hardware. In contrast, ChatGPT requires 8 A100 GPUs per query and faces $4.6M per training iteration.

These claims by DeepSeek have come under serious scrutiny, however, but it cannot be denied that the R1 model is completely free as of now and has the advantage of being open source. Unlike proprietary ChatGPT, DeepSeek’s open-source approach reduces development redundancy and allows for its use in other specialised models.

Democratising AI Access

DeepSeek’s promise of cheaper AI models could significantly lower the barriers to entry for African entrepreneurs looking to integrate AI into their businesses. But what does this mean for entrepreneurship in Africa on a broader spectrum?

As Alexander Tsado, co-founder of the Johannesburg-based activist group Alliance4ai, previously claimed: “AI-related tools could help improve access to healthcare in rural areas, drive up financial inclusion by helping banks reach underserved communities, and help farmers identify diseases on crops and plants, leading to higher crop yields. AI in Africa can be transformational for hundreds of millions of people.”

AI has wide-scale applications in many sectors and impacts, with an almost “Schumpeterian” cyclic innovation where different AI innovations intersect to generate even more innovation.

As such, a model such as DeepSeek-R1 offers great opportunity for African entrepreneurs who could now utilise these more accessible AI models in order to develop their ideas.

Potential Applications in Key Sectors

So, with Deepseeks new model and others yet to come, Africa will most certainly be impacted by an increase in innovation in the near future through the creation of startups using models such as Deepseek. And could Africa develop its own competent AI one day?  With that in mind, there is a lot to look out for as the availability of affordable AI could catalyse growth in several crucial African industries:

•  Agriculture: AI-powered crop monitoring and yield prediction systems could enhance food security and farm productivity.

•  Healthcare: Diagnostic tools and telemedicine platforms could become more sophisticated and accessible, improving healthcare delivery in remote areas.

• Education: Personalised learning systems and educational content creation could be developed to address specific African educational needs.

•   Finance: With the development of further Fintech solutions, which bases itself on the use of AI, many ideas and companies on the African continent will be able to reach more underserved communities, increasing their impact and contributing to the continents development.

These industries are key on the African continent as their development will be pivotal in Africa’s future (which we have covered extensively in our report: “L’Afrique, le Meilleur est Avenir”).

Challenges and Considerations

While the prospects of increased AI use on the African continent are exciting, there are important factors to consider.

Firstly, African nations may need to develop policies to protect local data and ensure it’s not exploited by foreign entities. With DeepSeek being a Chinese company, some might wonder if its use by companies in Africa will only deepen and extend the already serious influence that China has established in many countries in Africa.

Then, there is the question of adequate digital infrastructure, including reliable internet connectivity, which will be crucial for widespread AI adoption. Without the proper infrastructure, many African countries will not be able to fully experience this growth in AI use on the continent. AI is not a magic solution. Many countries still need to build the basis required to fully appreciate its benefits.

That is without mentioning that AI use needs AI understanding. AI is still a novelty on the African continent, and many are still not ready to implement AI in their business plans. With this, we can anticipate an increase in demand for digital and tech advisory as well as AI literacy and expertise among African professionals to fully utilise these technologies.

What KABA sees in this

DeepSeek’s claim of providing cheaper AI models presents a tantalizing opportunity for African entrepreneurs. If realized, this could be a game-changer for the continent’s economic development, potentially accelerating innovation and competitiveness across multiple sectors. However, it will be crucial for African nations to approach this opportunity strategically, addressing challenges related to infrastructure, skills, and data governance to fully harness the benefits of more accessible AI technology.

Written by Thomas Viarnaud