DeepSeek’s cheaper AI claims raise African hopes

The launch of DeepSeek, a Chinese artificial intelligence (AI) model that claims to be much cheaper than its US competitors, has raised hopes that Africa could benefit from cheaper AI technology.

Last week, DeepSeek released its open source “R1” model as a competitor to market leaders such as OpenAI’s ChatGPT, sparking a market rout amid fears that major US tech firms could be undercut.

Crucially, DeepSeek’s AI models are claimed to be cheaper than those produced by ChatGPT as they require far fewer advanced chips. DeepSeek claims that it was able to train its model for just $6m – in comparison to the more than $100m OpenAI spent producing ChatGPT-4.

Sparked by fears for the future demand and value of chips, the American chipmaking giant Nvidia shed almost $600bn in market value during trading on the Nasdaq on Monday, the biggest single-day loss in US history.

Levelling the playing field

However, the apparent emergence of a cheaper alternative to existing AI models is raising hopes in Africa that the continent may be able to use the technology in order to solve fundamental social and economic issues.

Alexander Tsado, co-founder of the Johannesburg-based activist group Alliance4ai, previously told African Business that 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,” he said.

Kennedy Chengeta, an AI-focused entrepreneur and academic based in Pretoria, said that, while there is a widespread recognition of the potential benefits of AI, “cost has been one of the most significant barriers to AI adoption in Africa.”

“Implementing AI solutions often requires significant upfront investment in computing infrastructure, software, and skilled personnel. Many African countries lack local data centres and advanced computing facilities, forcing businesses to rely on costly cloud services from international providers. This dependency not only increases operational costs but also limits scalability,” he says.

“But cheaper AI models like DeepSeek have the potential to dramatically reduce these costs. By offering affordable, pre-trained models that require less computational power, DeepSeek enables businesses to adopt AI without the need for significant investment in infrastructure or talent,” Chengeta tells African Business. “This could level the playing field for SMEs and entrepreneurs, allowing them to develop innovative solutions tailored to local needs.”

Navigating US-China tensions

President Trump – who used his first day back in office to unveil a $500bn investment project in American AI – has said that the emergence of DeepSeek is a “wake up call” for the US. Speculation has already started that the US may seek to restrict the use of Chinese AI models in America and potentially further afield.

Chengeta notes that “Africa is increasingly becoming a battleground in this rivalry. China has already made significant investments in Africa’s digital infrastructure, including data centres and telecommunications networks. The US, while slower to engage, is stepping up its efforts through partnerships with African tech ecosystems and investments in infrastructure.”

“Africa must adopt a strategic, neutral stance to navigate this competition effectively,” Chengeta says.

“By engaging with both nations, African governments and businesses can access a diverse range of AI technologies and expertise.”

“At the same time, Africa should focus on developing indigenous capabilities, investing in local talent and fostering regional collaborations through platforms such as the African Union.”