The Battle Over Africa's Great Untapped Resource: IP Addresses

Source: Slashdot

Background

Around half of internet traffic still uses IPv4, because transitioning to IPv6 can be expensive and complex, and many older devices still need IPv4. Companies such as Amazon, Microsoft, and Google continue to need IPv4 addresses for their cloud‑hosting services, using them as bridges between the IPv4 and IPv6 worlds. Africa, which has been slower to develop internet infrastructure than other regions, remains one of the few places with a pool of unused IPv4 addresses.

Lu Heng’s Business Model

In his mid‑s, Lu Heng “got an idea that has made him a lot richer,” writes the Wall Street Journal (link). He acquired about 10 million unused IPv4 addresses—mostly from Africa—and leases them to companies, primarily outside the continent, that need them urgently.

• Lu searches for IPv4 addresses that are not being used by ISPs or other holders and, through his Hong Kong‑based company Larus, leases them out.
• In 2013 he registered a Seychelles‑based company, Cloud Innovation, to apply for IP addresses from the African Network Information Centre (Afrinic).
• Between 2013 and 2016, Afrinic allocated 6.2 million IPv4 addresses to Cloud Innovation—more than the total assigned to Nigeria, Africa’s most populous nation.
• A single IPv4 address can be worth roughly $50 on transfer, and Larus leases them onward for about 5‑10 % of that value annually.

Lu’s operations give him control of just over 10 million IPv4 addresses.

Conflict with Afrinic

Lu’s activities triggered a showdown with Afrinic. In 2020, after an internal review, Afrinic sent letters to Lu and others demanding the return of the addresses, arguing they should not be used outside Africa. Lu contended he was not violating the rules that were in place when he obtained the addresses.

The dispute escalated into a series of lawsuits filed by Lu in Mauritius. One of those suits led a Mauritian court to freeze Afrinic’s bank accounts in July 2021, effectively paralyzing the organization and pushing it into receivership. The receivership halted the distribution of new IPv4 addresses, leaving many African service providers struggling to expand capacity.

Current Situation

In September, Afrinic elected a new board. Since then, some internet‑service providers have begun receiving IPv4 allocations, but the market remains tense, and the broader issue of IPv4 scarcity continues to affect global internet infrastructure.