Strange development in battle over future of Internet in Africa

Cloud Innovation was quietly added in an official capacity to the company registration of the African Network Information Centre (Afrinic) on 4 April 2025.

This is a significant development, as Cloud Innovation was the plaintiff in dozens of legal cases against Afrinic that led to the organisation being placed under receivership.

Several Afrinic members were alarmed at the discovery, expressing concern that Cloud Innovation and its founder, Lu Heng, had captured Afrinic.

However, Heng has assured that this is not the case.

“I fully understand why some community members were alarmed by seeing Cloud Innovation’s name formally listed — it was an unusual development,” he said.

“I want to reassure everyone that this is an administrative formality born of the legal process, not a hostile takeover or power grab.”

Afrinic is a Regional Internet Registry (RIR), one of five global bodies tasked with managing the allocation of Internet resources.

These include precious Internet Protocol (IP) addresses, specifically IP version 4 (IPv4) addresses, which are the reason Afrinic finds itself in its current predicament.

Afrinic and Cloud Innovation locked horns because the RIR attempted to claw back large blocks of IP addresses, threatening the company’s business model.

IPv4 addresses are scarce and precious resources, which has resulted in a lucrative secondary market emerging for them.

Between 2013 and 2016, Afrinic issued nearly 6.3 million IPv4 addresses to Cloud Innovation in four tranches, which are today worth nearly $315 million (R5.7 billion).

The assignments were controversial even back then, when the resale value of IP addresses was much lower.

To obtain an IP address block, applicants must justify their request by explaining how the addresses will be used and why the quantity applied for is necessary.

Afrinic’s board and senior management defended Cloud Innovation allocation, stating that it was done in strict accordance with member-established policy.

Afrinic was founded as a bottom-up organisation. Members set policy, which Afrinic staff must implement.

Members also vote for a board of directors, which is tasked with overseeing the organisation.

Any member may propose a policy change, which others can debate and provide feedback on. To become official Afrinic policy, a proposal must achieve broad consensus.

Attempt to change Afrinic out-of-region policy

In 2014, several Afrinic board members reminded critics that existing policies did not prohibit out-of-region use of IP addresses.

They said if the Afrinic community wished to restrict such usage, they would need to propose and adopt a policy amendment.

However, those making this argument at the time also knew that such a policy could never achieve the required consensus.

Public records show that Douglas Onyango, an ICT project manager from Uganda, drafted such a policy on 3 July 2014.

Onyango’s proposal faced heavy criticism on Afrinic’s policy mailing list and at in-person policy development meetings.

In the face of this opposition, Onyango continued revising his proposal in an effort to see it adopted, including making it non-retroactive.

However, it never reached the necessary consensus, and Onyango eventually withdrew his proposal on 24 February 2016.

While the out-of-region usage policy was dead in the water, that wasn’t the end of the Cloud Innovation controversy.

Going on the offensive

In 2020, the Afrinic board at the time resolved to reclaim the company’s substantial IPv4 allocation on the basis that it had breached its Registration Service Agreement.

Afrinic argued that Cloud Innovation was leasing the addresses to third parties, rather than using them for the operational needs originally declared in its application.

Its alleged violations included not using the IPv4 addresses to build infrastructure in Africa, which Afrinic said Cloud Innovation had promised to do.

Cloud Innovation dismissed Afrinic’s letter, arguing that Afrinic’s approach was procedurally flawed and ignored the realities of how the Internet worked.

It also said Afrinic had no mechanism by which resource members could notify the RIR if they began using their IP addresses for different purposes.

The dispute escalated quickly, resulting in a web of injunctions, appeals, and counter-applications spanning dozens of distinct cases.

At one stage, Afrinic’s bank account was frozen, putting it in danger of being unable to pay its bills or make payroll.

The final paralysing blow was struck by South African resource member Crystal Web, a now-defunct ISP that leases out its IP address space.

Crystal Web obtained a court order effectively confirming that Afrinic’s board was inquorate.

Without a board, it was argued that the Afrinic CEO’s contract could not be renewed, and no one could instruct legal counsel to represent the organisation in court.

With no way for Afrinic to reconstitute its board, Cloud Innovation then obtained an order appointing an official receiver.

The receiver, Gowtamsingh Dabee, was tasked with calling a board election and ensuring that Afrinic appoints a CEO.

However, some stakeholders have raised concerns about the receiver — concerns that intensified after they learned Cloud Innovation was added to Afrinic’s company registration.

Dabee’s response to former Afrinic vice-chair and Policy Development Working Group co-chair Seun Ojedeji also did little to persuade members otherwise.

“You are very well informed of Afrinic internal matters and seem very concerned,” he stated.

“This has been published on the site of the Companies Division of Mauritius. I suggest you write to them and ask them why it happened,” he continued.

“Maybe your contacts within Afrinic can assist you. It is not in my terms of reference to assist on matters regarding the Companies Division.”

MyBroadband contacted Dabee for comment, but he did not respond by publication.

Cloud Innovation responds

Lu Heng provided extensive feedback, stating that it was a legal technicality that resulted in Cloud Innovation being listed as a “member” of Afrinic.

Cloud Innovation’s name appears alongside four others — men who last served on the Afrinic board before Crystal Web’s court order.

However, Cloud Innovation is not listed under the organisation’s office-bearers in the company registration.

MyBroadband has received conflicting feedback about what the role of a company’s members is under Mauritian law.

Some argue that a registered member in the context of a non-profit is similar to a shareholder, except that they don’t receive a share of the profits.

Others say they are more like company directors, as they accept some liability if the organisation is wound up.

“Cloud Innovation’s member status is not equivalent to being a shareholder,” Heng said.

“Afrinic is a non-profit entity with no shareholders — our membership gives us a role in governance but no ownership or profit rights.”

Heng said that under Mauritian law, registered members of an organisation like Afrinic are participants with limited liability, not owners.

“This structure is normal for organisations like Afrinic and is meant to ensure no profiteering from its activities.”

MyBroadband asked if that means that Cloud Innovation has sole control over Afrinic, given that the other four listed members are no longer directors by court order.

“Cloud Innovation does not and will not control Afrinic,” Heng said.

“The organisation is currently under neutral oversight, and soon under a newly elected board accountable to all members.”

Heng said they have no controlling authority — they have one vote and one voice, like all other regular resource members.

“Afrinic’s governance is and will be a collective effort, not something one company can dictate,” he said.

“Cloud Innovation’s foremost wish is to see Afrinic restored to a healthy state, governed by an elected board and trusted by its members.”

Heng said that would allow everyone to move forward and focus on the important work of managing Africa’s Internet resources.

“Together with the rest of the Afrinic community, we look forward to a successful election on 23 June 2025 and a new chapter of stable, community-led governance for Afrinic.”