Africa Tech Ecosystem 20 years into the future
Africa Tech ecosystem 10 year ago
You cannot start the story on the growth of the technology ecosystem in Africa, without the throwback to the early 2000’s to talk about the liberalization on spectrum by African governments, to allow for private and foreign participation in the telecom industry .
I am old enough to remember when folks were arrested for using voice over IP aka Skype in Ghana.
The liberalization happened because, African governments realized the sheer amount of money that could be made from selling telecom licenses.
The liberalization coupled with the proliferation of cheap Nokia phones and telecom service providers enabling prepaid payments instead of postpaid, catapulted Africa into a mobile first continent and M-revolution.
This was the precursor the fin-tech revolution in Africa.
In 2011, which was 10 years ago, when the African tech scene was beginning to get noticed, I had moved back to Ghana after school and work in the United Kingdom and as per my knowledge a lot of the tech companies at the time were mostly software development houses or resellers for Microsoft,IBM, Oracle etc.
Startup Hubs
In 2007, one of the first African hubs, iHub was created in Kenya riding on the back of the fact the Mpesa ,the world’s first mobile money platform was built and thriving in Kenya . By 2011, dozens of hubs had sprouted across the continent aided by donor funding made available by development finance partners (DFI’s). The proliferation of these hubs made it easier for startups to find spaces to work from and communities to congregate into for cross learning
Funding
A lot of the funding around the time especially with nascent spaces like Agritech, health tech were heavily supported by DFI’s like USAID and philanthropic organizations like the Gates Foundation as a way of supporting their existing work with maternal health and agriculture in Africa. AN Example is Esoko in 2008 and Farmerline which started in 2013 to help provide farmers with weather and price information using SMS.
The women in tech movement on the continent had just started the emerge , I started Women in Tech Ghana around this time, and this grew into 5000 women across Africa expanding reach and making more women visible in the space.
Actual Venture Capital was few and far between in the technology space.
African technology ecosystem now
Pandemic technology acceleration
The Covid 19 Pandemic has shown that digitalization and digital infrastructure is more important than ever for the African region. As lock downs become common place, people had to find innovate ways to gain access to food and goods as well as health and ways to remain commercial in a world where going outside could be dangerous.
So it was not shocking that the disrupt publication reported an over 250% increase in capital for health tech startups from 2019 to 2020 with many health tech and virtual health services positioning themselves to provide services when people can no longer go to health facilities.
Countries like Rwanda have leveraged heavily on telemedicine and created Chabot and even used robots to support the Covid efforts
Funding
Disrupt Africa‘s flagship publication, the African Tech Startups Funding Report, charts funding flowing into the continent’s tech startup over the course of 2019. The data reveals 311 startups raised over US$491 million.
In 2020, African startups raised US$701.5 million in total funding. Both of these figures are up substantially on the previous year, with the number of funded startups increasing 27.7 per cent on 2019, and the funding total growing by 42.7 per cent.
Top tier African tech hubs have emerged from the continent South Africa, Nigeria , Kenya , Egypt, Ghana these countries have a large share of the funding available and the exits on going on the continent
Unicorns and IPOs
In 2020 Fawry, an Egypt-based e-payment platform has become Africa’s second unicorn to reach a billion-dollar valuation. The first being Interswitch of Nigeria after Visa acquired minority stakes.
Some publication place Fawry as third , citing Jumia as the first , however, technically Jumia is an ecommerce brand based out our Africa as their IPO listing on the New York Stock Exchange stated they were head quartered on the continent
Exits
A number of high profile exits have occurred in 2020/21 across the continent World Remit’s acquisition of Sendwave which enables Transfer money instantly to Africa and Asia for $500M.
DPO Group (DPO), one of the leading, high-growth online commerce platforms in Africa operating across 19 countries, was acquired by Network International, an leading enabler of digital commerce across the Middle East and Africa (MEA) for 288M USD.
Stripe the global payments platform also acquired Paystack a platform enabling payments in Nigeria and parts of West Africa for 200M USD to enable Stripe enter the African market.
Women in Tech
Briter Bridges reported that 15% of the funded startups in 2020 had women as founders, co-founders or C-level executives.
According to the research, only 10 percent of the West African startups that cumulatively raised $1 million had at least one female co-founder in the past decade.
A number of VC focused Angel and VC funds have sprung up to help fix the issue:
FirstCheck Africa, a female-focused angel fund was founded by Eloho Omame and Odunayo Eweniyi. Omame is the MD of Endeavor Nigeria, a program for high-impact entrepreneurs, and Eweniyi is the co-founder and COO of Piggyvest, a Nigerian fintech startup to fund ridiculously early women led startups
Women in tech partner Shequity founded by Pauline Koelbl is also hyper-focused on supporting women led startups with funding ticketing between 15,000 -25,000 USD
African technology ecosystem in the future
Global World Talent
According to the World Economic Forum by “2030 One in five people will be Africa and Africa will account for more than half (54%) of the 2.4 billion global population growth in coming decades and so we definitely Africa has an upcoming large pool of talent, larger than the United States and China.
The opportunity to have the largest pool of talent cannot be over emphasized. There are many opportunities for the African continent to strategically use that pool of talent to serve the world.
The explosion on remote work and outsourcing means local tech talent has also taken to doing remote work for clients outside the African continent leveraging on the many available remote work platforms.
Local developers have figured that considering the low wages on the African continent, remote work is a better way to make an income or augment current income.
AFCFTA
African Continental Free Trade Area (AfCFTA); a free trade effort led by the African Union, that came into effect on 1st January 2020, which has in turn, created the trade agreement with a largest number of countries in the world . It will connect 1.3 billion people in 55 countries.
The AfCFTA Plan is to eliminate tariffs on 90% of intra- Africa trade, to enable movement of investment and people across the countries as well as create a customs union.
This should help with the harmonization of tariffs that will positively affect intra Africa e-commerce trade and fin-tech across the continent.
Tech and Last Mile Fixes
The issues with infrastructure and last mile delivery means we will see a lot more starts ups set to specifically set to bridge those gaps in logistics, fin-techs and serving the underserved .
Funding
As it becomes more apparent that Africa is the next frontier for tech, I predict more money will flow into the ecosystem supporting more unicorns and gazelles in its wake.