The African continent has certainly faced its fair share of challenges in recent decades. But with the trend for emerging economies helping to drive progress in many parts of the world, Africa is now embracing technological change that is transforming the continent, and even leading the way with innovation.
Traditionally, Africa has suffered from almost unbearable instability. But as the benefits of independence began to emerge, so an African economic boom began, which has been likened to the growth of Asia in the 1970s. This process had developed to such a degree by 2013 that Africa housed seven of the world's fastest-growing economies.
To this day, the most prosperous nations in Africa are growing economically at a rate that outstrips virtually all other countries.
Willingness to Embrace Change
Probably the most critical factor in this transformation has been the willingness of the continent to embrace change. The last fifteen years or so has witnessed a vast technological revolution in Africa, with companies ready to innovate, and people enthusiastically embracing this innovation.
There are demographic indicators which also point to Africa's growing prominence. According to Pascal Gerken – the 2018 - 2019 YPO chairman – YPO believes that Africa is a continent of the future. Organizations such as the United Nations are predicting that by the beginning of the next century, Nigeria will be the third largest country on the planet with a population in excess of one billion. “Africa has enormous growth, and as a continent, it is truly rising at the moment. So it's a unique market that’s untapped in many areas, but it also needs help. For this reason, I believe countries don't need lessons; what they need is Impact Investments”.
The African spirit of innovation has already seen mobile platforms become highly established in the African continent. It is noted that by 2020, sub-Saharan Africa will have more than half a billion unique mobile subscribers, making the continent the fastest growing area for mobile technology, and establishing Africa as an emerging platform for social and commercial innovation.
Africans Become Early Adopters
Whereas other more established economic areas have been slower to adopt technology such as mobile money, Africa has less to lose by embracing it. Even to this day, 66% of sub-Saharan Africans are considered 'unbanked'; ie. they have no access to banking services and no bank accounts.
In such a climate, there is simply no need for the general population to cling to some traditional way of doing things. This helps explain why Africa is ahead of Western countries in adopting P2P finance, and why mobile banking services such as mPesa have been so enthusiastically taken up by African consumers.
Meanwhile, Africa has also been establishing trading agreements with the increasingly prominent BRICS nations, meaning that African countries can benefit from some of the innovations emanating from this loosely-tied group of countries. This is helping shape the direction and pace of economic development in Africa, and such trends led David McDonald, founder of The Global Millennial, to comment that " Africa will change more in the next century than it has in the past ten. "
Fertile Regulatory Environment for Innovation
Of course, it would be wrong to pretend that everything is suddenly rosy. There are still massive socio-economic problems in Africa, and poor governance has definitely not helped the situation. But the weakness and lack of insight from governments has also opened the door for companies to gain access to fertile economic environments, unburdened by regulation, and in which populations are highly receptive to an improvement in their standard of living.
This has meant that many startups have indeed headed straight to Africa, and found that the region is thoroughly ready to accept them. One such example is the Silicon Valley startup Zipline, which was initially turned down when attempting to test fixed-wing drones in US airspace. Rwanda welcomed the company with open arms, and Zipline is now pioneering the time-critical delivery of blood and medical supplies to remote areas.
Ravi Naidoo, the founder of the Design Indaba conference, is a big believer in this paradigm shift and comments that Africa is able to offer some very unique opportunities, partly due to the unique political and relatively relaxed regulatory environment, and partly due to the many issues that need to be solved. Naido describes this as a “beautiful, symbiotic relationship.”
Balance Shifting Towards Opportunity
While Africa continues to pose unique challenges, the balance between challenge and opportunity is now beginning to tilt in favor of the latter. But understanding the cultural, economic and logistical difficulties involved with investing in Africa is vital to success, according to Yariv Cohen, the founder of energy startup Ignite Power, who spoke at the recent Africa Family Office Summit in Cape Town.
“The key to success is providing quality at an affordable price, then it is about patience. If the value proposition is right, and you have the right local team, it is just a matter of time — they will solve all the challenges on the way,” Cohen asserted.
As the African growth story unfolds, investors are inevitably looking to the continent as a space for innovation. And with impact investment being such a prevailing trend currently, this means that Africa is in the perfect position to benefit. The private sector will undoubtedly drive growth in Africa, as the continent continues its process of evolution in the years to come.