RISE OF AFRICA’S DIGITAL ECONOMY CREATES OPPORTUNITIES

Sir,

Amid the myriad global macro developments, it is easy to overlook the quieter revolutionary tides that are turning. One such is the rise of Africa’s digital economy – a trend that is now at an inflection point. The emergence of a new generation of African tech entrepreneurs is heralding a new dawn of opportunities on the continent, with stories that are now as much about ingenuity, solving real problems and great technological achievements as anything else.  And international venture capital investors, led by South African and Nigerian markets, are taking notice and investing in this trend.

Opportunities

Africa’s digital opportunities are large – and growing. The digital economy is estimated at US$115 billion and is expected to grow six-fold to US$712 billion by 2050, according to the June 2022 report published by Endeavor Nigeria. And, judging by recent investment patterns, investors are of the opinion that these trends are here to stay. Not only has the funding in African tech start-ups increased 18 times from 2015 to 2021, but it has also grown at twice the pace of global venture capital funding in 2021 and Africa was the only continent where venture capital investment continued to grow in the first half of 2022. To put things into context, African start-up funding is currently where Southeast Asia and Latin America were five years ago and is tracking an accelerated upward trajectory. But what exactly is driving this growth and how can we fully participate?

Investor

Endeavour believes Africa’s digital opportunities are being driven by an interplay of three factors. For one, Africa is experiencing a once-in-a-lifetime demographic bonus – by 2050, the continent is predicted to be home to a third of the world’s youth (aged 15 to 35) and Africa’s youth is urbanising fast too. This fast-growing consumer market, dubbed the ‘next billion’, is attracting investor interest. Secondly, smartphone usage is predicted to double, with one in six of the world’s internet users expected to be in Africa in 2025. This, coupled with the impact COVID-19 had in accelerating the demand for digital solutions, has resulted in a fast-growing, young and digitally savvy population — a potent mix for super-charged digital growth.
Finally, Africa is still relatively undeveloped, with GDP accounting for less than three per cent of the world, and mobile penetration levels far below global averages, making it one of the last digital frontiers. This means an opportunity for high growth rates as African technologies catch up and leapfrog. The opportunity that exists in Africa in the tech ecosystem cannot be understated, however, regulatory barriers are crippling the current and future growth potential of our local entrepreneurs. But this could be changed with the stroke of a pen, it requires zero budget from the government and would result in generating additional revenue for the country’s fiscus.

Policies

We have internal policies that are decades behind entrepreneur-friendly jurisdictions, including a number of African markets. There are a handful of important policy amendments governments can make to ensure we unleash and nurture this growth and realise the economic development, especially job creation. Timing is everything. We have a wonderful opportunity in front of us right now – we just have to play the ball.

Alison Collier

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: