Chika Nwobi and Kresten Buch of Nigerian startup accelerator and funding programme 440ng assess the key tech trends which will shape Africa in the next five years
The western media may not always focus on the positive news emanating from Africa, however, those on the ground know that Africa’s tech sector is booming. Last year, Africa saw the fastest uptake of mobiles in the world and mobile subscribers are set to hit half a billion by 2020, according to the GSMA. Furthermore, the World Bank says that out of the 20 fastest growing economies in the world right now, 11 are in Africa.
From the rise of smartphone use across the continent, to fintech innovations and the increase of early stage investment funds, a number of key tech trends are exerting a positive influence on the continent. The strength of the technology and startup sector across Africa is also reflected in the startling fact that Africans are dumping promising careers to start venture into entrepreneurship.
The declining cost of high-speed internet across the continent is ensuring that more businesses and individuals than ever before are connected. Although infrastructure costs are yet to reach the competitive levels of the West, the next five years will see prices drop further, resulting in millions of individuals coming online.
One company taking advantage of the smartphone boom is Nigerian based Pass.ng— an online tool for Nigerian students preparing for one of Nigeria’s toughest college admissions exams. Founded by Samson Abioye, Adebagbo Joshua, Akanji Abayomi, and Oluyemi Oluseun, the firm provides millions of individuals with test simulations and a learning platform to study and track their performance. The company’s growing success is both contributing to and benefiting from the mobile explosion, while helping more Nigerians gain access to new services and information remotely from their mobile devices.
The proliferation of this hardware is not only leading an information revolution, but disrupting financial and retail sectors too. Innovations in mobile banking and transfers are giving people the tools they need to safely manage their money, while opening up a whole new digitised marketplace for businesses to target.
Kenya’s online transfer tool M-PESA alone has over 18 million active users, while Nigeria’s Paga is similarly popular. The rise of mobile payments is not only providing smaller businesses with stable platforms to conduct financial deals but is also leading to the growth of mobile commerce across the continent.
M-commerce, driven by technological advancement, is set to have a big impact on the development of Africa. As summarised in a recent CNN article, the development is helping African retailers leapfrog the need for capital-intensive mall infrastructure and quickening the establishment of robust logistic networks.
Further examples of services enabling businesses to reach new customers include mobile ad network Twinpine and content discovery platform 8bit. These both bring down the cost and time required to bring a product to market.
Demand for new products is also high, driven by a growing and youthful middle-class and this isn’t set to slow anytime soon. In 14 years alone, Nigeria’s middle class has made a six-fold increase to 23 million people. It is these expanding middle classes that are going to fuel the economies of African countries for future decades. The youthful populations of countries such as Kenya and Nigeria are also key users of new mobile services and products.
For the countless African startups benefiting from these technological developments, growth isn’t simply hinged on a burgeoning smartphone-carrying middle class. Many of the small startups and businesses which are driving Africa’s technological revolution are heavily reliant on capital investment. Thankfully, early stage funds headed up by plucky investors are growing fast.
In the last year alone the number of early stage funds operating in Nigeria has jumped from zero to seven. In 2015, these funds will distribute financing to over 100 startups. They aren’t unique to hotspots such as Nigeria, Kenya or South Africa. Uganda, Ghana and Senegal all have their own tech communities.
While the African growth story is far from homogeneous and some serious socio-political challenges need to be overcome before talk of economic success is possible, positive signs from the technology sector are giving hope. With the West facing continued economic uncertainty and stagnation, the next five years are set to be an instrumental period in the development of Africa’s economy.