Benjamin Tetteh opened the conversation highlighting Africa’s position as the “next frontier” given that the continent is home to some of the world’s fastest-growing economies. Technology startups have contributed greatly to this growth, with significant investments occurring across all sectors, especially fintech.
COVID-19 has brought both benefits and drawbacks to the growth of technology startups. Boye Ademola noted that an acceleration in the shift to digital—largely due to social distancing restrictions—has been a key benefit. In retail, many businesses have utilized e-commerce to meet pandemic restrictions while still continuing operations. However, other sectors continue to face challenges due to the economic slowdown resulting from the pandemic.
Looking beyond the growth in fintech investments, e-commerce is an up-and-coming technology startup industry. In South Africa, e-commerce is projected to have revenues of $1 billion in 2020. Outside of these sectors, there has also been a proliferation of platform-based models. Ademola highlighted examples like Cellulant’s platform, which connects farmers to actors in the value chain, and Kaiser Permenante’s platform, which allows users to buy healthcare products and request healthcare services digitally.
Tetteh raised the question of what has contributed to the growing interest in technology startups in Africa, and Ademola identified innovation, investment, and payment infrastructure as key drivers. Incumbent organizations in Africa have been weighed down by bureaucracy and regulation, and have recognized that the fastest way to bring products to market is to collaborate with startups to accelerate innovation. Furthermore, many startups in Africa are formed by repatriates, who often have strong relationships with foreign investors from their time abroad, allowing investments into startups to pull through. Additionally, Africa has a strong payment infrastructure (one that is often understated and misunderstood) that enables online payments, especially for small and medium-sized enterprises (SMEs). This is important and will likely be a gamechanger in the next three to five years as SMEs employ a large portion of Africa’s population and act as the continent’s engine for growth.
Tetten and Ademola also discussed the Africa Continent Free Trade Area Agreement, noting how current trade levels between African countries are a fraction of their true potential. Cross-border trade is a key opportunity that has not been fully explored, and technology startups could play a vital role by acting as platforms to enable connections across countries.
“It [the African Continent Free Trade Area Agreement] is a really significant initiative by the government and stakeholders in Africa, and it could not have come at a better time,” Boye Ademola
Key takeaways & next steps:
Moving forward, SMEs need to recognize that technology startups are offering solutions (largely through application programming interfaces (APIs)) to many of the challenges brought on by COVID-19. SMEs have a responsibility to be aware of how they can engage with these products to bring their business online and continue operations through this period.
Collaboration is key to the recovery process, and corporations and governments will need to work with technology startups to boost innovation. While the private and public sectors have already made investments into accelerators and hubs, more is needed in order to drive forward progress.