Top 5 Tech Investment Opportunities in Africa
Africa’s new and emerging generation of entrepreneurs, developers and designers are not just excited about tech, they are also passionate about money! They want to create value that changes and improves lives.
The continent is a blessed one filled with almost an infinite amount of natural resources, as we all know the rich old generations made the bulk of their money through exploitation of these resources and taking opportunities.
Amazingly, it is quite different for these new wave of African entrepreneurs, as they are not looking at the natural resources, but they are setting their eyes on problems as a more valuable resource.
Africa is set to be the most populous continent in the world in 100 years, but right now it is being overwhelmed by serious problems, like unemployment, illiteracy, hunger, electricity and so on.
In this article we will be highlighting how the new generation of Africans are using tech to make money out of the problems the continent is facing.
1. Fintech: Africa’s financial services industry is underdeveloped and it presents a very tough and important problems that need to be solved. In a survey carried out by the World Bank on the continent, after 50 years of banking just about 34% of adults in sub-saharan Africa have bank accounts.
With the fast increase in population, the traditional model of banking has proven to be too slow, inflexible and somewhat incapable of handling this growth.
This is a problem that needed to be solved, and the tech-preneurs have taken it upon themselves to optimize this opportunity.
In the past few years we have seen the rise of many fintech companies like Paga, Piggybank, Kudi, Paystack and so on.
Last month, Paystack a fintech company in Nigeria, which happens to be one of our portfolio companies raised $8million in funding.
Bill payments, bulk disbursement, international remittances, merchant payments, mobile airtime top up, mobile banking, person-to-person transfers, peer-to-peer lending, micro insurance, and several other interesting opportunities are a wide range of opportunities in the Africa financial services.
Fintech has proven to be on the list of top tech investment opportunities in Africa.
2. Crowdfarming: According to the UN, Africa’s agribusiness industry is expected to be worth $1trillion by 2030 but still, Africa spends over $30billion on importing food annually.
The problem here is most of the farmers in the continent are poor people who use old farming methods, and they also have very limited access to capital.
Agritech companies like Farmcrowdy, Livestock Wealth have seen this problem as an opportunity and they are using tech to solve it.
The idea is to create a platform where working class citizens in the city can sponsor or invest in these rural farmers, and take a share of the profits at harvest time.
In 2017, Farmcrowdy of Nigeria raised $1million from US investors to expand its operations. Africa’s population is growing at an exponential rate and the opportunities in the agritech industry of the continent grows with these numbers. The beautiful thing is, problems are solving and people are making money.
3. Start-up Funding: The potential return on investment in Africa is currently the highest in the world, and this has caught the eye of investors around the world, the possibilities and opportunities are becoming too much to ignore for investors.
In 2017, Tech Start-ups in Africa received over $560million in funding from investors within and outside the continent.
Nigeria, South Africa, Rwanda, Kenya and Ghana are currently the top destinations for investors in Africa. 2018 is already seeing more investors coming into Africa to explore emerging businesses.
4. Co-Working Spaces/Tech Hubs: Due to the growth in population and rise of techpreneurs, the need for a working space is quite paramount when it comes to building a company, a lot of these young individuals can’t afford the right or suitable office spaces.
The introduction of hubs and coworking spaces have made a lot of things easier and achievable for a lot developers, designers and entrepreneurs.
Just within a decade, there are over 250 coworking spaces in Africa, with 80% of these spaces springing up in the last 3 years. According to a research by Coworking Africa, the coworking business is expected to see a boom. This exponential growth is attributed to 70% of the total population of Africa which are the millennials and also the many opportunities currently flooding the continent.
We are expecting to see more Hubs/Coworking spaces in Africa in the coming years.
5. Urban Logistics: By 2030, up to half of the continent’s 1.4 billion people will be located in the cities.
Currently, at the top of the pack are cities like Lagos (21 million), Kinshasa (10 million), and Cairo (9.5 million). One of the biggest problems that appears to be worsening with the growth of Africa’s urban populations is congestion.
Most cities in Africa don’t have a good transport system, so getting around town can be very frustrating. This is a logistical nightmare that worries both consumers and businesses. Thankfully, some African entrepreneurs are already taking advantage of this problem.
Last year in Nigeria, MAX and GOKADA launched an on-demand motorcycle courier service for clients who have critical deliveries that need to beat the traffic on Lagos roads. A look into the future, we have realized more entrepreneurs will figure out ways to solve the complex problems and frustrating challenges of logistics in African cities.
In 2018, urban logistics is still one of the most promising emerging business opportunities in Africa.
Africa is a land of opportunities, a land that rewards problem solving individuals.
