The Digest from Afridigest - July 23rd Edition: Business. Innovation. Africa

Emeka Ajene
Jul 23, 2017 · 6 min read

This is an adaptation of the email newsletter The Digest from Afridigest.com, a media brand focused on ideas, analysis, and insights about business & innovation across Africa.

• Quick refresher: Here’s what we’re about at Afridigest:

  • Smart content for smart readers: Our focus is on ideas, insights, & analysis. Not “news”, not filler, and not fluff. We strive to churn up meaningful ideas that help you get smarter and raise your game.
  • Business, Innovation, Africa: Ongoing revolutions (e.g., mobile, digital, internet, demographic, and cultural) are sweeping the continent and creating challenges & opportunities in business that we think are worth exploring.

• Tell a friend to tell a friend: Afridigest is made with ❤️, time, and effort. If you find value in our content, please spread the word on social media or within your other networks.

An Inside Look: Ethiopia’s Sheba Valley

• This week’s top story: Sheba Valley — The Making of Ethiopia’s Tech Sector. Some notes:

  • Is Ethiopian Tech next up? South Africa, Kenya, and Nigeria currently boast Africa’s leading tech sectors. This article highlights recent momentum in Ethiopia and why it just might be next up. (See also: Ethiopia is the World’s Fastest Growing Economy.)
  • Did you know? Nigeria’s Paga, one of the country’s leading FinTech upstarts, has a sizeable engineering team in Ethiopia.
  • The author: Zekarias Amsalu Dubale specializes in helping investors discover and work with Ethiopian businesses & entrepreneurs. Connect with him on LinkedIn.

On Targeting African Consumers

• This week’s second most popular story: Should African Entrepreneurs Target the Few Affluent or the Many Low-Income Consumers? Some notes:

  • A gentle critique: This article offers an opposing viewpoint to the HBR article, 3 Things Driving Entrepreneurial Growth in Africa, which suggests that entrepreneurs & investors should “focus on the top of the pyramid.” (For what it’s worth: It earned a retweet from one of the authors, Christian Stadler, @EnduringSuccess.)
  • Quotable: “Given raw demographic patterns and purchasing power trends, it’s clear that the BOP represents a strategic market for companies doing business in Africa.”
  • Bottom Line: Collectively, low-income consumers at the base of the pyramid in Africa hold the lion’s share of the continent’s aggregate purchasing power.
  • Worth a look: This chart from The Economist.

• For more on business at the BOP, see: African Businesses Win by Understanding Base of Pyramid Consumers and How Nigeria’s Iroko Increasingly Embraces African Customers.

Fragmentation: An Opportunity for Innovators

• Rounding out the top three stories this week: On Africa’s Fragmented Markets: Innovators Can Win By Developing Platforms. Some notes:

  • Overview: This article puts forth a thesis that, given hig levels of fragmentation in many Africa markets, there are large opportunities for entrepreneurs & investors to develop and support platform business models. It highlights Nigerian Fintech firm, Flutterwave, as an example from the payments industry.
  • Market Realities: Most analysts agree that fragmentation is on the high end in African markets (e.g., retail and wholesale, agriculture, logistics, and payments). By organizing markets, reducing transaction costs, and introducing efficiency, platforms are able to create value and scale.
  • Quotable: “Compared to the widespread card acceptance in developed markets, less than 1 percent of the $380 billion in non-cash payments in Africa are made through cards. In fact, Africa is a maze of more than 276 mobile wallets, more than 500 banks, and 12 card networks in 54 countries.”Ameya Upadhyay

A MESSAGE FROM DIASPORA VC

Research Reports on African Startups

Want to invest in startups led by Africans & Africans in the diaspora but don’t know where to start?

We can help. We research dozens of startups every month and publish reports on those with the greatest potential. Learn more at DiasporaVC.com.

From the Archives: Inspired by the East

• In case you missed it: African Innovators Should Look East, Not West, For Business Model Inspiration. Some notes:

  • The argument: Although Western startups & emerging tech companies get a lot of attention from innovators in Africa and elsewhere, more attention should be paid to companies in the East given that market dynamics in many African countries are more similar to those in India and Asia than those in Europe and the US.
  • Did you know? ICASA is gaining steam over BRICs. According to McKinsey, there are “new growth dynamics, with the mental model of BRIC (Brazil, Russia, India, and China) countries giving way to a regional emphasis on ICASA (India, China, Africa, and Southeast Asia).”
  • Enjoying this adapted newsletter? Hit the ❤️ to help others see it. You can also subscribe at http://afridigest.com/subscribe

What We’re Reading

• From The Economist: Disrupting the trust business:

  • What’s interesting: Detailed overview of the blockchain, smart contracts, and so-called ‘truth services.’
  • Quotable: “The technology could also be used as a cheap platform to generate what poor countries lack most: more efficient government and trust in contracts.”
  • What we’re thinking: Some potentially interesting applications in emerging and frontier countries in Africa.

• From Andile Masuku in South Africa’s IOL’s Business Report: Investor Bias: The problem with Venture Capitalists:

  • What’s interesting: Generated quite a bit of conversation (& controversy) on social media. (If you missed it, here’s a decent place to jump in: https://twitter.com/africatechie/status/886238181045280769)
  • Quotable: “As Thomas Sankara puts it, ‘bad business ideas from foreign founders get capital and good ideas from local founders do not.’”
  • What we’re thinking: Some potentially interesting applications in emerging and frontier countries in Africa.

• From Victor Asemota in Nigeria’s The Guardian: Why African entrepreneurs need to think bigger:

  • What’s interesting: In some ways, almost a response to the previous article by Andile Masuku. The author also unpacks frequently given advice of solving ‘local problems.’
  • Quotable: “The most ambiguous and probably deceptive term in innovation or technology in Africa is ‘solving local problems.’”
  • What we’re thinking: To catch a cricket, one must move slowly.
  • One more thing: The richest man in China visited Kenya this week. The talk he gave is a must watch: Jack Ma’s Full Public Lecture at the University of Nairobi.

Worth a Look

A MESSAGE FROM AFRICREATE

Finding the Right Approach in Africa Can Be Hard

If you’re an entrepreneur, investor, or business leader in or with exposure to Africa, you know there can be many obstacles to innovation & growth across the continent.

We can help. Contact Africreate to learn more.

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Emeka Ajene

Written by

tech, innovation, finance, strategy, social impact | africa(/nigeria) focused | exec. editor at http://afridigest.com | @umich jd/mba

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