Setting up Africa for an Economic Renaissance
Written By. Sipho Sebele
When we think of Africa as an investment frontier, we generally think of the continent’s low development levels. Africa typically offers vast opportunities for first to market products and services but this stems from Africa’s development needs being a major opportunity of itself.
Royal Email Subscription
Subscribe to our email list and stay informed with our Royal Compass Newspaper and the Royal Qulture Magazine Click to Fill out this form.
The continent needs immediate investments coupled with reformation in the following industries: power generation, transport networks, information technology, and media. African governments have realized the size of the task at hand and have opened themselves up for private partnerships. Although the opportunities to effect change in Africa are vast, this article will focus on:
- Information communication technology
Africa is home to some of the world’s most fertile land, which is nurtured by a humid climate, space, and access. This makes it prime land for crop farming and husbandry. Furthermore, of the world’s 400 million hectares of untilled land, 200 million hectares of it is in Africa. That’s a huge opportunity and as the population grows, it will need more food. This was realized by China which has invested heavily in agriculture in Africa.
Although the investment in farming lands as been welcomed by respective government, local population have had bad experiences with corporate-level agriculture. Local farmers have faced
- Land degradation due to pesticides used by commercial farmers
- Environmental damage due to land clearing and Dam building
Moving forward, investment in farming land will have to cater to local farmers’ concerns. Farming provides 60–70% of employment in Africa, so it is naturally an industry that can raise tensions.
Agriculture is Africa’s biggest industry and largest employer. Yet most farmers are small scale subsistence farmers who use old farming techniques. Africa ranks lowest when it comes to productivity by hectare and the continent has woken up to the loss in opportunity. Take Nigeria, which realized the potential of its agricultural sector and invested in better farming techniques and tools. The investment resulted in significant growth in the agricultural sector and carried Nigeria through years of low oil prices.
Bitcoin, Ethereum, Ripple and many other coins have taken the world by storm. In Africa, Bitcoin is the dominant cryptocurrency. Africans are attracted to cryptocurrencies due to their socio-economic and political situations. Here is why Africans love the idea of cryptocurrencies;
- It is easier to trade and exchange in cryptocurrencies than it is with a lot of sovereign currencies. Whether it is due to weak currency or prohibitively strict foreign exchange rules, companies (especially eCommerce sites) and individuals find it difficult to efficiently exchange local currencies for assets from abroad.
- Cryptocurrencies are a decentralized autonomous organization, everyone has the same power and partakes in decision making. This appeals to citizens who feel hard done by central banks that don’t work for them.
- Although they have sophisticated procedures processes, cryptocurrencies are still a simpler asset to invest in. Capital markets in Africa are not readily available to the average man on the street, but they can set up a wallet and trade in cryptocurrencies
Naturally, most African governments are wary of a technology that would loosen their grip on power. Governments, like Zimbabwe which has a notoriously bad monetary and fiscal policy, have tried to curtail the use of cryptocurrency. Nonetheless, cryptocurrencies are gaining traction in Africa. South Africa is the leading cryptocurrency market in terms of size, innovations, and community. The Rwandan and Kenyan markets are gaining traction too.
Transport infrastructure in Africa is not only inadequate, but it is also not built in Africa’s best interest. That is because Africa’s infrastructure is mostly from colonial years and is still largely built according to the same function. That function has been and continues to be, to extract resources from Africa and export. Intra-Africa transport networks (rail, road, shipping, and air) is relatively underdeveloped because it hasn’t seen much investment or reform.
That could drastically change soon after the signing of the African Continental Free Trade Agreement (ACFTA). ACFTA will immediately lower trade barriers for 90% of goods made within Africa and create a 3.4 trillion market with over 1 billion consumers. The UN’s Economic Commission of Africa estimates that ACFTA could increase trade among African nations by 52%.
To cater to the surge in trade among African nations, the transport networks will have to be built or upgraded. The African Development Bank (AfDB) estimates that Africa needs $130–170 billion infrastructure spend per year (download link).
Africa is dominated by a few satellite TV companies namely;
- Go TV
- DS TV
- CanalSat Afrique
- MyTV Africa
- Star Dtv
The dominance of these players has largely been due to the high cost of setting up a satellite TV company. Traditionally, media was a capital intensive and highly regulated industry but technology has changed that.
A song or show doesn’t take a lot of money to produce, cell phone along with a laptop is enough to record and produce media. It’s not just the production of media that has been affected but it’s distribution too. Social media companies like Facebook, YouTube, Instagram, and Sound Cloud have made reaching the masses a possibility even for the smallest players.
Recently, the advent of technology has brought challenges even for the biggest company DSTV. Streaming video is a simpler model if you can get the content, and that has opened the industry up for the continent. The mainstreaming media companies are;
- iROKO Tv
- Acorn Tv
- Along with international players Netflix, Hull, etc
IT, Software and Applications
Cloud technology is taking root in Africa, most notably because of its ability to provide Software-as-a-service (SAAS), AI and machine learning. Using a cloud service is remarkably cheaper and simpler which enables small players to run sophisticated IT functions with ease.
For example, Cloud could lead mobile money applications away from USSD protocols so as to enable them to run more sophisticated requests. Mobile money will do more than simply deposit and transfer, it will evolve to provide more services like savings, loans, and investments. Industries like the video streaming video industry will also rely on cloud services to bring their products to market.
Although Africa has huge commercial appeal, it still carries high risks. Social and political turmoil plagues some nations along with the scourge of corruption. Nonetheless, Africa moves forward and rewards those who invest prudently.
Royal Qulture Magazine- Subscription
Our goal is to encourage entrepreneurship, small business development, healthy living, nutrition, and knowledge of…
We believe by understanding the needs of the continent we can forge relationships that can eradicate the wealth gaps between Africans and the rest of the globe. At BBM Publishing House we take pride in curating and creating content that drives this ideology. We believe providing representation and a voice to those who normally are shunned away, we can create a direct connection within the global African diaspora.
Subscribe to our Royal Compass Newspaper, we curate content that empowers, uplifts, and encourages our community towards wealth and personal growth.