COVID-19 and the African Tech Ecosystem: SWOT Analysis
Pour lire la version française de cet article, cliquez ici.
This post was written by Nadine Antoun for MEST.
It is difficult not to feel overwhelmed by the constant flow of information regarding the novel strain of Coronavirus SARS-CoV-2 (COVID-19 disease). On March 31st, U.N. Secretary-General Antonio Guterres, announced in a press briefing that this pandemic was the worst humanitarian crisis since the Second World War. However, having said that, he also had a strong message of hope: “Share the responsibility and global solidarity in response to the COVID-19.”
This alarming situation is very frightening and stressful, nonetheless, it is important to keep a positive mindset. As an entrepreneur or investor, there are now many new opportunities to solve issues related to the COVID-19 virus while making profit. Whether it’s by collaborating and building innovative solutions or by acquiring, partnering or investing in new technologies, there are many ways to help your community. Likewise, it is timely to look into enhancing your company’s procedures and practices, as well as communication protocols.
CURRENT MARKET OUTLOOK: WHAT IT LOOKS LIKE ACROSS THE CONTINENT
Since Africa is the continent with the least travel routes, it was the last one to be touched by the COVID-19. This, fortunately, gives it an advantage: having a head start on the virus and being able to handle the situation by following other countries’ examples. As of April 8th, most of the African countries are still at the beginning of the pandemic, being one or more weeks away from the peak of the epidemic curve. In comparison to Asia and Europe, the virus also appears to spread at a slower pace.
Almost every country in Africa has established some sort of restriction to limit movement either with curfews or lockdowns. However, the level of preparation and concern for the pandemic crisis varies across the continent. Senegal, Côte d’Ivoire, Mauritania, and Burkina Faso have all imposed confinement. Nigeria has also locked down the cities of Abuja and Lagos with their respective airports for one month (which has started on March 23rd). Ghana’s two most populous cities, Accra and Kumasi, also went into lockdown on March 30th. South Africa is the country that has reported the most active cases in Africa. It has one of “the strictest lockdowns introduced anywhere in the world — no jogging outside, no sales of alcohol or cigarettes, no dog-walking, no leaving home except for essential trips.” Hopefully, the measures in place will mitigate the crisis on the continent.
KEY STRENGTHS OF THE AFRICAN TECH ECOSYSTEM DURING THE CRISIS
Adaptability and familiarity with pandemics
With African entrepreneurs having experienced the Ebola virus in 2014, they are already familiar with pandemic procedures. They understand the importance of following recommendations of healthcare professionals, and they have the know-how to run their businesses during a sanitary crisis. It constitutes a significant asset since speed and discipline are key for companies to survive and thrive during the long-lasting upcoming global recession.
Innovation in the face of adversity: The leapfrog mentality
African tech entrepreneurs and African entrepreneurs, in general, are no stranger to leapfrogging. It consists of radical evolution in economic development, turning initial delays into assets. Skipping development stages to go faster and looking into innovative and more advanced technologies. Many factors come into play when it comes to leapfrogging; including the ability to attract investments, favorable and efficient governmental regulatory frameworks, research and development as well as capacity building with training and education. One of the most important drivers of leapfrogging is technology.
Through disruption, there is potential to create new and ingenious products that could spread rapidly. In the context of the COVID-19 pandemic, this consists of great strength to solve a multitude of issues related to the virus whether it’s directly or indirectly.
POTENTIAL WEAKNESSES TO WATCH DURING THE PANDEMIC
Low financial stability and overdependence on capital sources
According to a report written by Greentec Capital Africa Foundation and WeeTracker, African startups have a better chance of surviving the COVID-19 crisis compared to their counterparts in India or the United States. Yet only 50% of them are projected to survive the crisis, due to financial instability created by lack of financing and business underperformance. Although this could be a weakness for some tech startups, stimulus packages and grants are currently being offered by African Governments to help businesses withstand the current situation. MEST has already created a list of 5 relief funds that were created to help African Entrepreneurs through the COVID-19 Pandemic. Additionally, the Fuqua School of Business from Duke University has also created a COVID-19 capital relief resource list for entrepreneurs across the globe. More resources can be found here.
Absence of a strategy for business continuity and lack of long-term vision
Crisis will happen; it is out of our control and there will be many immediate challenges for businesses. However, it is crucial to keep a long-term vision for your company, in order to be sustainable over the next few months and years. Lack of long-term vision and the absence of a business continuity plan could potentially be a weakness for some tech startups. You have the capability to prepare in order to lessen the damages and grab opportunities instead. We encourage you to set up a contingency plan, and a business continuity plan if you haven’t already. EY has created a thorough resume of a four-action plan to “build resilience and reshape results.”
McKinsey and Company has also published a comprehensive guide on how companies should counter the COVID-19 pandemic, and it can be applied to any kind of disaster or emergency.
KEY EXTERNAL DRIVERS OF CHANGE: OPPORTUNITIES AND THREATS
Lockdowns and social distancing: a shift to life online
To bridge the gap created by lockdowns and social distancing, there will be a surge of demand for messaging, education and productivity apps as well as for video games, streaming websites, delivery services, and online shopping. Companies will also have to rely on videoconferencing and online training. With increased traffic, websites and apps that use content monetization will experience an increase in ad revenues. Some newer technologies will likely expand due to the crisis. This includes artificial intelligence, machine learning, augmented and virtual reality, location technologies, cloud, and entertainment localization, as well as robotics. This constitutes an opportunity for African tech entrepreneurs and investors.
However, with the digitalization of education and work being a new reality, there will be an urgent need for better internet access. Africa is the fastest-growing mobile telecom market on the planet, but the telecommunications quality of service (QoS) which includes mobile internet availability, connection speeds, and network latency is still very low. With the lack of a high-capacity backbone network (optical fiber routes and microwave), it is expected that there will be an overwhelming mobile internet influx on local base stations, which will then slow down the internet connection and cause calls to abruptly drop. Not to mention that consumers are also using a big part of their incomes to finance internet access, with Africa having some of the highest rates in the world. However, Telcos in different African countries have announced more affordable rates to help alleviate subscribers who are working from home due to the pandemic. This will likely create even more strain on base stations. It will be a challenge in the short and medium-term for entrepreneurs and investors because it will determine if users can access services and if their needs are met. One solution could be to create partnerships with Telcos.
Safer consultation options: Alternatives for the healthcare system
With the COVID-19 overwhelming the healthcare systems around the world and medical equipment being very limited, in many countries face-to-face patient care is now reserved for extreme cases of the virus and other pressing health matters. Movement is also restrained by lockdowns, and with public transportation being limited or non-existent, it can be hard for patients to visit healthcare institutions. There are many safer options for regular in-person consultations. Telemedicine, which consists of having a video-audio consultation in real-time is one of them. Telemedicine startups like Nadia are even more relevant in the context of the pandemic in Africa since it lacks sufficient medical personnel. It allows doctors to see more patients without adding hours. Asynchronous care is another form of telemedicine which “[…] involves acquiring medical data, then transmitting the data to a doctor or medical specialist at a convenient time for assessment offline.” This type of telemedicine is a substantial business opportunity, especially in countries with many languages and dialects since it can help overcome language and cultural barriers. There are also chatbots, which can be used to filter patients with the coronavirus. In Nigeria, the company Wellvis has already created one for users to self-assess their symptoms.
In addition, the Boston Consulting Group (BCG) has stated in an article that amid the COVID-19 crisis, governments in Africa will be working in unison by “[…] sharing data and capabilities and coordinating strategies.” This could lead to opportunities for entrepreneurs and investors to either create or invest in institutional platforms such as Réseau d’échange entre médecins d’Afrique (REMA). REMA is a Beninese start-up that allows collaboration between doctors who are remote from one another. Since COVID-19, the company has decided to temporarily make the platform free of charge to the ministries of health of all countries in West Africa.
Increased Cybercrime: Demand for better cybersecurity
In a recent article, the World Economic Forum has addressed the fact that cyberattacks have spiked during the COVID-19 crisis. Cybercriminals are targeting critical services such as healthcare, retail and local governments with malware and ransomware. Cybersecurity has fallen short, which creates opportunities to enter the market and deliver cybersecurity solutions to individuals, companies and governments. Snode, one of the three winners of the MEST Africa Summit 2019 sets a strong example. The South African company uses mathematical algorithms and machine learning to process large amounts of data, which is then used to counter cyber threats.
Also note, heightened Cybercrime can be a threat to your actual businesses. Make sure your data is well protected and be careful of fraudulent websites and phishing scams that are asking for donations or lab testings for the COVID-19 disease.
Mitigating the virus: Mobile money and mobile big data
Governments across the African continent are encouraging digital payments in order to reduce the risk of spreading the virus by handling cash. As a result, many mobile money providers have either eliminated or reduced their transactional fees. According to industry experts and analysts, this could lead to the African mobile money market to grow at a quicker pace. It is an opportunity for entrepreneurs and investors to enter the market. Mobile money also creates better financial and social inclusion on the continent, meaning more potential customers for your enterprise.
Another business opportunity for entrepreneurs and investors is mobile data. According to the Global System for Mobile Telecommunications Association (GSMA) in its “The Mobile Economy, Sub-Saharan Africa 2019” report, “When [data is] aggregated, anonymized and analyzed [it] can provide valuable and actionable insights across a wide variety of use cases”. This includes tracking disease outbreaks like the COVID-19.
No face-to-face meetings: Challenging business deals
The COVID-19 pandemic will have a direct impact on business deals and investors’ behavior. While some investors will prioritize safer investments, others will take a completely different direction, and embrace the global disturbance to look for new opportunities. The latter will need to have a liquidity cushion, as well as great judgment and business acumen.
With market conditions being more challenging than usual, it will be difficult to execute transactions and deals given that business negotiations are usually a series of face-to-face meetings. Activities will be delayed and pushed back to the last two quarters of the year, this will likely be a threat for most entrepreneurs. The decline of the stock market could also negatively affect the valuation of some early-stage companies.
5. SWOT ANALYSIS SUMMARY
It is an understatement to say that the Q1 of 2020 was difficult for everyone. The most important thing is that you, your family, your friends and your colleagues are healthy and staying safe. To inspire you to take action and create value in your communities, here are some exemplary tech companies from CcHub that have channeled their energies into finding solutions to the current turmoil using smart ways to counter misinformation on COVID-19.
While confined at home, you will have the time to reflect on your personal goals and look for new ideas. Don’t forget that the pandemic will eventually fade away.
