No doubt the youth populace are the major consumers of technological innovations. They are at the fore front of digitization.
This is a reality that places Africa’s tech startups with the continent’s hundreds of millions of young people on the world map as an important global launchpad.
UNICEF’s Generation 2030/Africa Report, covering the next three decades has it that close to two billion babies will be born in Africa.
With specific predictions from the same report stating that by 2050, in the region of 40% of all births, and the same percentage of total children globally will be in Africa – a huge increase on the 10% statistics of the 1950s.
The population of Africa is predicted to rise to about 3-4 billion by the turn of the century, and as internet and mobile penetration keep taking an upward surge.
This exponential increase in Africa’s young population will serve as a significantly high market from a goods and services consumption stand-point and will represent one-third of the total global consumption of technology and technology-driven solutions.
Another reality is that Africa’s technological innovations are mostly the creation of “need-to-have” solutions against “nice-to-have” solutions as typically seen in the Western markets.
The most possible and tangible evidence of this was the development of mobile banking in East Africa through Mpesa in the early-2000s, which applied innovative financial technology in partnership with the telecom industry to create an essential solution for the millions of unbanked in East Africa.
Extrapolating this into other industries like agriculture, healthcare, retail, education, energy, manufacturing, to name but a few is indispensable to the future growth of African economies.
But the major challenge to most of this still is funding, and this is exactly where venture capitalists (VC) will need come into play, to give the much needed financial, intellectual, and human capital to propel the level of technology disruption in Africa.
Although, to most, it may seem to be overly risky businesses thus the reason African investment money has, understandably, funneled primarily into presumed ‘safer’ investments like property and infrastructure.
The more compelling part to this is, should VC investment into Africa’s tech startups be sustained, it could quite literally bring positive global change.
Targeted VC and private equity investments can go a long way in supplementing the drive towards developmental outcomes through employment creation, economic growth, and transformation.
These VC’s have the potential to maximize this favorable multiplier effect, by not only giving growth for target companies and profits for investors, but also pouring in foreign capital into African markets, opening key socio-economic benefits for consumers, and making opportunities that multiply human capital across the continent.
Considering the growing and extensive opportunities on the continent for these startups essentially leveraging on established assets and customer networks to score and share value over time, VC investors can have an available way of addressing most risks by merely diversifying their exposure across the startup types, sectors, and industries.
On the brighter side to this for Africa’s tech startups and the world is that awareness of these huge opportunities by Africa seems to be blooming amongst global venture capitalists.
The Partech 2019 Venture Investments in Africa Report, has it that VC investments in Africa last year resulted in a record-breaking $2.02bn, coming through multiple hundreds of deals, with Nigeria, South Africa, and Kenya bagging the largest total amounts of funding.
Fortunately, given the immense scope therein for VC in Africa, this exponential growth in global investor interest should at no point result in a saturated market, rather, it will likely spur even faster, widespread growth among the cluster of Africa’s tech startups, and in the startup space across Africa as well , thus creating more essential opportunities for these businesses, their investors, and the African populace at large.
Don’t miss important articles during the week. Subscribe to techbuild.africa weekly digest for updates