Currently, many investors are lured to channel their resources into Africa. The continent is also being described with words such as; Africa is the next frontier and Africa is rising. Consequently, the continent’s growth potential has managed to attract international investors.
Investors not only look at the business potential when investing in a company but also explore the present economic environment, the industry, and the market. In case one describes a startup as a venture in search of a scalable and repeatable business model, that needs to find a market fit product then scale up journey begins. As Keet van Zyl from Knife Capital says, the analog brings a troubling or a more complex notion.
Keet asked if Africa is in search of comparative merit or it is already putting in place a model. He added that the continent is doing greater than many established markets in some areas. The continent has made some remarkable success in fintech more so in payments. But he still believes that the continent is running short of focus. He added that there is short of strategic thinking on how to iterate, pivot and finally scale. However, there are notable changes in the continent as per now.
The other person to agree with Zyl sentiments is Victor Asemota, an investor and entrepreneur. He agrees that the continent lacks focus but his question is who will give the sector a direction. He added that the continent is described as a meta startup that has in it the rest of startups. The United States Agency for International Development (USAID) valued informal trade in Nigeria, Togo, Ghana and Benin to be worth $10 billion in 2008. The greatest opportunity in the continent lies in a trade that does not need any technology. Asometa compares Africa with a startup with founders who cannot realize that they can bootstrap. The founders are in possession of reserves. The main question is if the direction is all that is needed. But we should also keep in mind the challenges that come with infrastructure.
For ten years, the continent has been on the rise courtesy of internet penetration. Nonso Obikili, an economist, agrees that the continent has been on the rise to a given level. He added that Africa could not manage to install the copper wire required to link people using the simple landline in the 80s. This was a huge challenge in the telephony and the same applies to electricity. The continent lacks resources to connect its population with electricity. What will be the innovation? Off-grid or mini-grid power and generators are the answer. According to Obikili, this is already taking place in the continent. He drives us to the fact that innovation is the key pillar for the continent’s growth. The first should be mobile, leapfrogging, and then upcoming growth and lastly consumerism. These are the key areas where the continent is succeeding in. But Asometa does not believe that the continent is at its rightful place compared to China and India. The two countries are at scale, therefore, bringing more mobility. He added that there are more Starbucks that are putting up in the two countries than any other place globally. The middle class in those countries are doing great while in Africa they are facing challenges.
According to Obikili’s opinion, the IT infrastructure in India was constructed with a purpose of linking the Far East to the west. India was in a position to maximize that opportunity. This is because India has renamed itself as the outsourcing world capital due to the dot-com boom. Despite the economic and social challenges it faces it has benefited from the growth of technology. Infrastructure is the main challenge as to why the continent is not doing great. The challenge, therefore, is how to improve infrastructure in the continent.
Mark Essien founder of Hotels.ng said that the continent has not yet sourced for a better business model. He worries that Africa’s dependence on land for survival will not force its people to embrace technology. He said that the continent has many products that are market fit. For instance, Ethiopian Airways is on a drastic growth as an airline. There is a lot of cocoa being exported from Ivory Coast. The continent only needs to invest much of its time and money in the available startups. Essien added that the continent needs to export value to the rest of the world at it should be more seamless value.
To scale the continent, it will need investment and time. It will also call for the role of stakeholders like entrepreneurial communities, corporations, and governments. All these should read from the same script rather than a solo move. According to Keet van Zyl, the continent lacks a collective effort in its growth. The continent has registered a world-class innovation around fintech and mobile. But it lacks intergradation in its borders.