The African landscape is changing
When hearing “Africa”, there is an immediate association with political unrest, humanitarian disasters and wild animals. But it would be a mistake to underestimate the potential of Africa. The landscape is changing, and that too at an unprecedented pace.
The current numbers suggest highly fertile ground for change. With a median age of only 19.4 years, the African population is extremely young and growing. As a result, one-fifth of the world’s population will be living in Africa by 2025.
That means that Africa’s workforce is expanding, predicted to surpass both India’s and China’s working population within the next 15 years.
On top of that, Africa is witnessing rapid urbanisation: 45 per cent of the population will be living in urban environments by 2025, earning increased incomes. So, if we can say one thing for sure, it is: Consumer spending in Africa is about to experience an unrivalled boost.
Genuine solutions for genuine problems
A new generation of entrepreneurs all over Africa is hustling to meet this increased demand, simultaneously recognising the opportunity to improve people’s lives.
Take Melissa Menke, Founder and CEO of Access Afya. Her team is responding to the lack of accessible public healthcare in Kenya by offering a Digital Operating System for health. What makes the chain of clinics, pharmacies and mobile health teams unique is its focus to serve patients below the poverty line.
Currently, 72 per cent of Africans are living in urban slums, unable to afford basic healthcare. Hence, with an average price as low as US$3.90 per medical visit, Melissa is not only addressing an enormous market but also making a genuine difference to an entire society. Sounds exciting? Welcome to the African world of entrepreneurship!
The same is true for Abid Khirani, the Founder and CEO of the tech startup Casky. Based in Morocco, Abid recognised the tremendous risk many moto drivers face on their vehicles every day.
Hence, he created a comprehensive road safety solution for moto drivers, reducing moto accidents in Marrakech by 10 per cent within five years.
As a smart device that can be attached to any helmet, Casky doesn’t only make two-wheelers visible but alerts the rescue when needed, using Big Data to notify the driver of road-related dangers and even encourages the user to be a more responsible driver. It is the dream of every African entrepreneur.
An African Solution to an African Problem, yet potentially scalable to a global market of 5.3 billion users.
The great need for investment
Both Melissa and Abid have recently been selected by the renowned programme Pitchdrive II (created by Co-Creation Hub in collaboration with Google for Startups) to participate in a deep tech tour in Asia.
Just last week they were hosted by the co-working space Found8 in Singapore to meet potential allies in the SEA region. Two intense weeks of travelling, pitching and networking should help them find what is desperately needed for the success of African entrepreneurs: foreign investment.
Despite the huge market and high-quality solutions developed, investors are still hesitant when it comes to funding African entrepreneurs. While in 2018, tech startups in the SEA region could benefit from an amount of US$10 bn invested, Africa’s tech scene only received US$1.2 bn.
Entrepreneurship in Africa – too risky?
However, it is comprehensible that investors are put off by the increased risk African startups are facing. Indeed, African entrepreneurs are still facing extraordinary hardships. Many are unbanked, hence financially limited in building up their businesses. Furthermore, recruiting a high-quality team is often easier said than done.
Human talent in Africa is scarce given the fact that Africa’s rate of higher education enrolment is half of India’s, but also due to the strong brain drain. It does not exactly encourage entrepreneurs either that property rights are rarely emphasised in the legal systems – which are frequently flawed or badly enforced.
Moreover, entrepreneurs often lack the crucial infrastructure to develop and implement their solutions. For instance, two-thirds of Africans still lack internet access. Finally, both entrepreneurs and investors are facing an overall increased risk drawing from political and economic instability.
While these are serious challenges, Africa offers the highest return on foreign direct investment in the world, according to the Overseas Private Investment Corporation (OPIC) and UNCTAD. The reason is that in Africa, the problems and challenges are vast and real for numerous people.
As a result, innovative solutions that considerably increase life-standards are, once established, very likely to be adopted and defended by customers.
For SEA stakeholders, it is now time to draw their attention towards the African startup ecosystem. With the upcoming implementation of China’s Belt and Road initiative, SEA would greatly benefit from disposing of an existing network in Africa.
Building connections takes time and effort, but the SEA finds itself in a good position. In many ways, Africa is currently going through the struggle of development SEA has been confronting for the past 30 years.
Entrepreneurs determining the future of a continent
The new rising generation of African entrepreneurs has historical value. Unlike their parents, they are not doomed to merely accept the present situations in their countries while relying on undesired foreign help.
Instead, technology empowers them to create disruptive solutions – advancing their societies, creating jobs, boosting the economy, even influencing politics. It is no doubt that their potential impact is without limits.
However, founders like Melissa or Abid are very well aware of the hustle it takes to be an entrepreneur in Africa. But for them, giving up is not an option. They know that Africa needs them, just like they know how profitable serving the needs of the African people can be.
The combination of potential impact and business opportunity is precisely why African startups are extremely hungry for change.
Investors should be too – and get ready to provide the necessary ingredients to transform the future.
Having travelled and worked in several developing countries such as Cameroon, India or Malaysia, Camilla is passionate about the link between entrepreneurship and development.
She believes that supporting young entrepreneurs is decisive for accelerating growth in any country. As the Associate for Europe & UK at the management consulting firm Foxymojo & Co in Kuala Lumpur, she is currently assisting European and African startups to settle in the SEA market.