- Africa’s population to double by 2050
- E-commerce players in Africa
- Viability of African Instant Messaging endeavors?
- Africa, a global leader in fintech
Africa’s population is expected to roughly double by 2050, adding 1.2 billion people to Africa’s 2019 population of 1.3 billion people. With an internet penetration rate of 35.9%, Africa has 474 million estimated internet users (Source: Internet World Stats-www.internetworldstats.com). The stakes in Africa’s digital economy have never looked higher for a market too big to ignore.
Notably, the digital economy in Africa is expected to grow to over $300 billion by 2025 at an annual rate of 40% (McKinsey, 2013), on the back of massive mobile penetration, among other technologies. This has and continues to spark the interest of both African and global players in the telecoms, fintech, e-commerce and artificial intelligence spheres among others.
Global e-commerce giants, Alibaba and Amazon have simply copied their models and pasted them to Africa, in the hope of yielding fruit as is the case elsewhere. Alibaba and Rakuten would be the customized versions of Amazon, that is, e-commerce platforms for China and Japan respectively. In much the same way, Africa’s first unicorn, Jumia has distinguished itself as an African equivalent in that regard.
It must be noted, however, that some of the challenges encountered in this quadrant are structural issues that have to do with internet connectivity, mobile phone access, smartphone penetration as well as financial inclusion.
While Jumia is arguably an African firm, a copy and paste model might not be as ideal, no wonder we have seen its withdrawal from certain countries, most recently Cameroon. African problems require African solutions, not to dismiss hybrids too! Kilimall, launched from Kenya has grown into Uganda and Nigeria while Takealot is the go-to online retailer in Southern Africa for the shopper that seeks a convenient and simplified online buying and user experience.
Konga, launched in 2012 as a Lagos-only e-commerce site, has transformed into a major online retailer, has joined forces with leading Nigerian banks to launch KongaPay.
In India, there is a contest in the e-commerce space between Flipkart (founded by Indians), Amazon India and PayTm mall among others. Late last year, America’s Walmart acquired a controlling stake in Flipkart in a deal worth US$16 billion. Could that also be coming to Africa?
In a scramble for the digital social space that has already been occupied by Facebook and its several brands averaging 140 million African Facebook users per month. MTN the leading mobile operator in Africa, leveraging on a subscriber base of just below 250 million subscribers across 20 African states, last year announced plans to introduce an instant messaging (IM) service akin to China’s WeChat and Facebook’s WhatsApp as it looks forward to boosting revenue from digital services and mobile money.
Cassava Samartech (Zimbabwe), the Econet Global owned company launched a chat app targeted at the African continent mid-2019. Like WeChat, Sasai combines social interaction (chatting) with payments. Sasai aims to build on Econet’s subscriber base of over 9 million people on the continent.
In China, protectionist policies helped We Chat thrive especially with the banning of Facebook. Question is would these instant messaging integrated platforms flourish without similar protectionist moves by Africa.
Africa is often 5-10 years late where most of the innovations are concerned. Nonetheless, the Advent of Mobile money platform; M-Pesa by Kenya’s Safaricom proved Africa can also lead the world where digital innovation is concerned. CNN’s Richard Quest could not help but express his fascination with the concept “Kenya has become a World leader in the mobile banking revelation, it’s all thanks to the system, M-pesa!”
M-pesa has a presence in more than 10 countries with tens of millions of users across the continent, a concept which has been replicated by Econet in Zimbabwe successfully is under serious consideration in Ethiopia as the telecommunications sector gets liberalized by government and is being relaunched by MTN in South Africa.
Not to be outwitted is Airtel Africa which in October announced a partnership with Mastercard, giving more than 100 million Airtel Africa mobile phone users across 14 African countries access to Mastercard’s global network.
In November, US payments technology corporation Visa acquired a minority stake in Lagos-based digital payments firm Interswitch Group at a valuation of $1-billion, effectively making the fintech company Africa’s latest unicorn.
As the digital banking trend continues to grow, banks are moving from brick and mortar structures to depend on digital platforms. Standard Bank in South Africa closed about a hundred branches in a migration move to digital banking. In the same country, a fully digital bank, Tyme bank was licensed in 2017 and hit a million users by the end of 2019. TymeBank does not have any physical bank branches and relies on an Android banking App, an Internet Banking site and a partnership with two retail chains, Pick n Pay and Boxer.
Uber, the ride-sharing platform has over the years reached some 2.7m active monthly riders and just over 59,000 drivers having expanded into 14 cities in sub-Saharan Africa and consolidating in major hubs such as Cape Town, Nairobi and Lagos. Taxify, the Estonian competitor has a significant footprint in South Africa, Kenya, and Uganda.
There remains stiff competition from various players in Africa. Little Cab, a Kenyan ride-hailing platform backed by telecoms operator Safaricom, allows customers to pay for their ride or others’ through Safaricom’s mobile money service, M-Pesa. In Nigeria Oga Taxi, launched in 2016 gives passengers three ride options while in South Africa, Yookoo Rider was launched in 2017 by the South African Meter Taxi Association and continues to grow its footprint across the Rainbow Nation. New entrants continue to surface with the Vaya app launched in Zimbabwe in 2019 and Solride (Nigeria) this January.
While this article has focused on a few aspects there remain various aspects of Africa’s digital economy where young entrepreneurs are voraciously exploring to site, agriculture, healthcare, cloud computing, big data analytics, blockchain technology, the list being interminable. Ventureburn reports 88 disclosed deals for African Startups which netted just below US$300 million, with Fintech deals accounting for about 18% of the figure.
To take you down memory lane, in the early to mid-’90s, eastern and western markets were hooked onto the mobile phone trend. At that time, Africa was excluded from the use of mobile phones. Those with an eagle eye saw Africa’s potential, invested in Africa’s telecoms industry which is now worth billions of dollars. Similarly, Africa lags in terms of I.T infrastructure and smartphone penetration, it’s only a matter of time before Africa catches on.
The fight for Africa’s digital space promises to intensify into a clash of the titans. “Clash” based on ideal and relevant innovation vis a vis financial muscle. Believe you me, at this point, it remains anyone’s game that will boil down to the most relevant, custom made innovative solutions.
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