When Jack Dorsey, the founder and CEO of Twitter and Square, told people
he was moving to Africa for a few months in 2020, it raised some eyebrows
in Silicon Valley. After all, tech companies have consistently looked to
China and India when they talked about reaching vast, untapped populations
who are slowly coming online and needing smartphones, cloud computing and
mobile payment infrastructure.
But it turns out in 2020, that sounds a lot more like Africa rather than
China or India.
For years, it was known derogatively as the dark continent, while
colonialism and general ignorance about Africa's people skewed
perceptions. Even today, if you listen to American media cover Africa, you
mostly hear about famine, Ebola and violence from militant groups.
And while countries like Burkina Faso, Mali and Niger have had to deal
with a recent spate of extremist violence.
Africa is a big continent and much of it is open for business.
Today, Africa has more than 600 active technology hubs, organizations with
the local address, facilities and support for tech and digital
entrepreneurs. That's up from 442 in 2018.
Big tech companies from the U.S.
have noticed and are beginning to focus more and more on Africa as the
next big market.
Africa is home to 54 countries and a population of more than 1.3
billion people. And according to the U.N.'s
world population prospects of 2019, that's expected to explode to 4.3
billion by the start of the next century.
The African population also remains young, very young.
The median age in 2020 is projected to be under 20 years old .
In 2019, s ix of the top 15 fastest growing economies in the world were
projected to be in Africa, according to Focus Economics.
The list includes Ethiopia at one, Rwanda at two, the Ivory Coast at five.
Tanzania at 10. Senegal at 12, and Ghana at 15.
African startups last year reached $2.02
billion in equity funding.
That's a new milestone, according to global investing firm Partech
Africa's 2019 report on VC funding for African startups.
Ben Lynette is a venture capitalist in San Francisco.
His company, Lynette Capital, invests in African startups.
One of Lynette's investments is in Flutterwave, which provides payment
solutions for companies like Uber.
I'm really optimistic from a general standpoint that tech enabled startups
can be the driving force that has historically been lacking at building a
lot of basic infrastructure, allowing people to get into the middle class.
Last year, the African Continental Free Trade Area was formed with the
goal of creating a single market on the continent and dealing with the
ongoing issues like infrastructure and bureaucracy.
The agreement couldn't have come at a better time since many believed the
continent is poised to take off.
According to the London based think tank Future Agenda, Africa's total GDP
could at 2.6
trillion this year and GDP growth is projected to accelerate to 4.1
percent by 2021, according to the African Development Bank.
With a growing middle class, that number could easily head higher as the
continent tackles its lack of critical infrastructure.
Only 43 percent of the population has access to electricity and internet
penetration on the African continent is only about 40 percent as compared
to the more than 60 percent of the rest of the world.
Infrastructure is one reason, but another is cost.
American tech companies know this.
But so does China. The country's Belt and Road Initiative demonstrates how
serious China is about helping African countries develop the roads and
travel infrastructure necessary to grow businesses.
In 2017, there were more than 200000 Chinese citizens working under
contract in Africa, according to the Johns Hopkins China Africa Research
Initiative. And they worked on ports, pipelines, power plants and
railways. At the same time, a number of U.S.
technology companies are working to gain a foothold in Africa, and some of
the locals are trying to make it easier.
David Osei is the CEO of Silicon Accra, a 60 acre technology park.
He's building in Accra, Ghana.
The park will include residential and retail units as well as recreational
facilities. It will also house the African Institute of Mathematical
Sciences. The park will open in 2022, but he's already talking to large
American tech companies about locating there when it's fully complete in
2023. Africans, we love Americans.
because when an American to do a partnership with you they leave knowledge
behind. They leave you with experience, they leave you with empowerment.
I'm not saying we don't get that with the Chinese necessarily.
But I'm saying that we are yet to have that model from the Chinese.
We see the Americans come in willing to participate, willing to train.
So we want Americans to come to the party or else they will come and
realize that there's a little bit too late because Africa is growing
exponentially. At the same time, companies need qualified workers to fill
positions on the continent.
But that is improving as well.
Charles Laba is the head of GMEA, a Ghana-based tech group that works with
fintech, manufacturing and oil industries.
Laba has worked with tech giants like HP and Cisco for the last 25 years.
And he says when he first went into business in 1990, finding qualified
people was difficult. That's beginning to change, though.
And so they actually quite a few other people in Ghana who have come in,
who have been educated outside and come back to Ghana.
The end result is a larger pool of qualified people and increased
dependence on technology.
The challenge about coming to Africa is really finding the right partners
who is going to collaborate with you .
You know we still have our challenges in terms of the policies and in
terms of creating actually conducive business environment, which
actually respects the rule of law. Big tech understands that, a nd it's
already begun to maneuver.
In November 2019, Twitter founder and Square CEO Jack Dorsey announced he
would be moving to Africa.
Analysts who cover Square weighed in on the move, saying Africa was
untapped and underserved, that the region was the future of payments, and
that Dorsey's move was forward thinking.
Jack, I think, is looking at Africa as a huge growth vector for the
company. I think if you ask him, his perspective will ultimately be around
users and revenue. And then lastly, I think he's got a view that he has to
figure out some way to decrease the hiring pressure here in San Francisco.
And so by creating a more remote workforce, and he may lead by example.
In fact, mobile payments and social media are how big tech hopes to gain
traction on the continent.
Online retailer Jumia offers a cautionary tale about opening a consumer
facing business in Africa.
After much fanfare, it became the first African tech firm to list on the
New York Stock Exchange in April 2019 .
But the company has hit a rough patch and has been forced to close offices
in Cameroon and Tanzania .
After hitting a peak valuation of near $4 billion dollars, Jumia's market
cap has fallen to just over $440 million.
U.S. tech companies know the potential in Africa, and they're well aware
of the potential pitfalls.
Still, many of them are making significant investments on the continent.
Microsoft arrived in Africa in 1992, but it wasn't until 2013 that it
launched the 4Afrika Initiative, its business and marketing development
engine on the continent,
From health care to agritech to fintech.
There's really been quite a bit of investment that has been landing across
the continent, but also just innovation, local innovation that is taking
off as well in different markets and different markets are different
stages as we look at it.
But the opportunity for scalability busy of some of these solutions is
actually quite there. Microsoft is looking to promote its cloud
technology, which it says will provide a number of benefits.
Entreprenuers will be able to deliver new services to market faster.
Businesses will become smarter and make more data driven decisions.
Governments will be more transparent, efficient and accountable, which
improves local climate for business.
And every citizen will have access to key services.
But you have to have critical infrastructure, and more than one tech giant
is focused on providing it.
Facebook's biggest problem of reaching all of its users is getting them on
the internet cheaply. So what are they do?
They help enable startups that are building cheap internet.
To that end, Facebook, Airtel Uganda and BSC worked to complete a 770
kilometer network in northwest Uganda to bring mobile broadband to some 3
million people. In South Africa, the social networking company worked with
Vast to connect with the underserved communities to Wi-Fi.
And in Nigeria, it teamed up with Main One to build out 750 kilometers of
fiber. Last year, the Wall Street Journal reported that Facebook was in
talks to lay an underwater cable that would go around the entire continent
and drive down the cost of bandwidth.
The project is known as 'Simba' for the Lion King character.
Meanwhile, Google has its own plan, called Equiano, named after the
Nigerian-born abolitionist and writer who was a slave when he was a boy.
The plan to connect Portugal to South Africa, the first phase of the
project is slated for completion next year.
Google also has a number of initiatives across Africa, including Google
for startups, which announced last September it had started its first
Africa immersion cohort.
It was a twelve week program meant to share expertise with tech startups
from Africa. One of the companies they worked with is called Kwara, which
provides online and mobile banking services for financial institutions and
members. Amazon has been in Africa since 2004, when the company opened its
development center in Cape Town.
The center focused on networking technologies and customer support
software. In 2015, the company continued to expand with an office in
Johannesburg. Two years later.
Amazon introduced AWS Direct Connect to Africa.
Available in every country in Africa since 2016, Netflix is now
programming to its audience.
Queen Sono is a crime drama series coming in February 2020, and it's its
first African original series.
It features South African actress Pearl Thusi.
More African shows have been commissioned from South Africa, Zimbabwe and
Nigeria. In late 2018, the countries in Africa signing an agreement to
develop the African Continental Free Trade Area, an agreement the director
of the International Trade Center called a game changer.
Africa is taking off and it's a good time to be involved in the transition
of Africa. As 54 different countries to Africa, as one continent on trade.
This year we are launching the African Continental Free Trade, which is a
very big deal because all 54 African countries agreed to now have a trade.
Now, this is not just a trade deal on paper.
But it's going to be trade, That is going to transcend groups and
services, intellectual properties. In November 2019, The African Union met
in Ethiopia to discuss its goals for its member states.
The A.U. also wants to promote continuing education in Africa by creating
a virtual university that will allow students to access from anywhere in
the world. And it's also adopted cybersecurity as a flagship program to
ensure that these technologies are used for the benefit of African
individuals, institutions and nation states by ensuring data protection
and safety online.
African leaders, it seems, also know the importance of Internet
connectivity and are taking steps to improve it.
Elon Musk, who's from South Africa, isn't going to wait.
In January 2020, Musk's company, SpaceX, launched another rocket
containing 60 Starlink satellites.
Musk hopes to have 700 in orbit by mid year and to create a mega
constellation designed to provide low cost Internet to underserved regions
like rural America and Africa.
Even of the continent's demographics are changing.
Consulting firm McKinsey projects that half of the populace in Africa will
live in cities by 2030, which will help increase overall Internet access.
My experience has been very positive in terms of how big tech interacts
with these startups. And as I've said, how they rely on a lot of ways and
it will be easy to paint the picture of Colonization 2.0.
But the reality is we're still so early and we need as a continent, I
think it needs all the focus and energy and resources that can get at this
stage. And we're far away from it being a competition type environment on
the basis of there's just so much to do.
Africa is becoming seamless.
Slowly, we're not there yet.
They do have all these policies, as you said, in place , where it's going
to be open borders, open economies, open movement, and that's going to
change all the dynamic massively.
This inevitably has to happen.
And I actually think if we Africans don't step in and make the best of it,
we're not gonna get anywhere. And so I think inevitably, organically, we
have to grow.