The African technology ecosystem is brimming with potential - potential that often feels buried in the minds of its numerous innovators who struggle to access funding to bring their ideas to life. It is also full of tenacious and hardy creators who make the most of every situation, good or bad. A great example of this has been the past year, which has been one of immense global challenges, a colossal crisis that most expected would drive Africa into extreme poverty. Instead it proved to be a fantastic year for African tech, and we’re excited to see what 2021 holds for the sector. For this week’s blog, we spoke to a few founders in the ecosystem, who had a lot to say about how to maintain this new momentum and keep pushing the growth of the sector in 2021.
Funding is one of the biggest challenges in the start up space globally - but acutely more difficult to come by in Africa. Yet it hasn’t seemed to be the case in recent months. In fact, African startups raised over $700m in venture capital funding in 2020, a significant increase from previous years, even in the midst of a pandemic. We’re excited to see what the figure will be by the end of 2021!
According to Zach Bijesse, Co-Founder at PayHippo, “Investment will reach an all time high”. This is largely due to the fact that the pandemic has pushed the adoption of new ways to do things, such as mobile payments, digital solutions in the agricultural sector and health technology - innovations which have the ability to attract investment like never before.
Luna Bawa, CEO and Co-Founder at EveryFarmer believes that “COVID will most likely be around for a much longer time and might drive new ideas in biotech especially in preventive medicine, driving more investment into the sector.” Other beneficiaries will include “startups innovating around the challenges associated with smallholder farmers onboarding and digitization.”
David Chen, Co-Founder & Co-CEO at Kapsule shares the same sentiments as he predicts “over ten $100m+ deals coming from Africa leading to increased investment in specific sectors like healthcare, finance, agriculture and energy.”
Luna Bawa and Dayo Akinrinade, Founder of Africlick both believe that Fintech will continue to attract more investment in 2021 and we can understand why. Data from Disrupt Africa’s African Tech Startups Funding Report 2020 revealed that 2020 saw 99 venture capital deals in the African fintech sector valued at USD 160 million+, representing 24.9% of the overall total. For Fintech in 2021, the only way is up!
International investment into the African technology sector has historically been higher than that from local investors. Mike Mompi, CEO at Enza Capital believes “there will be an increase in international investors and private capital looking to the African continent for yield. They will also be looking for big solutions to big problems for a big population. As one of the final frontier markets, and one which is increasingly understood as a grouping of distinct countries with nuanced risks rather than one big Africa with 'Africa Risk', investor appetite will increase alongside increased understanding of the nuanced opportunities and risks,” he concludes.
Unemployment levels in 2020 have made it more evident that young people in Africa need better access to digital skills to compete in the job market. The pandemic led to the creation of more jobs in the tech sector, however there is still a lack of adequately trained young people to take up these roles.
“As more Africans are exposed to the potential of building tech-enabled solutions or working for a tech company, it becomes inevitable that platforms that seek to upskill both founders and tech workers will become more prevalent. As Africa and Africans begin the voyage towards the technical talent tipping point (the point where there is more quality talent than the market needs), these upskilling programs will serve to bridge the talent quality gap”, says Uche Nnadi, Chief Technology Officer at PayHippo.
David Chen also believes that “there will be opportunities for increased employment in tech and other location independent knowledge work areas (digital marketing, software development, SEO) as employees tap global resources.” This will also lead to the growth of remote working in the African technology sector, according to Gabriel Amodu, Co-Founder at Peersview, as he says it will “continue to grow and become a bigger fabric of our ecosystem.”
“A major challenge for startups in Africa is the digitization of the informal sector of the continent's economy,” says Luna Bawa. However, Victor Thien, Founder and CEO at afringa is hopeful that “tech is about to experience a strong overall growth rate across the African continent as a result of an aggressive increase in the adoption of technology due to the COVID-19 pandemic.”
With all said and done...
We know that growth on the continent cannot happen without infrastructure. The pandemic further exposed the discrepancies in Africa’s infrastructure from lack of access to basic internet and digital skills to regulations needed to make innovation more seamless for young creators. Beni Ngwamah, Founder & CEO at WEKA, says, “The emergence of tech solutions on the continent is great, but in order for these solutions to truly scale and impact those that need it most the right infrastructure is needed to support them. So in 2021 I envisage more solutions that enable infrastructure.”
Indeed, ‘the African technology ecosystem narrative is changing,” says Richard Machomba, Founder and CEO at FlexPay Technologies. The combination of changing customer expectations, technological evolutions, and the emerging new ecosystem will expand the market and create enormous growth opportunities in Africa.
The current wave of growth and innovation in sub-Saharan African tech hubs is exciting. Seeing African startups raising serious capital, technology, and innovation hubs cropping up, business accelerators taking-off, and supportive government policies gives us hope of a new, more conducive environment for growth across Africa.