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Our Blog

Our Predictions for African Tech in 2020

1/7/2020

 
Before we get into the predictions, we’d like to thank our contributors:
Akinyi Ochieng, Esther Ocloo Fellow, Botho Emerging Markets Group 
Bryan Mezue, Entrepreneur and Investor
Suki Fuller, VC & Analytical Storyteller

China on the Move

Over the past decade, the bulk of funding for African start-ups has come from global tech and financial hubs in Silicon Valley and Europe. That's slowly beginning to change. In 2019, Chinese investors showed a growing interest in the promise of high-growth sectors in Africa, particularly transportation and fintech, as demonstrated by recent investments in Lori Systems, PalmPay and OPay. All three investments highlight how Chinese investors are focusing on sectors where they have expertise based on their homegrown experience building tech solutions in environments with poor infrastructure and an urban-rural divide.
 
Lori Systems, for example, counts Hillhouse Capital amongst its Series A investors—the same investor that backed the Series A of Huochebang, the Chinese Uber-like trucking service that recently merged with Yunmanman, another major Chinese trucking app, to form a logistics company now valued at more than $2 billion.
 
In the case of PalmPay and OPay, Chinese investors may be seeking to help African start-ups adopt the same platform plays that have turned tech giants Alibaba and Tencent into multi-billion-dollar companies catering to Chinese consumers of all income brackets. For example, Opera-owned products such as ORide, a ride-hailing service, OFood, a delivery service, and OLeads, an online lead generation platform targeting SMEs, can now tap into OPay’s payments infrastructure.
 
If Jack Ma, co-founder of Alibaba, is to be believed: “African entrepreneurs will drive the next digital revolution.” And in 2020, Chinese investors will support that promising future
, with a focus on key sectors where the Chinese have honed their expertise reaching the last mile: transportation, logistics, e-commerce and financial services.

Local Solutions to Local Problems

Perhaps we are moving away from the times of taking solutions from the western world and transplanting them directly into an African context. While there are countries like Kenya that have a great reputation for widespread tech adoption, when you consider the rest of the continent, the transplanted solutions can’t pass muster. A 50% problem in London is probably a 50% problem across Africa. We’re looking forward to seeing more startups building solutions that solve problems faced by at least 50% of the continent. That AfriTech XYZ program has given insights into the types of startups being built across our 6 focus countries in Africa and we’re encouraged by the obsession these early-stage founders have with locally experienced problems. Something we didn’t see a lot of are HealthTech startups, hopefully, we’ll see more of those when we recruit for our 2020 cohort. 

We predict that we’ll see more companies focused on Continental Africa and internal issues than external rest of world. Innovation will target local infrastructure and utilizing homegrown talent. Also, the number of returning diaspora will continue to rise to bring more influx of capital and additional skills. Rest of world investors will also continue to enter the market, due to lower costs and potential market growth but only truly gain higher penetration with local partners and through M&A. Models previously used to gain a foothold in the continent will need to be more locally focused. The potential to build and rebuild infrastructure in a more sustainable, efficient, environmental and technologically advanced manner surpassing "western" societies is a huge opportunity for African tech startups. 

Food Production 

There is a massive opportunity for more FoodTech across Africa. While AgriTech is an area with a large number of companies, the type of food and how food is produced is and will be one of the largest issues concerning climate change currently under-addressed. With depleting natural resources, food eating (meat in particular) will need to be reassessed. African food production should be part of this conversation. 

Security/Privacy Solutions

We’re calling for more security/privacy companies across Africa. We will need to be more robust (ID verification or similar) for growth, especially as larger global companies use more invasive methods (facial recognition) with technologies to dominate market spaces. As technology continues to advance the need for robust security/privacy solutions across Africa continues to rise. Where are the companies developing and delivering these solutions on large and small scales?

2020 Wishlist
  • IPOs that highlight the potential of the African consumer market. 
  • B2B AI solutions for SMEs across Africa. 
  • An answer to the Governmental disruption to connectivity we saw in 2019 e.g. Ethiopia.
  • More Governments will decide to champion the tech ecosystem in their country e.g. Rwanda.

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