Technology, one of the major determinants of economic growth has been said to be methods and procedures used to produce various goods and services. Over the past decade, Africa has experienced significant development in the area of technology, although not enough to attract significant global attention, but when dialog pertaining to the continent’s willingness to harness the potential implicit in information technology arises, it certainly cannot be ignored. The continent now has a number of countries listed in the top 100 nations exploiting technological solutions to promote socio-economic development. Mauritius is Africa’s most developed financial hub and she is ranked 45 in the 2015 Network Readiness Index (NRI) compiled by the World Economic Forum. Other countries such as Seychelles (74), South Africa (75), Rwanda (83), Kenya (86), and Cape Verde (87) are the only other entrants into the top 100 list. Ironically, Nigeria despite overtaking South Africa last year to become Africa’s largest economy, failed to feature in the top 100 and ranked of 119 out of 143 countries, which indicates the level of technological development in the country.
Despite these shortcomings, a few sectors in Nigeria have blossomed with the infusion of technological solutions which has been majorly driven by “startups”, a word which is now common-place within the world of business. According to PRX Co-Founder and CEO Ricky Yean, poverty was highlighted as a primary factor in access to startup success. Sub-Saharan Africa, been known to be among the poorest regions in the world coupled with the advent of the present economic recession in Nigeria, has propelled the Nigerian government to focus their attention on developing other sectors of the economy.Technology, which is key in making this plan a success is often neglected. Startups on the other hand have the key to ignite technological development, which in turn will wheel economic growth into a positive motion. The present development in Africa and Nigeria “being one of the hotspots for technology in Africa” has actually proven Ricky Yean wrong.
In spite of the prevalent economic challenges, Africa is booming and a lot of this economic growth stems from investment in technology. According to World Bank projections for global growth, out of the 20 fastest growing economies in the world right now, 11 are in Africa. This growth can be seen via the move away from labour intensive economies to ones which largely rest on telecommunications, banking and retail. Confidence in the technology and startup sector across Africa is reflected in the fact that senior executives are starting to leave secure positions in banking and telecoms in order to start their own businesses. Factors such as the declining cost of high-speed internet, the rise of smartphone use across the continent, innovations in banking and payments technology and the increasing availability of early stage investment funding will all play major roles in the development of Africa.
For sectors like retail, which rely on the buying power of consumers, the growth of the middle class and their access to mobile internet has provided many young companies with access to millions of potential customers. As summarised in a recent CNN article, mobile commerce is accelerating the development of retail in Africa by leapfrogging the need for capital-intensive mall infrastructure and quickening the establishment of logistic networks.
The youthful populations of countries such as Kenya and Nigeria are also key users of new mobile services and products. As well as being key consumers, young people offer a huge potential talent pool. However one challenge faced by startups in countries where the average age is 19, is finding training and mobilising this potential talent. Tackling this issue is important as lack of talent is a major barrier to growth. For the countless African startups benefiting from new technological developments, growth isn’t simply hinged on an increasing smartphone-carrying middle class. Many of the small startups and businesses driving Africa’s technological revolution are heavily reliant on capital investment. On the other hand, early stage funding headed up by bold investors are growing fast and can bridge the gap between access to funding and a sustainable growth. These funds aren’t unique to hotspots such as Nigeria, Kenya or South Africa. Uganda, Ghana and Senegal are all beginning to develop their own tech communities led by vibrant entrepreneurs.
It can be said that making a sweeping statement concerning the future of the continent is hard, however, one thing we can be sure of is that growth in areas such as banking, retail and telecommunications will largely stem from an increasingly healthy ecosystem of tech startups and early stage investors.