Since 2019, there has been a massive explosion in growth and investment in African tech companies.
In November 2020, Ugandan and Ghanaian-owned fintech startup Chipper Cash raised a US$30 million Series B funding round with participation from Bezos Expeditions, the VC fund run by Amazon’s CEO.
Chipper Cash represented a high-potential opportunity for Bezos — the startup has already scaled to 3 million users and reached a monthly payments value of US$100 million, according to CEO Ham Serunjogi.
Jeff Bezos’s firm is not alone in showing interest in the African tech ecosystem. As of 2019, Microsoft, Facebook, and Google got involved in accelerator programs in African tech.
Square and Twitter CEO Jack Dorsey, who travels the world regularly to explore new markets and international talent, also decided to spend a full six months on the continent because he believes, “Africa will define the future.”
The global trend of looking further afield for opportunity has particularly boosted tech startups. In Africa, the focus is on fintech.
Getting small enterprises and people online, especially the 66 percent of Sub-Saharan Africa’s 1 billion people who are unbanked, has factored prominently in investment decisions, according to World Bank data. Fintech became Africa’s highest-funded sector in 2019, reaching an estimated US$2 billion in venture capital funding.
Africa faced Covid head-on and the economy prevailed
The World Health Organization’s (WHO) Regional Office for Africa predicted a rapid increase in the number of Covid-19 cases this year, but three months after the continent’s first case was detected, death and case numbers were lower than those in any other region, according to the Africa CDC.
The WHO attributed this to several factors, all of which contributed to Africa’s resilience in the face of a virus that quickly toppled much of Europe and the Americas:
- A young population: the median age in many countries is between 13-19, a low-risk age group.
- Limited communication infrastructure: it is hard for people to travel between certain towns due to poor roads, which minimizes the spread of infection.
- Early mitigation steps: Each country quickly took action, including shutting down airports, closing schools, and instituting strict lockdowns.
Shaun Truelove, a scientist at Johns Hopkins Bloomberg School of Public Health, says, “Part of the problem in Africa is that the world often assumes the continent will fail at everything. I think that heterogeneity is something that may have a big impact here and I think we’re going to start to see it soon what that really means.”
Why is African tech grabbing investor attention right now?
As Truelove pointed out, heterogeneity may have contributed to the continent’s resilience in 2020. It may have also sparked original ideas to solve issues that no other continent was identifying.
Africa’s diverse tech scene has been one of the fastest growing in the world this last decade. The continent has hosted the emergence of innovative companies when other regions were focused on restarting their economies.
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Also, funds are looking for attractive technology investments with plenty of potential — something they may not be finding in their local markets due to Covid’s impact on the economy. A global outlook is now the norm.
As we enter 2021, more firms evaluating expansion or portfolio diversification are expected to consider Africa. Investors in the tech space know that startups often grow by hiring engineers, designers, and innovators regardless of their location, and they are encouraged to look to an expert in global hiring to support their portfolio’s growing teams.
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