Africa is largely regarded as one of the next growth markets by investors and speculators alike. Based on the current trends, the notion seems to be coming true sooner rather than later. So far, as of May 2020, the continent recorded 526,710,313 internet users according to internet world stats. For comparison, North America recorded 345,660,847, and Europe recorded only 727,559,682.
Boasting more internet users than North America and 72% of Europe’s capacity is no small feat and a sign of even more growth. The growth in the number of internet users is buoyed by Africa’s young population. For comparison, Africa has a median age of 19.7 while Europe and North America have median ages of 43.1 and 38.6 years, respectively. The number of internet users is expected to double over the coming 10 years, making it second only to Asia.
African’s digital future has moved from the realm of predictions to an unveiling reality. The charge has been primarily led by the availability of cheap digital devices championed by far-east Asian manufacturers. In Nigeria, Africa’s most populous country and the digital market on the continent, more than 74% of internet traffic comes from smartphones. A survey of the most popular smartphones in the African market reveals names like Huawei, Tecno, Infinix, Oppo and Xiaomi – all made in far-east Asia.
Despite these numbers, much of Africa’s digital potential remains untapped. As with all other emerging markets, problems abound that require solving. Although the continent has more internet users than North America, its contribution to the digital economy pales in comparison. This is, no doubt, because of high poverty levels and low incomes that most citizens have to contend with.
However, these problems are also opportunities for value creation. No economy started wealthy. It has always taken the grit and determination of stakeholders to make it work. As the continent embraces a digital future, there are three classes of people who must rise and be seen as pillars of this revolution.
The first class of people who must rise to be counted are the innovators. Several organizations have tried to penetrate the African market to no avail. Billions of dollars have been spent to create digital ecosystems that today do not exist. While the problems that have affected these attempts differ from place to place, they typically have just one thing in common – they were as a result of trying to implement an imported solution on an emerging market.
Every emerging market is unique in its behaviour, and that is something that a lot of solution-providers must keep to heart when addressing the African market. No matter how smart a solution may appear, if it does not take into account the peculiarities of the economy it is going into. Unique solutions will have to be provided for African problems going forward, global boardroom solutions cannot cut it.
Incremental innovations are not going to be enough to capture this market. Disruptive innovations will be required. Innovators can take a leaf from Econet’s adaptive solution to successfully navigating the African telecommunications market. Backwards integration will be crucial to every viable solution.
Another class are investors. The role of investors in the digital revolution that is here is quite simple – prioritize innovations that boost human capital. Africa’s most significant resource, as has been highlighted, is its young population. The continent currently houses over 20% of the global youth population. Investing in innovations that improve the human capital of the continent will yield to elastic growth of the economy.
A growing trend in this direction can already be spotted when the top investment sectors for FDIs are considered. Telecommunications, transportation, financial services and life sciences top the list of most attractive industries for investment.
The last category is the policymakers. The African success stories in the digital economy have, so far, happened in spite, and not because, of policies. Policymakers have to wake up to the reality of a new Africa, emboldened by digital technology.
African leaders might be yet to realize it, but they are in a race with one another. There is immense potential for any economy that makes itself the frontier for digital technology in Africa. As South African President Cyril Ramaphosa highlighted, African governments are yet to embrace this new bright and brave world that their young people live in today.
As the final gatekeepers of economic success, African policymakers have to create an enabling environment for both investors and entrepreneurs to flourish. Free markets must be encouraged as a way to incentivize innovation. Investors’ interests must also be protected.
The digital economy is no longer a prophecy but a reality. If Africa will benefit from it, we must all rise to be accounted for. All of us are critical players in this major economic revolution that is headed our way. All of us are stakeholders in Africa’s future.