Chidera Ejueyitchie, University of Southern California
With talk of self-driving cars, artificial intelligence, and metaverses dominating the headlines, it is hard not to fantasize about the exciting technological innovations the future holds in store. But somehow, despite all the buzz, the prevailing vision of a futuristic new world still has a missing piece—a blank spot the size of a continent.
This isn’t the first time Africa has been forgotten: The continent has lagged behind through each industrial revolution. Today, the African tech industry is ready to finally put an end to this game of catch up.
With bustling marketplaces full of ambitious entrepreneurs, hustle culture is the ever-present undercurrent in the lives of countless Africans. With the threat of poverty propelling industrious Africans into discovering new and creative ways to make ends meet, millions of entrepreneurs are taking to the streets and markets to sell their goods. For the local businesswoman, making money may no longer be a problem, but finding a way to transfer, store, and make payments with that money is.
It’s no secret that underdeveloped financial institutions plague countries across Africa, making navigating everyday life that much harder. A lack of access to financial technology is not just a gap in the market—it’s a gap in the well-being of citizens. Fortunately, the Vodafone Group has slowly but surely helped bridge this gap through M-Pesa, Africa’s first mobile banking platform. Launched in 2007, M-Pesa provides services that facilitate money transfers between 2G feature cellphones. This has revolutionized banking on the continent, allowing the previously unbanked to transfer money from urban areas to less-populated rural villages. M-Pesa laid the foundation for financial technology to flourish in Africa, paving the way for what is now being referred to as the “fintech eruption” of Africa.
Reports estimate $4-5 billion dollars were invested in African startups in 2021, with financial technology receiving the largest share of total funding among all sectors. This boom was bolstered by rapid growth in the number of tech startups, which tripled between 2020 and 2021, with just under half of those startups geared towards providing financial services. The digitization of banking has empowered people to utilize their hard-earned money in new ways, introducing forms of investment and digital currency that are just a click away.
The market has yet to become saturated: 90% of retail transactions in sub-Saharan Africa are still cash based, and only 34% of African adults have a bank account. For African tech companies and investors, there’s certainly money to be made, but unfortunately no shortage of obstacles.
For one, African tech companies are often up against uncertain regulatory regimes. While some countries are eager to create an environment that supports the tech boom, others are busy doling out complex regulations that lack clear mandates. These challenges only serve to make business more difficult for startups, especially those still in their growth phase. Countries must begin to develop regulatory frameworks that foster technological innovation and streamline authorization and licensing processes while ushering in clear policies that work to create a culture of security and transparency that protects citizens.
Besides regulations, African startups are facing stiff competition for talent from the West. As potential employees are often promised better benefits and higher pay overseas, resources in the form of intelligence and proficiency are being swiftly exported from the continent in what has been colloquially referred to as “brain drain.” This means attracting and retaining the very best will be a high priority for any African companies wanting to excel in their industry.
Over the last few years, it has become clear that the Silicon Valley model will not transfer seamlessly to Africa. African consumers have less interest in luxury services and are instead looking for products that serve immediate needs. For now, the innovation happening in African tech hubs looks less like building rocket ships and more like solving everyday problems. However, that in and of itself is groundbreaking, as digitization for Africa means curbing corruption, revolutionizing healthcare, and making security and safety mainstream throughout the continent. For the first time in a long while, the future of Africa lies directly in its own hands.