Category: Thought Leadership

Global Entrepreneur of the Year 2024

  • 5th July, 2024
  • < 1 min reading

We are delighted to announce that ETK Group has been shortlisted for the 2024 Allica Bank Great British Entrepreneur Awards – Global Entrepreneur of the Year category for the East of England region! https://bit.ly/3VX48UQ

The Great British Entrepreneur Awards & Community, often referred to as the “Grammys of Entrepreneurship,” celebrate the achievements of the UK’s most dynamic and innovative businesses.

Each year, the awards receive thousands of applications, demonstrating the competitive nature and high standard of the competition. This year’s shortlist showcases businesses with a combined turnover of £2.9 billion and approximately 20,000 employees, highlighting the significant roles of these businesses in driving economic growth across the UK.

This award is a testament to the hard work of the ETK team and our commitment to the growth of the UK’s economy and businesses. We’re excited about what the future holds for our mission to support UK businesses in expanding into other markets.

We look forward to celebrating with other finalists on the 18th November, 2024 at the JW Marriott Grosvenor House London.

The Role of Africa’s Critical Minerals in the Clean Energy Transition  

  • 6th May, 2024
  • 3 min reading

As the world transitions from carbon-based sources of energy to a more sustainable future, demand is increasing for a range of minerals and metals required for the transition to cleaner sources of energy. From uses in home appliances, transportation, construction, electrical components, and medicine to aerospace technology and infrastructure development, minerals are essential components of modern life. In addition to these applications, minerals such as copper, nickel, platinum, silver, gold, aluminium, cobalt, and lithium are used in renewable energy technologies like batteries for electricity storage, wind turbines, and photovoltaic cells for harnessing energy from the sun. 

Sustainable Development Goal 7 (SDG7), which calls for “affordable, reliable, sustainable, and modern energy for all,” aims to increase the share of renewables in the global energy mix and ensure universal access to affordable, reliable, and clean energy. The decarbonizing technologies required to transition to wind, solar, batteries, and other sustainable energy sources are driving increased demand for these scarce natural resources, creating significant economic opportunities for countries where the minerals are found but also posing social and environmental risks. 

Risks Associated with Mineral Mining 

While minerals are essential for the transition to an electrified future, their extraction from the ground creates a range of social and environmental challenges in countries where the minerals are mined. Extractive industries pose risks to human health, water supplies, and ecosystems. Mining can ravage landscapes, decimate biodiversity, lead to human rights abuses, and be a significant source of greenhouse gas emissions as well. 

Other risks include deforestation, soil erosion, water contamination, dust, and noise pollution. Land-based mining is encroaching on wildlife areas and accelerating the rates of extinction of endangered plant and animal species. The extensive land required for mining is also impacting indigenous populations and leading to a crisis of pollution and toxic waste in local communities. 

Economic Opportunities for African Countries 

With growing demand, proceeds from critical minerals are poised to rise significantly over the next two decades. Global revenues from the extraction of just four key minerals—copper, nickel, cobalt, and lithium—are estimated to total $16 trillion over the next 25 years, in 2023-dollar terms, says the IMF. With sub-Saharan Africa estimated to hold about 30 percent of the volume of proven critical mineral reserves needed to power the transition to renewable energies, this means that Africa stands to reap over 10 percent of these cumulated revenues, which could correspond to an increase in the region’s GDP by 12 percent or more by 2050, according to the IMF. 

The Canadian Mining Journal on Africa’s mining potential reports that the extraction and export of these mineral resources contribute significantly to national revenues, foreign currency reserves, and employment. Lithium, cobalt, copper, manganese, graphite, and many other critical minerals are abundant in the region. Africa produces over 60 metal and mineral products and has huge potential for mineral reserve exploration and production. Over 30% of the world’s mineral reserves are found in Africa, with practically every country on the continent producing at least one critical mineral. According to the Policy Centre for the New South’s research on Africa’s mining potential, sub-Saharan Africa accounts for around 80% of global platinum production, 50% of manganese, two-thirds of cobalt, and a considerable proportion of chromium. 

In spite of the abundance of raw materials, many African countries still export most of the mineral resources in their raw forms. Approximately 70% of mined minerals are exported to Europe or Asia for refining. This shows that local processing options for critical minerals are still limited. 

Mining vehicles digging coal: Source freepik.com

Since the bulk of the economic benefit from these minerals is derived from the refining of the raw materials, the greatest economic gains are realized elsewhere. Developing local processing industries could significantly create higher-skilled jobs and increase tax revenues, thereby supporting poverty reduction and sustainable development. Africa can generate even greater windfalls by not only exporting raw materials but processing them as well. Raw bauxite, for instance, fetches a modest $65 per ton, but when processed into aluminium, it commands a hefty $2,335 per ton in end-2023 prices according to the IMF. 

In line with this, many governments on the continent are undertaking structural reforms to support domestic companies in mining and related processing sectors to retain greater economic value onshore. This includes implementing policies aimed at restricting the exports of raw mineral resources. For instance, Ghana has implemented a green minerals policy aimed at retaining a greater portion of the value chain from the country’s natural resources. Namibia and Zimbabwe have taken similar steps regarding the export of unprocessed lithium. 

Realizing the Gains While Minimising the Risks 

If managed properly, the extraction of these critical minerals has the potential to transform the region’s economic status, according to IMF’s latest Regional Economic Outlook. Accessing these critical minerals in ways that minimize the impact on local communities, protect biodiversity, respect the land rights of indigenous communities, protect workers, and reduce the environmental impacts on surrounding ecosystems is essential if we are to create a sustainable future for everyone. Massive wealth transfers of raw materials in ways that negatively impact communities in the global south to the benefit of consuming economies in the global north are not the answer to a sustainable future. 

 

Nigeria: Net Zero by 2060 – A Progress Report

  • 29th February, 2024
  • < 1 min reading

Recently, the Federal Government of Nigeria announced its commitment in 2024 of ₦60 billion (about US$ 37 million) towards achieving net zero emissions by 2060. The roadmap for achieving net zero by 2060 is set out in Nigeria’s Energy Transition Plan (ETP), which stipulates the specific actions the government will take to decarbonise the economy.

The plan focuses on eliminating emissions from the largest sources of greenhouse gases, which taken together, account for about 65% of Nigeria’s CO2 emissions. In thinking about how effective these strategies will be, the following four questions come to mind:

  • How does Nigeria plan to meet its commitments to achieving net zero by 2060?
  • Are the commitments laid out in the ETP compatible with the goal of 1.5 degrees Celsius, and how well is Nigeria doing in achieving its Nationally Determined Contributions (NDCs)?
  • What has been undertaken so far to achieve these objectives, How well is Nigeria doing with respect to meeting its stated objectives, and what more needs to be done?
  • What does this mean for the country, specifically for individuals and businesses?

We thought it would be a good time to review Nigeria’s strategy for achieving net zero and its impact on businesses and households in the country.

In this progress report, Brent Barnette reviews, assesses, and provides expert insights on Nigeria’s strategy for achieving net zero, progress so far, and how the transition is impacting businesses and households

The progress report can be downloaded here Nigeria’s Net Zero by 2060 Progress Report

Sustainability as a Driver for Institutional Investment in Africa

  • 11th February, 2024
  • < 1 min reading

Institutional investors have a key role to play in helping to close the
sustainable financing gap, which is defined as the shortfall between the expected investment required to meet the UN’s Sustainable Development Goals, and existing investment currently allocated towards achieving those goals. In Africa, the sustainable financing gap is estimated to be approximately 7% of the continent’s gross domestic product (GDP).

As part of our commitment to developing robust, viable, growth-enabled businesses in markets across Africa, we at ETK wanted to explore how the sustainability agenda is affecting institutional investment in Africa.

In this article, we took a look at how the focus on sustainability is creating entirely new business models and new opportunities for existing businesses while considering the challenges these businesses face in accessing financing from institutional investors.

We also delved into how institutional investors and the sustainability agenda are creating a new set of obligations for all businesses – regardless of sector or geography – in terms of transparency
and reporting around non-financial ESG measures.

Our insightful thought piece on how sustainability is changing the way institutional investors engage with businesses in Africa can be downloaded here Sustainability and institutional investment by ETK Group

East Africa: Unlocking Sustainable Investment Opportunities in the EAC

  • 25th January, 2024
  • 5 min reading

The economic dynamics and investment landscape in east Africa present numerous business opportunities for investors looking to tap into the growth potential of the region. The East African Community (EAC), which comprises Burundi, the Democratic Republic of Congo, Kenya, Rwanda, South Sudan, Tanzania, Uganda, and the newly admitted member Somalia, offers exciting prospects for investments.

According to IMF’s Regional Economic Outlook for 2023, the East African Community (EAC) is on a trajectory of substantial economic growth, with region’s real GDP accelerating to 5.7 percent in 2024. The region will register the highest regional economic performance in Africa in 2024, with growth figures at over 5 percent, according to the African Development Bank’s 2023 East Africa Economic Outlook 

While the substantial growth is not equally distributed among member countries, the remarkable achievements of the Democratic Republic of the Congo and Rwanda, which are projected to grow at 7.2% and 8.0%, respectively, in 2024, according to the African Economic Outlook 2023, are commendable. The Democratic Republic of the Congo and Rwanda are among the world’s highest-growing economies in 2024, according to the World Bank’s report on Global Economic Prospects. For instance, Rwanda’s robust digital infrastructure, renewable energy capacity, and favourable economic and political landscape make it the largest economy in East Africa and a significant player in Sub-Saharan Africa.

The EAC’s development far outpaces the sub-Saharan African average, demonstrating the region’s economic vibrancy and the efficacy of its collaborative policies.

WHY EAC?

Ranked number one in Africa by sub-regional population, EAC boasts assets such as political stability, an English-speaking and enterprising workforce, a strategic location, and exceptional natural resources, all of which make the region appealing to investors.

According to a report from Journal Economic Analysis on the attractiveness of the East African Community (EAC) for Foreign Direct Investment, some of the main strengths of the EAC relevant for attracting FDI include fast economic growth, relatively low general government debt, relatively low cost of labour, geographical proximity to regional markets and international markets (special agreements with the EU, US, China, and India), and a high share of young people involved in primary education.

Additionally, the free visa policies of Kenya and Rwanda will substantially bolster economic activities in the tourism sector of the region, enhance regional integration and economic inclusion, and attract global investors to the region.

Another comparative advantage of East Africa is its vast reserves of critical minerals. According to UNCTAD’s Economic Development in Africa Report 2023, Africa is home to 48% of the world’s reserves of cobalt and manganese, 80% of the world’s reserves of phosphate rock, and 92% of the world’s reserves of platinum-group metals, which are critical minerals in the production of electric cars, lithium batteries, and hydrogen batteries. Like other African regions, East Africa is also endowed with a variety of minerals, including fluorspar, titanium, zirconium, gold, oil, gas, cobalt, nickel, diamonds, copper, coal, and iron ore. These mineral deposits offer an opportunity for the region’s mining industry’s development.

Opportunities for Sustainable and Renewable Energy Investment

Apart from the region’s investment potential in agricultural businesses, supported by its nutrient-rich soils and a climate favourable to crop growth, the renewable energy sector in East Africa offers excellent prospects for investors. Investing in renewable energy in East Africa can have great benefits on sustainable socioeconomic development of the region by catalyzing economic growth, supporting job creation for the teaming youth, and improve the livelihoods of people in the region.

According to Africa’s Development Dynamics 2023 report, investments have been a major driver of East Africa’s recent growth; however, their allocation towards social and environmental sustainability remains insufficient. Current investments in sustainable energy are insufficient to meet the region’s energy access needs. While the region’s renewable energy sector has grown, most of its potential for sustainable investments has remained untapped.

For instance, despite East Africa’s diverse renewable energy assets, encompassing vast hydro, wind, solar, and geothermal energy resources, only 4% of greenfield foreign direct investment inflows into the region were directed at renewable energy projects during 2017–2022, compared to 17% for Africa as a whole. One of East Africa’s economic ambitions today is to develop its infrastructure, especially sustainable energy infrastructure.

In a recent development, in recognition of the low level of clean energy in Global South countries, which include east African countries, at the just concluded Davos 2024, the World Economic Forum announced the launch of a new alliance to provide a platform for developing economies like East Africa and other emerging markets to raise awareness about their clean energy needs, share best practices, and sustainably accelerate their energy transitions.

Past investment in the sustainable and renewable energy sector in the region includes the construction of the first solar photovoltaic park in Tanzania with a projected capacity of 150 megawatts, the second largest solar PV plant in East Africa. Kenya’s Power and Lighting Company launched a Last Mile Connectivity campaign, which was financed by the Kenyan Government and the African Development Bank (AfDB) with the aim of providing electricity access to over 300,000 non-commercial households in the first phase, reports

Similarly, Uganda is endowed with renewable energy sources, particularly hydro, biomass, and solar. Biomass accounts for 94 percent of the country’s energy consumption and is followed by hydroelectric.

With investment-appealing features such as political stability, an English-speaking and enterprising workforce, a strategic location, and exceptional natural resources, the region possesses high potential for innovative and sustainable investment to accelerate the uptake of renewable energies and contribute to the productive transformation of the continent. East Africa holds unique potential for renewable energies. The East African region is also seeing a growing interest in the renewable energy sector driven by the high costs of fossil fuels, the need to reduce greenhouse gas emissions, and the challenges of climate change, which make investments in clean yet renewable energy more attractive in the region.

However, ineffective energy regulation, poor energy infrastructure, and unstable macroeconomic conditions, exacerbated by recent global shocks, weigh negatively on investor confidence in most East African countries. Africa’s Development Dynamics 2023 Report noted that suitable and renewable energies are core to East Africa’s goal to expanding access to electricity and clean cooking while supporting entrepreneurship and the region’s productive transformation. At the end of 2020, 49% of the population had access to electricity, and only 14% had access to clean cooking. Nonetheless, innovative enterprises are growing across the region and offer the potential to catalyse more investments in renewable energies and support productive transformation in the region.

According to the United Nations’ Renewable Energy in Africa: Prospects and Limits report, Africa has substantial new and renewable energy resources, most of which are under-exploited. Countries in the region have significant potential for renewable energy, particularly hydropower, solar, and wind. The report noted that only about 7% of Africa’s enormous hydropower potential has been harnessed. Existing estimates of hydro potential do not include small, mini, and micro hydro opportunities, which are also significant. Geothermal energy potential stands at 9000 MW, but only about 60 MW has been exploited in Kenya. Based on the limited initiatives that have been undertaken to date, renewable energy technologies (RETs) could contribute significantly to the development of the energy sector in eastern African countries. Renewable energy technologies (RETs) provide attractive, environmentally sound technology options for Africa’s electricity industry.

In the build-up to the UK-African Summit scheduled to take place in April 2024, UK and Rwandan business leaders, investors, and senior government officials will converge in Kigali from January 29 to 31, for the inaugural UK-Rwanda Business Forum, a Pre-event for the UK-African Investment Summit, to discuss business and investment opportunities in Rwanda and, by extension, the East African region. It is hoped that the forum will attract high-quality British investment in sustainable, yet renewable, energy to the region and further open opportunities for new investments from other parts of the world to East Africa.

As a leading African trade and investment firm focused on guiding existing and potential firms in Africa on their ESG and sustainability investments in Africa, our network of experts on the ground in east Africa can guide you in successfully exploring the untapped potential in the region. From Kenya, Rwanda, the DR Congo, and other countries in the region and across the continent, our experience and expertise will help your organisation successfully navigate the complexities of the East African market.

Image by ASphotofamily on Freepik

Exploring Opportunities in the African Market: Key Considerations

  • 12th January, 2024
  • 3 min reading

Recently, while sharing valuable tips on mastering adaptability in entrepreneurship and navigating career transitions on the BLACK RISE Podcast Series with Flavilla Fongang, ETK Managing Director Bolajo Sofoluwe emphasised that success is a marathon, not a sprint.

The same could be said about doing business in Africa. If you are a company trying to enter the African market in 2024, our advice to ‘newbies’ is to treat doing business in Africa as a marathon, not a sprint.

Do you need a crash course on entering the African market? Our FREE Market Entry Guide will teach you all you need to know, from picking the right partners to selecting the suitable market for your product and service, promotion, and finding your African client base.

Doing business in Africa is a marathon; if you aren’t physically fit, don’t start. African marketplaces require a significant amount of discipline, attention, time, and investment. The goal is to cross the finish line, and whether you’re first or last, the real achievement is getting started and earning the “medal” of success.

Before you get started, it’s crucial to outline your market entry objectives when considering expansion and entry into the vibrant African markets. Whether you’re eyeing Nigeria, Ghana, Kenya, South Africa, or any other country on the continent, consider these key points:

Business Objectives for Africa Expansion
It is critical to define your African expansion goals and how success will be judged. Set precise targets to help you track your development and measure your triumphs as a starting point. Measuring progress and determining whether your strategy is performing as anticipated can be challenging without clearly defined targets. This must be in line with the goals of your firm. For example, if you are expanding into a new African market like Ghana, your objectives could include increasing your customer base, increasing revenue, or enhancing brand visibility.

Understand your Sales Value or Volume
Rather than monetary profit, your targeted sales volume reflects the quantity of products you need to sell in your chosen African market. While it may appear that sales volume is less essential, this is not true. Africa’s growing population presents significant prospects for retail and distribution expansion. As a result, your sales volume is an important sign of the health of your African business. It enables you to monitor the effectiveness of marketing initiatives, assess the efforts of sales personnel, and select the ideal sites for real stores.

Identify Relevant Product or Service
If you have considered direct sales or exporting as your main entry options into your chosen African market, the overall success of your export business in Africa will depend strongly on the products and markets you have chosen to export to.
The right market can give you a competitive advantage and the chance to expand your business. On the other hand, picking the wrong market can lead to low sales, higher expenses, and legal difficulties.

Define your Target Market or Markets
When expanding into Africa, one of the major areas to consider is market size. While most African countries can boast of a sizeable population, a market worth targeting should be sizeable enough to be profitable, have growth potential, not already be swamped by competitors, be accessible, and fit with your firm’s mission and objectives.

Allocating Resources for Project Success
Funds and resources play a vital role in the success of your expansion into African markets. You might have a great idea to compete in the sustainable energy market in Africa. However, it is a business that is capital-intensive. What this means is that you will either need a lot of money or must be able to raise funds. The question then is: does your organisation have the resources to do business in Africa?

Is your business eyeing economic opportunities in Africa? Our team of African business expansion experts is ready to guide you in achieving your African market entry goals.

Fascinating Insight into ETK Clients’ Profile

  • 5th January, 2024
  • 3 min reading

A warm welcome to 2024! As we begin yet another remarkable year, it’s a moment for us to reflect on the distinctive characteristics of the businesses that placed their trust in our services throughout 2023. To offer a fascinating insight into our customer base, we’ve taken the opportunity to categorise them.

Join us as we explore the diverse and prevalent categories of clients that ETK Group had the privilege to collaborate with in 2023.

1) Enterprise Catalysts for Growth (ECG)

These risk-takers are major contributors to economic growth in Sub-Saharan Africa. They are energetic business owners with a strong desire to succeed. They have strong managerial and ownership control over a huge portion of African enterprises and are responsible for an estimated 80% of jobs on the continent. Despite the continent’s current economic predicament, this set of clients continues to strive for the top. Their business goal is to become more structured and to develop their businesses into scalable African enterprises. They ensure that their teams have the appropriate competencies across a range of functional areas with our bespoke organisational transformation and capacity-building solution for African MSMEs.

2) The Market Frontier Navigators (MFN)

This clientele consists of daring risk-takers who have had success in other markets or have gotten it right with their products and services on other continents. They, like the three wise men, have heard of Africa’s immense potential and are eager to capitalise on it. However, they are hampered by a lack of advice and knowledge about African markets. They frequently come to us for guidance on how to strategically marshal each market on the continent. Our team of professionals assists them through the market entry process, giving assistance, insights, and research to ensure their success on the continent.

3) The Impact Development Partners (IDP)

This group of clients is less concerned with profit and more concerned with the well-being of their host communities. Non-profit companies, development institutes, foundations, and charities are looking for highly qualified individuals to implement, manage, and oversee their projects in Africa. They are looking for progress partners who might be their third eye on their impact projects in Africa. Our team of Africa-based consultants got to work, providing monitoring, evaluation, and reporting services to maximise the success of their impact investments in Africa through our project management and implementation services.

4) The Global Expansion Pioneers (GEP)

These are resilient enterprises that weathered the storm, mastered the skill of doing business in a specific African country’s market, and gathered sufficient expertise to establish, maintain, and expand their operations in the dynamic marketplace of the continent. They embody the potential to drive economic advancement and make meaningful contributions to Africa. These clients face the challenge of extending their thriving local operations to new markets within Africa or across other continents. They’ve successfully ventured into markets not only in Africa but also in the United Kingdom, Europe, and various other continents by leveraging our state-of-the-art market expansion solutions, and they are eager to explore additional markets.

5) The Enterprise Stewards for Global Success (ESGS)

These customers come to us for long-term, in-person management of their enterprises. These clients are MSMEs, family-run businesses in a range of sectors, who have worked hard to manage and scale to a desirable level within Africa’s difficult business climate, attain their full potential, and attract investors. These companies have achieved success and sustainability by investing sweat, equity, and personal finances to ensure that they not only survive but thrive. However, for various reasons, they must ‘japa’ to other regions of the world but do not want to abandon their businesses. These clients are confident in the viability of their enterprises but are unsure who to turn to. We ensure the stability, success, and security of their businesses throughout their extended absences by providing managed business services. We collaborate with them to provide additional layers of management to ensure that these enterprises’ high standards are maintained throughout their ‘staycation’ abroad. This enables them to continue focusing on providing outstanding service to their clients and consumers while remaining profitable.

As experts in assisting businesses to expand and scale, we are committed to delivering a variety of business support services aimed at assisting Africa-focused businesses and organisations to achieve their objectives. Whether it’s entering a new African market, expanding into other African markets, strengthening institutional capacities, providing trade support services, or managing environmental, social, and governance (ESG) activities in Africa, our services have been proven to help our clients achieve their goals.

Regardless of where your company is on the growth curve, ETK can provide insights to guarantee that your targets and goals are met.

Ready to increase your business success in Africa? Let our expert consulting services be the catalyst for your success. Contact us today, and let’s embark on a journey of innovation, growth, and unparalleled achievements together in 2024.

Global Gender Gap: Encouraging More Women in Senior Positions

  • 22nd November, 2023
  • < 1 min reading

The benefits of a diverse workforce are increasingly evident, as more women have joined the global workforce in recent years. This shift is also reflected in the changing landscape of women’s senior leadership roles.

According to the World Economic Forum’s Global Gender Gap Report 2022, there has been a steady global increase in women’s share of senior and leadership roles over the past five years (2017–2022). The global gender parity for this category has reached 42.7%, the highest gender parity score recorded. Despite this progress, women hold less than a third of leadership positions worldwide.

In a recent interview with BBC News, Bolaji Sofoluwe, our Group Managing Director, stressed the significance of “more women going for senior positions.”

Bolaji, recognized on Power Media’s Black Powerlist 2024 as one of Britain’s 100 Most Influential Black People, discussed the importance of having “women who look like me in the boardroom.”

She shared insights into her various roles, including being the chairwoman of a women’s forum, chairwoman of BGEN International , and a mentor at the UK Research and Innovation

You can read the full interview here: https://bbc.in/49MRcpu

Unlocking the African Market: 6 Key Strategies for Success

  • 20th October, 2023
  • 3 min reading
Diving into the vibrant African market?

Here are some essential tips to pave your way into this diverse continent with a growing middle class and an abundance of untapped potential.

Embrace Cultural Diversity:

Africa, the world’s second-largest continent by area and population, is unique with national and regional differences.

With this kind of diversity, it’s understandable that each African country also has its own unique identity, culture, and way of life. Although Africans have diverse cultures, they share common ground.

By taking the time to immerse yourself in the local culture and learn about their day-to-day #business practices and business etiquette, you can overcome some of the challenges that are faced when expanding into Africa.

Find Your Niche:

Finding the correct target market for your products or services is the key to effective African market expansion. Africa’s growing economies provide great potential for B2B and B2C expansion.

With around 1.3 billion consumers now and an anticipated increase to 1.7 billion by 2030, the future of retail and consumer spending seems promising. However, African income levels have not been increasing at a steady rate since household expenditure on the continent has remained largely static.

While studies demonstrate that African consumers are sophisticated and loyal to brands, the vast bulk of consumer purchasing on the continent currently occurs in informal, roadside marketplaces, even in countries with well-developed retail and distribution industries.

A well-defined niche in Africa will benefit from less competition and will produce significant commercial growth while using fewer resources.

Phase Your Entry:

Market expansion can be a daunting task; doing things carefully and strategically is essential. When entering new markets, and not just Africa, you may as well test the waters with one foot. Rather than incurring the risk of fully establishing a company, developing strategic alliances with local enterprises that are already taking the risk and navigating the market can be a wonderful strategy with fewer risks. Consider a staged approach to entering the African market.

This will allow you to adapt and alter as needed, as well as test different ideas and approaches before committing to setting up in a specific location.

Leverage Import-Export Opportunities:

When considering expanding your business in Africa, you have several options available to you, each with its own set of advantages and problems. From marketplaces to local sales reps, local branches, subsidiaries, or joint ventures, there is something for everyone.

Similar to how businesses in other markets search to export or import from different markets, #African businesses look for strategic import-export prospects both within and outside the continent. Strategic collaborations can give your product or service access to new markets, such as Africa, as well as shared expertise and reduced resource expansion.

Establish Local Roots:

Having a solid local presence and focusing on your expertise can give you the confidence to extend your company into African markets. Local knowledge can assist businesses in better understanding the legal and regulatory environments of emerging markets, such as Africa.

African countries, like the United Kingdom, Europe, and the United States, have legal systems. What is legal in the United Kingdom may be illegal or strongly regulated in another country. Businesses that lack local knowledge may find themselves in violation of these restrictions, which can result in large penalties and legal action. Having local experience in the form of legal advice or #consultants can thus be quite beneficial in assuring compliance with local laws and regulations.

Harness the Power of Connections:

In the dynamic African market, relationships matter. Building strong ties not only keeps you ahead but also streamlines your supply chain and product availability. Cultivate these connections to stay competitive and enhance your market penetration. Cultivate these connections to stay competitive and enhance your market penetration.

Remember, the African market is as diverse as it is promising. Embrace your uniqueness, find your niche, and nurture relationships—these are the building blocks for your success. Here’s to thriving in the heart of Africa!

Photo by kurt arendse and  pius quainoo on Unsplash

The Increase in Tech Investment Opportunities in Africa

  • 15th December, 2021
  • 7 min reading

Overview of tech investment opportunities in Africa

Technology is an important part of any country’s modernisation strategy; technology developments in health, communication, and economy benefit all nations. The most powerful countries in the world are also associated with technological breakthroughs, which emphasises the importance and influence that can be generated by developing a technologically integrated society.

As a result, there is a widespread misconception that Africa lags behind the rest of the world in technological breakthroughs; nevertheless, recent achievements are gradually dispelling this myth and significantly repositioning the continent in this regard.

Over the last decade, digital connectivity has rapidly spread across Africa. More than 300 million Africans acquired Internet connectivity between 2010 and 2019, with approximately 500 million more smartphone connections. According to the International Finance Corporation, the number of Internet users in Africa is predicted to increase by 11% over the next decade, accounting for 16% of the global total.

The number of mobile phone users has grown at an exponential rate, from 330,000 in 2001 to 30 million in 2013. It could be argued that the Internet is the first piece of technology to have had a substantial impact on Africa’s technological advancement.

In Africa, a 10% increase in mobile Internet coverage raises GDP per capita by 2.5 percent, against only 2% globally. Furthermore, a 10% rise in digitisation, or the conversion of information to a digital medium, increases GDP per capita in Africa by 1.9%, compared to 1% in non-OECD nations. More broadly, reaching 75% of the population with Internet access could result in the creation of 44 million jobs. It’s safe to claim that the mobile technology industry is a significant economic driver and has resulted in increased trade and investment opportunities in Africa.

In Sub-Saharan Africa, mobile technology and services accounted for 8.6% of total GDP in 2018, a contribution that amounted to over $144 billion of economic value added. In addition, the mobile sector supported approximately 3.5 million jobs, generating an extra $15.6 billion in taxes. As a result of increasing connectivity, businesses and communities have been able to leapfrog societal challenges and weak infrastructure through the use of new technology, which has paved the way for economic progress.

by the end of 2019, Sub-Saharan Africa had approximately 144 mobile money providers, servicing over 469 million registered accounts with $1.25 billion in daily transactions, compared to 298 million registered accounts for traditional bank accounts in 2017. Mobile devices are now the accepted medium to connecting to the Internet, and to carry out financial transactions in Africa.

investment opportunities in Africa

Internet’s contribution to GDP in Africa

Fintech, healthtech, media and entertainment, e-mobility and food delivery, and B2B e-Logistics are just a few of the emerging verticals in Africa that are fuelling innovation. Over the last decade, Africa’s Internet gross domestic product (iGDP) – defined as the Internet’s contribution to GDP — has rapidly increased. In 2012, less than a decade ago, the Internet economy in Africa was estimated to be around 1.1% of GDP, or $30 billion. According to Accenture, iGDP might add $115 billion to Africa’s 2.554 trillion GDP (4.5%) in 2020, up from $99.7 billion in 2019, with the potential to rise as economies develop. By comparison, the Internet sector contributed 9% of GDP in industrialised economies like the United States in 2018.

The Internet economy has the potential to add $180 billion to Africa’s GDP by 2025, rising to $712 billion by 2050. Over the next five years, COVID-19 is expected to limit economic growth in Africa and the rest of the world. Despite the pandemic, Africa’s growth will be driven by the Internet economy’s resilience, private consumption, developer skill, public and private investment, digital infrastructure investments, and new government laws and regulations.

Investments did pick up, and from July, VC funding on the continent had a bullish run until December. Despite the fact that 2020 did not see the same level of megadeals as 2019, and did not surpass the $2 billion barrier, it proved to be a successful year for acquisitions. High-profile instances include WorldRemit’s $500 million purchase of Sendwave, Network International’s $288 million purchase of DPO Group, and Stripe’s more than $200 million purchase of Paystack.

Sector analysis of Africa’s Internet economy Sector

Fintech has evolved into a major driving force in the African Internet economy, directly contributing to GDP growth while also enabling a variety of other industries. Fintech startups continue to be Africa’s most funded sector, with a significant year-on-year increase. The vertical received $836 million in investment across 65 deals in 2019, up from $379 million in 2018 across 42 deals, resulting in a 120% increase in funding and a 55% increase in deal volume year over year (YoY).

Fintech startups have remained the most popular destination for tech investment opportunities in Africa, growing at a CAGR of 24% over the last decade and accounting for 54% of all Africa startup funding in 2019. The fintech sector in Africa is expanding in part to serve the unbanked and financially excluded population. However, the rise of these solutions and increased access to mobile technologies is driving demand and growth in this sector. The opportunities arising from vertical expansion beyond traditional banking services are also a contributing factor.

Surprisingly, despite the Covid pandemic, Africa’s venture capital ecosystem has been steadily growing in recent years, with an influx of funding from local and international investors reaching previously unheard-of levels. According to Africa-focused firm Partech Africa, African entrepreneurs raised a modest $400 million in 2015, compared to the $2 billion invested in the continent in 2019.

These figures were expected to rise in 2020, but with the pandemic sparking an economic downturn, businesses were forced to downsize as investors re-strategized, which slowed down activities during the first few months of the year.

However, in an unexpected turn of events, investments began to increase, and VC funding on the continent began a bullish trend that lasted until December 2020. Despite the fact that 2020 did not witness the same flurry of megadeals as 2019, and did not break the $2 billion barrier, it was a good year for acquisitions. The $500 million purchase of Sendwave by WorldRemit, the $288 million purchase of DPO Group by Network International, and the more than $200 million purchase of Paystack by Stripe were all high-profile acquisitions.

tech investment opportunities in Africa

Four key factors that are having a positive impact on technological investments in Africa:

  • A rapidly rising urban and mobile population is driving digital consumption growth

The African economy benefits greatly from a growing urban and mobile population. Internet penetration is currently at 40%, and a 10% increase in mobile Internet penetration can boost GDP per capita in Africa by 2.5 percent, compared to 2% globally. Increasing Internet penetration to 75% could result in the creation of 44 million new jobs.

  • The tech sector is driven by a thriving developer and startup scene

Africa’s tech talent is at an all-time high, and it will only get better. There are approximately 690,000 professional developers in Africa, with more than half concentrated in just five countries: Egypt, Kenya, Morocco, Nigeria, and South Africa. Despite the challenges that the African startup ecosystem faces, the future appears bright as venture capital continues to pour into the continent.

  • Internet infrastructure investments are further boosting connectivity

More people will be able to enjoy cheaper and faster Internet access as infrastructure continues to improve. Subsea and terrestrial fibre-optic infrastructure investments have fueled the rapid expansion of global Internet capacity. For example, Equiano, Google’s own undersea cable, is set to be finished in 2022.

  • Pro-innovator regulation can benefit the African Internet economy

Inconsistencies in regulatory requirements make it difficult for businesses to gain market access and raise capital. Initiatives such as startup acts and regional harmonisation are examples of progressive initiatives that are promoting mutually beneficial growth. Entrepreneurs, investors, and policymakers must continue to communicate in order to foster enabling environments conducive to the growth of digital firms.

Development opportunities

Africa can take advantage of the Internet economy to help informal businesses and workers overcome challenges. For example, businesses in Africa’s informal sector have limited access to finance and quite often do not make use of modern business practises, particularly in bookkeeping and accounting. As a result, they often incur higher costs when interacting with suppliers or clients due to insufficient logistics, a plethora of middlemen, and the prevalence of cash transactions. Furthermore, access to electricity is less certain in the informal sector, particularly in rural areas, creating an overall unpredictable economic environment.

Despite this, the vast majority of workers in the informal sector own a mobile phone, often used for both private and business purposes. Mobile phone ownership in the informal sector is broadly correlated with access to digital connectivity at the national level.

COVID-19 pandemic highlighted how digital platforms that service the informal sector can support societal resilience. Because of their ability to quickly reengineer their platforms, digital platforms were critical in supporting government responses to the outbreak in several markets, particularly in reaching the underserved. This further emphasises the importance of technology in supporting Africa’s economic growth and stability.

The most significant development opportunity lies within Africa’s significant population growth and demographic transition, which is driving, increased consumption. As they mature into household decision-makers, young African consumers are becoming more rich and globalised. The proportion of the population that is of working age will continue to rise; by 2050, Africa will have the lowest dependency ratio in the world.

As a result, the continent’s competitiveness in both skilled and unskilled labour will improve, resulting in greater consumer purchasing power. By 2030, Africa is expected to have more than 1.7 billion consumers, with the ability to spend a whopping $2.5 trillion.

tech investment opportunities in Africa

What does the future hold?

Year after year, African technology startups continue to raise record-breaking sums of money. While actual investment numbers vary, estimations show that investment opportunities in Africa’s digital sector have increased year after year for the past five years. The attraction and reputation of Africa as a venture capital investment destination is growing, attracting investors ready to take some early risks based on the continents attractive opportunities and long-term economic potential.

This expansion is being largely driven by the increased ease of doing business, improved business environments, and the world’s youngest and fastest-growing labour force. Improved government policies that encourage greater cooperation across the continent and across various sectors of the economy have given investors even more reason to be optimistic.

Not to mention the implementation of the African Continental Free Trade Area (AfCFTA), which will bring together a market of 1.3 billion people with a combined GDP of $2.6 trillion. AfCFTA aims to reduce tariffs on 90% of all goods and promote free movement of goods, services, capital, and people throughout Africa. It will make Africa’s regional economic communities more integrated and accessible, making it easier to do business across the continent.

Despite this progress, investment in Africa remains in its early stages when compared to other emerging global trading blocs such as Southeast Asia. This indicates that there are still untapped technology investment opportunities in Africa, but this will require governments to become more investor-friendly to achieve continued and consistent investment growth.

In conclusion, despite the pandemic and other challenges facing the African continent, trade and investment opportunities in Africa continue to thrive, and the future of Africa looks bright with continued investment in technology and progressive policy initiatives such as the AfCFTA.