OPINION: Why Africa is a continent of hope and opportunity

Way back in History, Africa was not mentioned by authors writing about the global economy. It was as if Africa didn’t exist... Or it ‘existed’ only when media organs were writing about civil wars, famines, severe malnutrition and migration – mostly illegal migration!

It was a continent of no hope; a continent of woes.

However, all that has drastically changed in the last few years – and, in this article, I explore six areas of greatest opportunities in Africa.

Today, there are about 400 companies that earn annual revenues of $1 billion or more in Africa – and, on average, they are both fast-growing and more profitable than their global peers.

Africa has become an important test lab for global innovation. If you can build a product, a service or a business model that’s cost-effective and robust enough to succeed in Africa, chances are that it will be competitive anywhere else in the world.

Admittedly, there are huge challenges to doing business in Africa. But, these same challenges also provide opportunities for value-creation.

In all those opportunities the golden thread running through them is technology.

More than perhaps any other continent, Africa is piloting digitally-enabled breakthroughs that aid companies in surmounting entrenched barriers and unlocking exponential progress.

1. Millions in Africa lack access to savings and credit facilities. To serve the excluded households and businesses – and to do so in a profitable, sustainable way – banks and other financial institutions must use efficient but easily operable technology-based solutions; and there are compelling examples of both.

Consider Equity Bank, born of a small building society in Kenya in 2004. By 2017, the bank had more than 12 million clients across East Africa, more than $5 billion in assets – and reported a pre-tax profit of $270 million.

The bank’s goal was to solve the problem of lack of access to financial products and services, even as it also made a modest profit.

Only about 10 per cent of Kenyans had a bank account at the time, as most kept their savings under the proverbial mattress.

Equity Bank introduced mobile banking and mini-bank branches that fit in the back of a Land Rover, which were then driven from village to village.

Another innovation was its banking model of accrediting more than 30,000 small retail outlets across the country as bank agents authorised to accept deposits and dispense cash.

Later on, the bank harnessed the exponential growth in mobile telephony in Africa. In 2000, sub-Saharan Africa (s-SA) had fewer telephone lines than Manhattan Island in New York. By 2016 there were more than 700 million mobile ’phone connections across Africa: roughly one for every adult.

Mobile phones have transformed African lives in important ways, such as by replacing cash transactions with instant and secure mobile payments.

There are now more than 120 million active mobile money accounts in s-SA – and Equity Bank has moved beyond the ‘Land Rover banking’ stage, creating instead true mobile banking via its Equitel cell-phone banking application that makes the bank extremely cost-efficient.

2. African countries have glaring gaps in transportation, power and water infrastructures, as well as in ‘soft’ infrastructure such as healthcare facilities.

It is estimated that the annual global gap between current and required infrastructure spending is $350 billion – and, unless/until this gap is closed, general growth will slow and fast-growing cities will come under enormous strain.

Nowhere is the gap bigger than in Africa. For instance, nearly 600 million Africans lack access to electricity.

The deficit has spurred some bold public/private partnerships (P/PPs) that could serve as models for other regions. A case in point is the partnership of US-based General Electric (GE) that signed a Country-to-Company (C2C) agreement with the Federal Government of Nigeria in 2009. Renewed in 2014, the partnership supports the financing, designing and building of infrastructure and capacity across key economic sectors.

In that regard, GE in Nigeria partnered with:

• the Energy ministry to support the development of 10GW generation over the next ten years;

• the Health ministry to support the development of diagnostic centers in Nigeria; and,

• the Transportation ministry to modernize and expand Nigeria’s locomotives fleet.

Other African innovators are harnessing mobile money along with advances in solar and wind power and battery storage to leapfrog the continent’s gap in electric power generation. Good examples of this are the Kenya-based M-KOPA, and Fenix in Uganda (to be continued next week).