Africa is currently blossoming with entrepreneurial potential. The continent has the world’s largest free-trade area, and now boasts seven unicorns, up from zero in 2015. Not only this, but it has the largest percentage of entrepreneurs among the working-age adult population of any continent globally.
Prior to the pandemic, entrepreneurialism was already booming, with 22% of Africa’s working-age population having already started a new businesses prior to 2020. But with the economic difficulties caused by the pandemic and many businesses freezing recruitment, entrepreneurialism accelerated.
What’s more, African entrepreneurialism is particularly abundant in digital business, with predictions indicating the segment may contribute $300 billion to African GDP by 2025.
The tech scene in Africa is therefore presenting a key area of opportunity for businesses who want to invest globally, and benefit from an ambitious workforce.
The continent is paving the way for new business models, ideas and is opening up to investment opportunities from around the world.
There are however, many areas that require further support in order to ensure the tech sector continues to thrive in this region – here we explore the continent’s challenges in more detail.
Africa’s tech investment opportunity
There’s a growing body of evidence suggesting Africa is a worthwhile consideration for investment with successful technology companies springing up every year.
The World Economic Forum listed six African start-ups in their Technology Pioneers of 2022 – including Okra, a Nigerian fintech start-up specialising in digitalising financial services; Access Afya, a Kenyan start-up providing quality and affordable healthcare by leveraging patient data more effectively; and Ampersand, a Rwandan start-up offering a leading battery-swap energy network for light vehicles.
Last year, there were eight African start-ups named in the WEF’s list, also spanning genetics tech, agritech and fintech, in Ethiopia, Kenya, Ghana and Zimbabwe.
The diversity and growing maturity of the tech scene offers a huge opportunity for companies worldwide to tap into talent and cross-sector expertise in the region.
Yet, despite the African Tech Start-ups Funding Report finding that total annual funding into African tech start-ups grew by 1,000% between 2015 and 2021, the region continues to suffer from too little capital and talent, when compared to the strong demand for both from the many entrepreneurs building the next generation of African companies.
The potential for the tech sector to continue to thrive
Indeed, for technology companies to continue to grow and prosper in the region, there needs to be a focus on harnessing tech talent. In fact, an emerging talent bottleneck for high-growth African start-ups is suggested to be in the number of professional software developers on the continent. Estimates by Google suggest that there are about 716,000, nearly half of whom are in Egypt, Kenya, Nigeria and South Africa. The average age of these developers, at 29, is younger than the global average of 36 – suggesting there needs to be support in developing and funnelling young people into tech careers at an early age, as well as upskilling older employees across all sectors.
The good news is we are starting to see significant expansion from companies like Microsoft, Google and Oracle in the region, with Microsoft opening its first African development centre in 2022 and aiming to hire 100 employees by 2023.
Additionally, a number of talent accelerators have been created with the aim of establishing new routes into tech across the region, such as Andela, AltSchool, Univelcity and Decagon – with the later aiming to train 10,000 software engineers every 6 months.
Sector-specific investment is proving vital too. Cybersecurity experts Venari Security have established a new Centre of Excellence in Tunisia, building a hub to nurture some of the best talent Tunisia has to offer and generate new opportunities for cybersecurity specialists.
Tunisia itself has a burgeoning tech scene – with over 1,800 companies in the IT sector employing nearly 80,000 people, which contributed 7.5% of GDP in 2018. Tunisia also ranks highly in terms of quality of vocational training, graduate skills and ease of access to labour – making it an attractive region for cyber and other specialised tech.
Tackling market challenges in the region
Impressively, it is estimated that by 2030, tech financing will hit 90 billion US dollars in Africa. However, African governments need to ensure that these investments remain attractive in order to reduce the chance of stagnation.
Indeed, a lack of harmonisation across the region is currently one of the biggest limiters for start-ups, leading to complex legislation that can be off-putting for investors. Currently, regulations differ across all 54 African countries – which is making it difficult for investors to scale across the continent.
The regulatory landscape can also make it difficult for employees to earn and own stock, further limiting benefits for the start-up scene.
While far from straightforward to solve, it’s positive to see work being done by the African Union and AfCFTA to push development forward in this area. Collaboration between government and industry leaders will be required to design a common, unified tech policy framework that will make it easier for start-ups to expand into regional markets.
Developing ecosystems or tech clusters such as the one developed in Odense, Denmark for the robotics and automation industry, that mimics a regional Silicon Valley tech scene, is vital. A strong Pan-African tech start-up network, underpinned by a collaborative digital economic policy set up across governments in Africa, will help to connect market and open up investment opportunities and jobs.
A hub of tech talent and opportunity
The tech sector can be an ultimate enabler and equaliser for growing economies – and African entrepreneurs have shown there’s a huge appetite for a range of tech start-ups to thrive across the region.
As we’ve seen, there’s a role for global companies to set up their own regional presence in African countries, with a focus on developing and encouraging more workers into technology. But there are also barriers that government, business and investors must tackle together, to reduce risk in investment and encourage the opportunity for start-ups to grow and scale across the region.
The future is bright and Africa is buzzing with tech entrepreneurialism – a key driver for the region’s post-pandemic recovery. With support to build more focused tech clusters, investment and security can be shored up to help the continent thrive as a tech superpower.
Simon Mullis is the CTO at Venari Security
