Africa, the continent with the greatest potential for innovation

Africa and Innovation? Yes. This century, Africa is the continent with the most innovative potential; where the best opportunities for disruptive innovations could arise. 

Africa has already revolutionized the financial sector with the introduction of M-PESA some years ago, a financial system that works through mobile telephony and that has allowed the financial inclusion of millions of people. 

Jens Schulte-Bockum, Director of Operations at MTN Group and Foundation’s trustee, explains it to us. 

The African opportunity 

Why is there a huge opportunity for innovation in Africa? There are several data that allow us to get an idea: On the one hand, Africa’s GDP growth has historically exceeded world’s GDP growth. On the other hand, with a GDP comparable to that of the United Kingdom or France, Africa has 20 times more population than these countries, which demonstrates a potential for economic growth per capita of at least one order of magnitude. 

Furthermore, Africa’s population is growing and is much younger than the rest of the world: Africa will account for more than a quarter of the world’s population in 2050 and Nigeria will have overtaken the US population to 400 million that year, with a disproportionately larger youth (55% vs. 28%) and much smaller retired population (4% vs. 22%). 

In other words, Africa’s innovative growth is fueled by a young, motivated and growing population, whose current under service represents enormous future opportunities. 

To put us in context, Jens cites a series of relevant figures in the African innovative world: 

“Mobile, app-based banking made more inroads in financial inclusion in the past 10 years than the 50 years of bank branches and plastic cards that preceded it.” Andrew Torre, VISA Regional President for Central and Eastern Europe, Middle East and Africa. 

“Fintech provides what the African economy has wanted all along: greater purchasing power and more money that isn’t taken up by fees or other nonsense.” George Gordon, Director of Africa Master Blockchain Company and board member of Africa Blockchain Association. 

“In another five years, mobile money could evolve into a pan-African ecosystem akin to China’s ubiquitous WeChat app.” Rob Shuter, Chief Executive Officer Enterprise at BT and former President/CEO, MTN Group. 

In a continent where access to electricity does not reach even 50% of the population, where at least 60% of the population is unbanked or where less than 30% of the population has Internet access, opportunities are opening up to: 

• Use digital/mobile technologies to extend service coverage through out Africa (Communications, Internet, Banking). 

• Tap into and fund entrepreneurial Africa: Africa has 44 million SME businesses which account for 80% of jobs on the continent. 
• Support the GIG economy and boost employment through innovative digital solutions. 

The innovation ecosystem in Africa 

Innovation in Africa is characterized by providing creative and scalable digital solutions to reach the underserved and, increasingly, they are exportable to the rest of the world. 

Jens gives us the example of the company Zipline, which was created to provide access to vital medical supplies through drones, and which is diversifying around drone trafficking and the transport of all kinds of supplies. 

In addition to telecommunications, the bulk of innovations in Africa come from the Fintech sector. It is followed by the Energy, Foodtech and Edtech sectors. The Fintech sector has evolved beyond P2P solutions to form complete ecosystems. 

African startups are backed by international venture capital firms such as Endeavor, our partner in the Scaleup Spain Network program. In addition, innovation hubs have been created in Lagos, Nairobi, Cape Town, Accra and Cairo. 

During 2021, 5 unicorns were consolidated (Flutterwave, Wave, oPay, Go1, Fawry), highlighting the case of oPay, which has achieved it in just 3 years. 

To underscore the power of these companies, Jens points out that Flutterwave has already processed 100 million transactions worth $5.4 billion for companies like Uber, TransferWise and Flywire and is aiming to become a global payments company. 

The future of innovation in Africa 

Our trustee explains to us that the future of innovation in Africa is very promising. The socioeconomic and demographic data, together with a vibrant activity around startups and the need to cover services that are already available in other parts of the world, he predicts the arrival of more international investments and the creation of new technology companies with a universal vocation. 

For example, cloud computing has growth rates in Africa that are triple the global growth rate. Microsoft, Huawei, AWS, Google and VMWare are betting on the cloud computing opportunity in Africa, and dozens of large data centers open each year. The most recent, in Lagos, with 10MW capacity, will be followed by another three in Nigeria. 

The African communications giant, MTN Group, of which our trustee is a Director, is in the process of developing five technological growth platforms, backed by the largest connectivity network in Africa, in order to provide IoT solutions, artificial intelligence, social networks or e-commerce, among others, at the pan-African level.