Why The Smart Money Is On Africa

Taking a long view on the future economy of Africa is something that's being adjusted, thanks to a combination of factors including technology and a growing global appetite for growth
Why The Smart Money Is On Africa
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Co-founder and co-director of Quicket
5 min read
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You may be asking ‘why now?’. Well, besides the fact that the population is growing so rapidly – and it is getting younger – in ten to 15-years’-time it’ll flip, and the rest of the world won’t be able to get in.

Big business and pioneering SMEs need to catch on now to Africa’s amazing potential if they are to escape the impending barriers that make entry into the likes of Europe and the US increasingly challenging.  

Ask any economist focused on what’s happening on the continent, and the smart money realises that Africa is attracting investment at a rapid pace.

So much so that five-out-of-ten of the world’s fastest-growing economies will be in Africa within the next three to five years, and by 2034, Africa will have a bigger working-age population than India or China.

Related: The Growth Mindset That Has Taken This Local Company Global

Africa’s future

What’s clear is the smart money is investing here at an ever-increasing rate. As someone who is at the forefront of a local company’s brand strategy, vision and expansion into Africa, I have a front row seat to what’s happening on the continent and when it’s a good time to strike out into other markets in Africa.

The African Continental Free Trade Area (AfCFTA) agreement means that the moment to take the plunge for the brazen could not be more ripe for the picking.

Add to that the fact that labour costs are one-third of those in the lowest-cost European countries, and all signs point to the continent as an attractive destination for businesses looking to scale, reduce overhead, and grow bottom-line returns.

I recently came upon and read Africa’s Business Revolution, published by McKinsey, and was further inspired by Quicket’s commitment to embracing all things African. I believe that what you have to be most excited about is the exponentially growing, young up-and-coming population.

Related: 5 Ways to Support South African SMEs

Focusing on the youth

By 2025, one-fifth of all the world's population will live in Africa, and by 2050 that number will double again. Contrary to popular belief, there is also a lot of money in Africa, with 400+ companies exceeding a billion dollars in revenue and 1.4 trillion dollars in consumer spending, which is more than India.

Not surprising then that there are many billion-dollar companies already trading on the continent, most of which are flying under the radar.

What makes this exciting is the unique business and payments environment that effectively shelters Africa from global competition and which results in enormous opportunities for entrepreneurs like Quicket, who know the landscape.

Barriers to entry in Africa are lower than most

Compared with other countries on other continents, the barriers to entry in Africa are still fewer than the rest of the world.

Related: High-Impact Growth Investments

The big established markets (Europe and the US, amongst others) are incredibly competitive in the older more established industries, so there are very few opportunities left there, unless you have a massive amount of money, or a very unique take.

In Africa, the barriers to entry are far more about operations than the competition. This creates a massive opportunity for people who can innovate to come up with uniquely African solutions.

The best example here is Mpesa, which flourished in Kenya because there was no proper banking infrastructure. There are however countless other examples in every sector from electricity to agriculture.

The power of scale is not to be underestimated. For example, we want to deliver a solution that Africa is ready to embrace. It’s essential that we can be super-efficient and innovative in rolling out our solution.

Related: Opening Up A World Of Opportunity

This is all about creating systems, building partnerships and solving payments in a way that simultaneously works across all of the most important markets.

Finding your opportunity

There are, of course, big challenges in increasing an African footprint. In the case of Quicket, anyone can spend five-million dollars in setting up a ticketing company in a new city or country, but this doesn’t work in Africa because these markets are individually too small, but collectively very worthwhile.

The challenge is to set up a viable operation that works for a lot less money. And key to this is using existing hardware (Android phone, web applications, etc.) and making things easy to use and self-managed, so you don't need to invest vast amounts in training and support.

All of this said, not every company should be looking at Africa. It’s a unique continent with a unique set of challenges and you can’t just expect everything to work the same way it works in Europe or the US.

Companies that can adjust to these challenges, and innovate around them, should have enormous potential to tap into the world’s most significant growth market. 

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