“You can invest in Africa” and other common mistakes in how the world sees our continent

Africa, with a few of the world’s fastest-growing economies and a quickly increasing inhabitants, has the potential to turn out to be a world chief in telecommunications. But enabling this requires overcoming sure shortfalls. First, there’s a have to shift elementary misconceptions about the continent.

The perception that Africa is a unified market should be corrected. It will not be. The sheer measurement of the continent is huge, with the means to accommodate China, Europe, the continental United States, and a good portion of India inside its borders. This expansiveness is not only geographical, however cultural, too. It is house to greater than 1.2 billion individuals—not far shy of China’s populace that speaks greater than 2,000 languages. By comparability, Europe homes just a little over 200 languages and dialects.

The fact right here is easy: Africa is a area, not a market. We should perceive that Africa will not be a homogeneous entity however a various continent consisting of 54 markets, every with distinct political dynamics and financial climates. Africa is a area of numerous nations. As such, the argument stands firmly that we can not logically “invest in Africa” as a result of it isn’t one nation with a single forex, authorities and regulatory framework, social system or enterprise ecosystem.

From a enterprise viewpoint, corporations don’t function “across Africa”—they as an alternative have the alternative to win a share in particular nationwide markets. Without a doubt, over-generalisation can not win in the area as working in our context requires a tailor-made strategy for every particular nationwide market, and attempting to extrapolate tendencies for shopper app adoption generically will solely produce an inaccurate and harmful conflation of no worth.

There’s knowledge in the alternative of complexity

The expertise, media, and telecommunications (TMT) trade serves as a major instance of the intricate dynamics that make it difficult to undertake a one-size-fits-all strategy to doing enterprise in the area. As suppliers of connectivity and important companies, telcos play a major position in constructing belief amongst shoppers as they allow them to attach with others wherever in the world and make and obtain funds. Looking at the sector, even from a fundamental perspective, we realise the depth of variations and nuances in market dynamics as there are intensive and modern ecosystems.

In East Africa alone, take into account a few of the giants in digital funds and cell cash options: Safaricom’s M-Pesa in Kenya, MTN Network’s Mobile Money in Rwanda and Uganda, and Airtel Money in varied international locations. Within renewable power and inexperienced expertise areas, there are corporations comparable to M-KOPA Solar, BBOXX, and Powerhive which supply inexpensive and clear renewable power options utilizing solar energy and battery storage, leveraging the Internet of Things (IoT) and cloud expertise for monitoring and administration. Artificial intelligence (AI) can be leaping forward with the likes of Twiga Foods, Shield, and Flare utilising AI and machine studying algorithms to optimise provide chain logistics, fight monetary fraud, and optimise emergency response programs.

In phrases of cell expertise, East Africa has witnessed outstanding cell penetration, with this expertise changing into the main technique of communication and web entry. Mobile cash companies and cell functions at the moment are broadly adopted, with efforts being made to develop broadband protection by deploying 4G and 5G networks. Network infrastructure can be progressive with vital investments made in submarine and nationwide fibre optic cables, enhancing worldwide connectivity and broadband protection—that is only a look at the full image of the advances happening.

There’s no x-factor in entrepreneurship

Another common false impression is the perception that every one African startups can be categorised as “X for Africa”. In actuality, the startup ecosystem of the area has advanced in three waves. Initially, these companies emulated ecommerce fashions like Amazon, adopted by drawing inspiration from Asian counterparts. A 3rd wave emerged with them adapting to the realities and necessities of native environments. This showcases the distinct entrepreneurial spirit and options that originate from inside the African ecosystem.

Assuming that international values apply to startups on the continent is one other fallacy. In actuality, valuations in African international locations differ considerably, difficult the preconceived notions of Western buyers. African offers at the moment are valued at all-time highs, reflecting buyers’ rising confidence and willingness to help these fast-growing companies. Importantly, this discrepancy necessitates a extra detailed appraisal methodology, contemplating the components at play in every market.

To obtain extra, the proper grasp of the continent is required globally. Africa can’t be handled uniformly, and acknowledging and understanding the complexities of that is essential to enabling a powerhouse of inclusive impression throughout the area.

This article was contributed to TechCabal by Bernard van der Walt and Roy Kinoti Nkandau. Van der Walt is head of audit in Cape Town and leads the TMT sector for BDO South Africa. He can be a member of the managing committee in Cape Town. He has intensive expertise in the media and expertise sector, from start-ups to listed entities. Nkandau serves as the director of audit & assurance at BDO Rwanda. He has greater than a decade {of professional} expertise below his belt working throughout a plethora of industries starting from NGOs, manufacturing, tourism, service, buying and selling, power, and well being.