"Development in the Age of Digital Platforms" Conference

The development of the manufacturing sector, across the world, has been closely linked to the path to the industrialisation of a country. While the West has enjoyed over 200 years of industrial production and is now fully embracing what many refer to as the 4th Industrial Revolution - i.e. that of connectivity, advanced manufacturing, and digital transformation - Asian countries, spearheaded by Japan and China, have only entered the race since the 1950s. African economies, however, despite experiencing double-digit growth for decades, have been lagging behind global standard when it comes to manufacturing capacity.
Extensive capital expenses make it hard for small businesses to enter global competition, especially in light of the increasing imports of cheap hardware, from laptops to mobile phones, vehicles and data centres, as well as world-class industrial machinery from China, Japan, and Europe. Most importantly, while countries like Ethiopia and Ghana have begun being seen as future manufacturing hubs, China and Southeast Asia remain the go-to destinations for the outsourced production of leading US and European brands across all sectors. The startup landscape for technology for manufacturing remains extremely nascent, although robotics and additive manufacturing companies have appeared in countries like South Africa, Kenya, and Nigeria.
On a more reduced scale, innovation hubs and universities have been allocating resources to building manufacturing labs, mainly equipped with basic low hardware tools and small scale 3D printing machines.

As African cities witness a steep urbanisation rate, the question of transport sustainability has become a core discussion for local administrations. Urban transportation across the continent remains predominantly led by informal matatus / taxi buses or private rental companies. Galvanised by the global Uberisation trends, ride-hailing companies have enjoyed significant interested from the investor community and, since the COVID-10 outbreak, several such businesses have explored new avenues by expanding leveraging their fleets to enter the e-commerce and delivery market. Regulation around transport across Africa has been a hot topic in the past few years due to the fast rise in digital mobility companies from ride-hailing to carpooling and private buses. Some of the major markets such as Nigeria, Kenya, and South Africa have in fact been pushing back by imposing fines or extra taxes on these companies.

Financial technology has been acting as a driving force of Africa’s technology ecosystem by attracting hundreds of millions in venture capital as well as over a billion dollars in acquisition value. While fintech is now seeing third or four generation startups being founded by former employees of companies that are now market leaders in their verticals, such as interswitch, Flutterwave, and Paga. While consumer finance such as personal finance, digital banking, loans, and remittances have been growing since early in the past decade, the recent years
have seen an increase in interest in B2B platforms, especially those enabling merchants to trade and digitise their work. Financial technology companies are now increasingly looking at integrating their services with other sectors.

Since the beginning of COVID-19, digital platforms for payments and business management have seen a surge in demand which has followed the need for remote interaction. In a continent where cash remains king, readily available digital financial services have proven pivotal in allowing businesses to operate without significant  setbacks. 

Agriculture in Africa still employs around 60% of the population and the continent remains predominantly rural. With less than 10% of total capital deployed in 2020 going to agriculture and agtech companies (data from Briter Intelligence, Q4 2020), agriculture is offering an untapped room for opportunities ranging from food production to crowdfunding for farms. Africa’s food imports have spiked over the past two decades to keep up with the fast population growth.
While digital startups have been proliferating across the continent, it is only a handful of organisations which have managed to reach critical mass and scale and expand to other markets. Digital solutions for farm management have become popular, especially when able to syncronise connected devices for measurement and crop health monitoring and geospatial technology such as drones for precision agriculture.

Healthcare received about 10% of the total venture and institutional funding allocated to startups in 2020. While the sector has seen a significant expansion when it comes to products and services, the bulk of funding has focused on telemedicine, hospital management (which includes electronic medical records, appointment booking platforms, and patient records), distribution (mainly including e-pharmacies), and biotech. A large portion of funding into the sector still involves traditional private equity and development finance focusing on infrastructure, such as hospitals and private clinic networks across the continent. Among the companies gaining traction to date, when excluding Zipline’s investments, Vezeeta, M-Pharma, CarePay, and 54 Gene are some of the fastest-growing.
Navigating regulatory frameworks, infrastructure gaps, and capital scarcity remain significant obstacles for health tech entrepreneurs. The barriers to entry and scale remain high if compared to other fast growing industries such as fintech and e-commerce.

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The question of developing educational alternatives remains one of the most complex themes in the debate around the contributions of the private sector to capacity building in Africa. The educational sector, historically, has almost solely relied on public subsidies and funding and the emergence of technology-based solutions to deliver educational content has largely remained on the sidelines, despite raising some modest interest by governments - such as in the case of the One Child One Laptop initiative.

Over the past few years, while technology companies have been playing a major role in innovating existing, traditional industries, in the educational sector, a significant share of the funding, especially from private equity investors, has gone into (private) school networks such as Bridge International, African Leadership University, and Enko Education, while venture capital and philanthropic money have been targeting organisations focused on critical and digital skills training and employment generation, such as coding schools. Some of these include Moringa School, Andela, Gebeya, Le Wagon, as well as ad-hoc boot-camps run by local technology hubs.

Though increasing attention is being put on digital education and the role of e-learning, especially in the face of COVID-19 and the subsequent lockdown measures, private capital in this space remains limited. Learning Management System (LMS) companies, albeit to some extent boosted since the beginning of pandemic, still face structural challenges such as high data prices and lack of reliable power in several non-urban or periurban areas.

Despite the obstacles and nascent state of financing for learning platforms in Africa, there is a vibrant and emerging landscape of over 200 learning platforms on the continent. The solutions range from e-learning, professional skills development lessons, tutoring, online courses and school management software. Some of top deals across Africa’s startup ecosystems that happened over the past few years in the educational sector, include GetSmarter’s mammoth deal - selling for over $100 million - and the notable investments in Andela, a company which has recently been pivoting towards a more senior talent outsourcing model vs the entry-level training it initially put forward. Nigeria’s uLesson, Eneza Education, and Middle Eastern companies such as Noon Academy are some of the other top businesses that have managed to attract substantial capital in recent years, and impact donors such as the Mastercard Foundation have also been supporting early-stage initiatives with grants in the order of $20-100,000.

The very nature of digital platforms and online tools for learning and management means that most LMS and edtech solutions are accessible and relevant across borders. Numerous platforms also offer their services in several languages, especially those originating in Portuguese, French, or Arabic speaking countries, extending the reach of the solution to a global scale. Noon Academy, for instance, is active in 8 countries across Africa, the Middle East and Asia, and France-based Superprof is active in 29 countries across 6 continents. Many platforms such as gidimo (Nigeria) and eLearning Solutions (Kenya) offer standard e-learning courses on popular topics including IT topics (such as How to Develop an App) and business topics (such as Entrepreneurial Skills, Digital Marketing, Public Speaking, and Management). Some platforms such as etudesk (Côte d'Ivoire) also offer the opportunity for organizations to create and publish their own e-learning courses on a ready-made learning management system (LMS).

In sum, while the sector is ripe for disruption and ready for more sizeable capital, the dialogue between traditional funding and new models, especially those brought about by innovative startups, is key to define synergies and efficiency in the coming years.