Why Its Time for Investors to Tap Africas Tech Boom

CSM Tech

Imagine standing at the edge of a vast, unexplored ocean. The waters are teeming with life, promising discoveries that could change the world. Would you hesitate to dive in? This is precisely the scenario investors face with Africa's burgeoning tech ecosystem. It's not just an ocean of opportunity; it's a sea change in the making. Investors have a unique opportunity to be part of a story that's not only about profit, but also about profound societal change.

A Resilient Market in a Global Downturn

While global venture capital markets have faced headwinds, Africa's tech ecosystem has shown remarkable resilience. In the first nine months of 2023 alone, African tech startups raised an impressive $1.4 billion, with nearly half a billion dollars secured in Q3. This resilience is not a flash in the pan; it's a testament to the continent's unique ability to thrive even in capital-constrained environments. Historically, Africa’s Big Four – Kenya, South Africa, Nigeria and Egypt have grabbed the investor interest, securing 90 per cent of startup funding in 2023. But investors have an opportunity to diversify and explore the potential in other emerging beachhead markets in Africa’s techpreneurial landscape. Each dollar invested is a vote of confidence in Africa's ability to not just survive, but thrive in challenging times.

The Power of Youth and Innovation

Africa boasts the world's youngest population, with over 60 per cent under 25. This demographic dividend isn’t a statistic; it's a powerhouse of tech-savvy, entrepreneurial energy. They are not tech naïves waiting for solutions to be imported; they're digital natives actively creating innovative answers to local challenges in health, education, finance, and agriculture. For investors, this represents both a vast market and an under tapped talent pool.

Beyond Profit: The Power of Purpose-Driven Tech

In the halls of Silicon Valley, we often hear about "disruption" and "scalability." But in the bustling tech hubs of Lagos, Nairobi, and Cape Town, there's a different conversation happening. It's about impact, about solving real, pressing problems that affect millions of lives. Take Zipline, for instance. In Rwanda, this startup isn't just delivering packages; it's delivering life-saving medical supplies to remote areas using drones.

Digital Infrastructure Boom, Supportive Regulatory Environment

The continent is experiencing a rapid expansion of its digital infrastructure. Internet usage in Africa grew by over 23 per cent between 2019 and 2021, supported by significant investments in undersea cables, data centers, and mobile networks. This improving connectivity is laying the groundwork for e-commerce, digital payments, and remote work to flourish, creating a fertile environment for tech startups to thrive and scale.

Governments across Africa are waking up to the potential of the tech sector as a driver of economic growth. Countries like Rwanda and Ghana are leading the way with policies that encourage innovation, protect intellectual property, and provide tax incentives for tech investments. The African Union's Digital Transformation Strategy for Africa (2020-2030) aims to create a harmonized digital policy landscape across the continent, making it easier for tech companies to scale regionally. Besides, The African Continental Free Trade Area (AfCFTA) is set to create a single market of over 1.3 billion people, offering tech companies unprecedented opportunities for expansion.

Challenges as Opportunities

While talent acquisition and retention remain significant challenges, they also present opportunities for investors to contribute to skills development and capacity building. By investing in education and training programs, investors can help create a robust talent pipeline that will fuel the growth of their portfolio companies and the broader ecosystem.

CSM Tech’s big stakes in Africa’s tech landscape

CSM Tech has been one of the early movers and shakers in Africa’s tech landscape. From agriculture to mining and grants management to automating tea auctions, we have proven how even minimalist tech interventions can deliver maximum outcomes. The web-based Seed Certification and Plant Variety Protection System (SC-PVP) that we have developed for the Kenya Plant Health Inspectorate Service (KEPHIS) saves clients’ money and time, eases manual feeding work on inspection, offers regulatory relief to seed certification challenges and streamlines labelling, sampling and resampling of orders. Separately, the Integrated Tea Trade System (ITTS) deployed at Mombasa, the port city in Kenya, has emerged as a disruptive differentiator created by CSM with features like supply chain visibility and product traceability. But this auction's business model is a script beyond digital turnaround- six million families in Kenya lean on it for their income and livelihoods.

CTA for future investors

As Africa's tech landscape continues to evolve, those who invest now will be at the forefront of a transformative journey that is reshaping the continent's future. The convergence of youthful energy, innovative problem-solving, rapid digital growth, and supportive environments offers unparalleled opportunities for impact and returns.

For investors looking to make their mark, the message is clear: Africa's tech ecosystem is not just a frontier market; it's the future of innovation. By diving in now, investors can ride the wave of Africa's digital revolution, contributing to sustainable development while positioning themselves for significant long-term growth.

The question isn't whether you should invest in Africa's tech ecosystem. The question is: Can you afford not to?

AUTHOR:

Jayajit Dash

Senior Manager- Corporate Communications (Marketing)