Africa is home to one of the fastest-growing internet markets in the world. Who is going to tap this potential?

By Xische Editorial, August 5, 2019

Africa is home to the world’s lowest share of people using the internet thanks to poor infrastructure and the rural nature of many communities. This stark statistic is often cited by western aid agencies to justify investment in rural communities. The problem facing Africa, the thinking goes, is fundamentally a rural one. While this might be true for the present, Africa’s challenges are on the verge of becoming decidedly urban. The future is not rural, it’s urban. 

While Africa’s share of the internet might be low right now, it’s home to one of the fastest-growing internet markets in the world. With an especially young population that is expected to balloon in size, African cities are about to explode. 

The World Bank says urbanisation is the most important transformation taking place in Africa with more than 450 million new city residents expected by 2040. Bloomberg estimates Africa will be home to more than nine megacities with populations surpassing 10 million each by 2050. These cities are far beyond the established metropolis of Cairo, Lagos, and Johannesburg. N'Djamena in Chad and the Malagasy capital Antananarivo are two examples of soon-to-be megacities. 

This shift brings enormous opportunity for the continent and outside investors, as well as aid organisations. First and foremost, western aid organisations must invest in the future rather than the present. With so many young and connected Africans, investments in new smart farming technologies, for example, will go much further than traditional agricultural equipment. Germany’s recently announced Marshall Plan for Africa is underpinned by the notion that rural areas will determine Africa’s future. Such perspectives are representative of outdated thinking still rife in western aid programmes. 

Flipping the situation on its head and looking at Africa’s impressive urban growth opens a range of possibilities. The primary opportunity lies in addressing Africa’s uneven development with technological innovation. Again, the smartphone is vital here. Local telecom operators such as MTN Group of South Africa and France’s Orange SA are now selling smartphones for as little as $20 that use a lightweight operating system called KaiOS. By using cheap plastic and a lightweight OS designed for slower 3G networks that cover large parts of the continent, these phones are allowing Africans to jump right into the digital economy. 

Take bank accounts as one example. An over-reliance on cash and underdeveloped finance sectors in many countries have left millions without bank accounts. With the explosion of smartphones, people are able to move away from cash and use their smartphones for digital currencies. Startup companies such as Mama Money in South Africa enable remittance payments over cell phone networks. Zimbabwean migrant workers using Mama Money can send money home for a fraction of the cost and users can keep the money in a secure digital form. The knock-on effects of bank accounts on smartphones is profound. With digital currencies, many of these people are then able to sign up for health insurance, savings vehicles, and other types of products.   

As cities explode in growth and internet infrastructure improves, these developments will dramatically accelerate. While it won’t solve challenges such as poverty and lack of housing, the smartphone-powered transformation will enable an entirely new class of customers to emerge across Africa. Who is going to tap this potential? 

China has made an aggressive and clear push into several African markets. Through debt-trap diplomacy, China has secured massive amounts of land and resources across the continent. Chinese technology is also popular. KaiOS, for example, is owned by a Chinese company. But Chinese investment strategy contains blind spots with regard to booming African cities and the prospect of a budding knowledge economy on the continent. With too much focus on infrastructure projects and resource extraction, China has failed to capture the hearts and minds of young Africans. 

This is the opportunity for smaller states like the UAE, Singapore, and Estonia to step in. While these players might be small, they have invested substantially in their own knowledge economies. The UAE and Singapore rely heavily on imported talent from across the world. Given the reach of these countries through their aviation networks and powerful economies, they should be on the forefront of Africa’s next urban century. UAE companies like the telecom operator Etisalat already have footprints in major African markets like Egypt and Nigeria. The next step is to invest in knowledge-based startups and ecosystems that are harnessing the power of African youth in places like Kigali and Nairobi. 

One way that Africa is going to craft its own African solutions is by partnering with countries that don’t harbour hidden agendas or subscribe to outdated models of thinking. The old idiom is applicable here: Value creation over exploitation. Africa needs eager partners who are investing in the future by empowering young people with the technological tools necessary to innovate for the present. As the population moves to cities, these tools will be key to unlocking the continent’s true potential and entrepreneurial edge.