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A Guide for the New African Entrepreneur

October 20, 2015

A Guide for the New African Entrepreneur

October 20, 2015

There are many challenges that have prevented Africa from advancing at the same pace as the Western world: poor transportation, insufficient education, high interest rates, and problems with online connectivity, among others. However, wide-ranging changes that have occurred on this continent over the past few years have led global leaders to discover an upside to unexplored territory. What has been revealed is now paving the way for international and domestic entrepreneurs, large and small, to invest in Africa. Even big names like Apple, Microsoft, Cisco, and Facebook are some of the many that believe in Africa and what it can yield, especially from the technological point of view.

African youth and booming tourism are paving the way for African entrepreneurs

Africa is the world’s second-largest and second-most-populated continent. Moreover, its population is the youngest among all the continents; as 50% of Africans are 19 years of age or younger.

As a result, urban life is becoming increasingly popular. The article, “The Challenges and Rewards of Creating a Startup in East Africa” reveals that 40 percent of the population now lives in cities, and that an emerging middle class is eager to spend some of their hard-earned money in a variety of ways. This is a huge advantage for startups, and a great motivation for those who want to launch a business in East Africa and gain a large chunk of the market share before competitors follow into the region.

An article by the Economist further explains that demographic and touristic changes have organically led to the creation of a void that needs to be filled by mobile and online startups.

Thus, anything that speaks to the younger crowds is bound to spread like wildfire. Any internet-related startup involving social media, online payment methods, and technological gadgets are what’s “in”.   Social platforms allow for a very effective way of connecting with consumers as their popularity has boomed in recent years. Mxit, for example, is a South African-based mobile social network with millions of active monthly users in various countries. With the ability to target each of their specific markets by customizing certain features and creating localized content, Mxit successfully targets emerging market youth and is dominating the areas where they are active.

In addition to the younger demographic rising to the majority in Africa, increased tourism also plays a huge role in the development of new businesses and technologies in the region. For example, Kenya alone receives about two million tourists a year, and there is potential for more than ten million annual visitors, says Dinfin Mulipi in the article “Entrepreneur aims to boost online payments in East Africa“.  Tourists, young and old, who visit the continent require quality online services, whether it is for wiring money, navigating around town, or communicating with friends and family back home. Skyrove for example is the largest independent provider of Wi-Fi hotspots in South Africa.  Their service allows travellers and locals alike to have easy and constant access to the internet, as they provide over 600 Wi-Fi hotspots throughout the country.

Mobile opportunities for African entrepreneurs

Mobile companies explain that smartphones are now available for reasonable prices by African standards, and they believe that every African will have a cellular phone within the next few years, and thus, easy access to the internet and eCommerce within the next decade. A super successful example is Jumia, a leading online shopping center with a user-friendly mobile app.  Jumia provides its services to various countries in Africa and delivers goods with the click of a button – or the tap of a finger on mobile devices.

Therefore, nearly any business that finds its place where mobile meets virtual is already on its way to being in great demand. New African entrepreneurs should follow in Jumia’s (and other African companies’) footsteps, and offer their customers a mobile app or website that also enables them to order and make payments via their mobile phones.

Accepting and processing payments in Africa and transferring funds, especially through the cellular phone, is a fundamental part of broadening intra-African ecommerce and making cross-border transactions much more feasible in the region.  M-Pesa, a cellular-based money transfer service, is a great example of a successful mobile money transfer service that has allowed millions of Africans the ability to send and receive funds, acquire more airtime and pay bills who might otherwise not have been able to due to limited access to formal financial systems and bank accounts.

There are many more examples out there like these; companies that have recognized a void or need for a mobile-based service or product within the African continent that will ultimately improve the local economy and the lives of those living in the region.  These are the companies that have experienced proven success, and new African entrepreneurs would be wise to learn from them.

Helping out the little guy

Another important change in recent years is the number of large, global companies prepared to help the small business sector to develop.

A BBC piece on the subject discusses a sense of corporate social responsibility that large businesses and corporations have regarding Africa, and that countries such as Ghana, Kenya and Uganda are going through a second wave of economic transformation thanks to this initiative.

Africa: The newest big tech hub

The Business Insider divulged the fact that there are now more than 90 tech hubs across Africa, according to the World Bank. In 2013, U.S. investors began pouring more money into African startups than any other year, and the involvement has since been on an incline.

There has been a vacuum of services in Africa that, while fueling the desire of the African entrepreneur to do business in the region, has also been very challenging to work around.  These obstacles, and the drive that African entrepreneurs possess to overcome them, lead to the development of startups and services that meet the demands of today’s African market.  New businesses that use the virtual and mobile worlds as their storefronts improve the overall quality of life for many Africans by bettering connectivity, facilitating online and mobile payments for products, and easily enabling money transfers, among offering other technologically-based services and platforms.  These are the types of startups Africa needs now, and any entrepreneur that can fill these voids can have a great chance of succeeding in Africa.

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