Business opportunities in Africa that will make more millionaires in 2018 - Part 2

Innovations such as MERGIMS are fast gaining popularity and disrupting Africa’s financial services market.

This is the second of a two-part series of opportunities in the continent that will create millionaires in Africa in the African continent. 

The continent’s new wave of entrepreneurs are investing in sectors that create social impact in long standing challenges which affect a significant section of the population.

Most of these problems are tough, widespread and decades old. But while they are scary and frustrating to most people, entrepreneurs see them for the breathtaking opportunities they really are.

Local products for export

Africa spends billions of dollars on imports every year. This includes both food and non-food items.

But beyond the traditional commodities – crude oil, minerals, cocoa, coffee, timber etc. — what else of value can Africa actually export?

It happens there are a lot of local products on the continent that have the potential to become global brands. The problem is, we often overlook or look down on them.

But a few interesting entrepreneurs are now turning local African products into global brands and best-sellers.

Startup funding

The buzz of entrepreneurship activity on the African continent has caught the attention of a growing number of investors, both within and outside the continent.

The potential returns on investment in Africa is currently one of the highest in the world, and has become too obvious for investors to ignore.

Since 2012, the amount of seed funding and venture capital flowing to Africa has grown 1,400 per cent. And the trend continues to look up.

In 2017 alone, African tech startups received $560 million in funding from local and international investors. This amount represents a 53 per cent jump from the $366 million raised one year earlier, in 2016.

Also, Silicon Valley accelerators such as 500 Startups and Y Combinator have increased the number of African startups that are admitted into, and receive funding, through their programmes.

Currently, South Africa, Kenya and Nigeria are in the spotlight and take the lion share (about 75 per cent) of the investment inflows.

It’s important to note that every year, the size of venture capital investments that take place around the world exceeds $100 billion. Currently, Africa gets less than 1 per cent of this global deal flow.

It’s still very early days in Africa’s startup funding space, and 2018 will certainly attract more investors looking to explore emerging business opportunities in Africa, and take their positions in lucrative deals.

Fintech

Africa’s underdeveloped financial services industry presents very tough, important and widespread problems that need to be solved.

After more than 50 years of banking on the continent, just about 34 per cent of adults in sub-Saharan Africa have bank accounts or access to formal financial services.

It is clear the traditional model of banking is too slow, inflexible and incapable of spreading financial access at the pace the continent requires.

But with the spread of mobile phones and the Internet across Africa, the continent’s entrepreneurs are leveraging technology to deepen financial access in ways the banks never have.

There are a wide range of opportunities that are opening up in Africa’s financial services spaces.

They include bill payments, bulk disbursement, international remittances, merchant payments, mobile airtime top up, mobile banking, person-to-person transfers, peer-to-peer lending, microinsurance, and several other interesting opportunities.

In the area of overseas remittances for example, Africa loses more than $1.4 billion annually in charges alone. Western Union and MoneyGram have been longtime monopolies in the remittances segment, and are clearly ripe for disruption.

Opening up, growing and disrupting Africa’s financial services market will certainly transform millions of lives on the continent and create a league of millionaires in the process.

Fintech will surely remain one of the top business opportunities in Africa to watch in 2018.

Low-cost private schools

According to this report titled: “The Business of Education in Africa”, it is estimated that 1 in 4 African students – a total of 66 million – will be enrolled in private schools by the year 2021.

Rapid population growth, poor funding, corruption and neglect have caused a serious deterioration in the quality of education in public schools on the continent.

As a result, more African parents are looking to private schools to ensure their kids get a good education. And the demand for this alternative is skyrocketing. And this trend of low-cost private education is leading entrepreneurs to come up with several interesting models.

As more players enter the low-cost private education space on the continent, there is likely to be fierce competition will improve the quality of education, drive down school fees, and afford many children the chance of a decent education.

Rather than set up exclusive private schools for the elite, who says entrepreneurs can’t make good returns and find tons of fulfilment in educating children en masse?

Urban logistics

The future of Africa is in the cities. And by 2030, up to half of the continent’s 1.4 billion people will be located in the cities.

Currently, about 60 African cities have a population of over 1 million people. And one of the biggest problems that appear to be worsening with the growth of Africa’s urban populations is congestion. Most cities on the continent do not yet have well-diversified transport systems, so getting around town can be a very frustrating endeavour.

It’s a logistical nightmare that worries both consumers and businesses.

Thankfully, some African entrepreneurs are already hacking this problem.

As we go into the future, more entrepreneurs will figure out ways to outsmart the complex problems and frustrating challenges of logistics in urban areas.

In 2018, urban logistics will likely remain one of the most promising emerging business opportunities in Africa.

Healthcare services

With poorly-funded public hospitals and a significant brain drain of African doctors to countries outside the continent, waiting for the government to fix the continent’s healthcare sector will not work.

Also, waiting for international “donor” funds (which are channelled through governments) will not work too. We have been doing the same thing for decades and very little has changed.

With 25 per cent of the global disease burden, a rapidly growing population, and a rising middle class, Africa’s healthcare market presents a huge opportunity.

According to the IFC, Africa’s $21 billion healthcare market could double in size in just 10 years.

Currently, a growing number of Africans are seeking medical help outside the continent, in places like India, the Middle East and Europe. This growth in outbound medical tourism costs Africans millions of dollars every year.

To arrest this ugly situation before it gets much worse, Africa needs a private-sector led transformation of its healthcare industry that requires both the innovation of local entrepreneurs and investment from local and international investors. Gladly, this transformation is already happening.

This article was first run on Small Starter, an online  platform targeting emerging entrepreneurs. This is the second of a two part series. 

Have Your SayLeave a comment

Consider AlsoFurther Articles