African technology businesses have been on a wild ride over the past year. It was impacted by VC funding falling considerably across the world, several startups closing shop and those that survived made financial cuts. Difficulties stemming from the collapse of FTX and Silicon Valley Bank meant that investors began to look at international markets – including Africa – more conservatively while emphasising cost-cutting and preparing for a difficult period ahead. In fact, according to data from Disrupt Africa, the African Tech economy raised just $1.4bn in the first nine months of 2023 – down 48% on the same period in 2022 – which had huge implications for the technology scene.
A few years ago, during the Zero Interest Rate Policy (ZIRP) years, African tech was buzzing with excitement. Global investors were focused on Africa. This brought with it high hopes and optimism, and for a while, it seemed like the future of African tech was entering a new era of hyper-growth. The rapid influx of funds had created an illusion of quick success, but the ecosystem was hit hard by various events that rattled investor confidence and affected the global economy. The economic slowdown, driven by inflationary pressures and tighter monetary policies worldwide made investors more cautious about investing in Africa – a region perceived to be higher risk than western markets. This global financial tightening reduced the amount of available capital and made funding harder to secure.
A combination of diminishing international investment and a focus on profitability forced African technology businesses to rethink their strategies and focus on what was really achievable. Questions were asked: How could they deliver long-term sustainable growth? What technology was the next gamechanger that would have generational impact for nations across the continent?
Africa – and investors in it – have long been obsessed with the concept of “leapfrogging”. To those unfamiliar with it, leapfrogging is the idea that we could skip the intermediate stages of development and turbocharge towards faster, bigger, better. That is, in part driving fledgling technology scenes like those seen in Lagos and Nairobi, but also by international investors pushing for African investors to get up to speed with western technology and realise greater returns.
However, the truth is that some of Africa’s greatest technology stories aren’t always those that have skipped technological generations. Instead, the success stories stem from businesses using technology to focus on the very real issues facing Africans.
To me, the jewel in the African technology industry’s crown is mobile money and instant payments. This has been a game-changer and a standout success story. Airtel Africa’s Mobile Money, for instance, has made significant strides across the continent. Launched with the goal of enhancing financial inclusion, Airtel Money has provided millions with access to mobile money services, including digital wallet payment systems, microloans, savings and international money transfers. Its simple-to-use services meant that the long, exhaustive and often unsafe trips to out-of-town banks quickly became a thing of the past. People no longer had to take days off work to cash in their pay packet. More productivity days could be unlocked, creating huge economic benefits that provide significant value to the continent.
Another brilliant example is Flutterwave. Founded in 2016, Flutterwave has revolutionised the way businesses and individuals handle payments across Africa. It provides seamless, instant payment solutions that cater to the diverse needs of the continent. By making it easy for businesses to accept payments in local currencies and from various payment methods, Flutterwave has played a crucial role in enhancing financial inclusion and facilitating commerce. This kind of practical innovation is exactly what African tech needs more of.
Mobile money and systems like Flutterwave have turned phones into financial tools, making them essential for daily transactions. They made buying airtime easier, and for many, it was their first access to formal financial services. If the industry had waited for smartphones and mobile internet, millions would have been – and could still be – financially excluded.
Despite the challenges in other sectors, mobile money and instant payment systems like Flutterwave show the potential of African tech when it’s rooted in the real needs of its people. It wasn’t about jumping straight to the next big thing but about finding practical solutions that work here and now. This is a lesson the industry must remember.
Our tech ecosystem must focus on creating solutions that address real, present needs rather than chasing idealised stories. When innovation finds its footing here, the uptake can be dramatic, as seen with mobile money and instant payment companies. This means we need to be realistic about our market readiness and develop solutions that cater to the evolving needs of Africans.
It’s inevitable that the bright lights of international capital will turn their attention to Africa again soon. But the allure of hyper-growth needs to be grounded in what is achievable, sustainable and most impactful for people across the continent.
By focusing on sustainable growth, leveraging local insights, and staying grounded in the realities of our markets, African businesses can build a robust and resilient tech ecosystem. The potential is immense, and with the right approach, African technology businesses can turn today’s challenges into tomorrow’s successes.
