As the African Continental Free Trade Area (AfCFTA) enters its second year in 2022, most enterprises are now looking continent-wide to grow their businesses. Inter-country trade has been a riddle that African governments, businesses and organisations have failed to solve, but is now being unravelled by technology.
In 2022 we will see the use of technology erasing the borders that have hampered the growth of trade and business in Africa. The bedrock of trade lies in supply chain management, custom processes and easy payment options. Implementing these technologies will be innovative startups and entrepreneurs whose eyes are now trained on the 1.2 billion population in Africa. However, the tech talent to grow these solutions is lacking.
Below are some of the technologies that will dominate developments in Africa and have the potential to positively affect how Africa does business.
Better Supply Chain solutions
Over the pandemic year, 2020 and the better part of 2021, supply chain companies and startups across Africa have been on a rapid growth trajectory, a sign that the complicated supply chains in Africa are being simplified and made more efficient.
Supply chain technology has enabled buyers to see prices of goods, order through an online portal and have them delivered in one swift browse. Payments have also been made simple and users can pay through these portals.
Companies such as Kobo360, Lori Systems, Copia Kenya, Sendy and MarketForce360 are all changing how enterprises buy, ship and distribute their goods. By collating suppliers, transporters and payment channels, trade has been made easier by these services.
Even beyond startups, government-owned systems such as ports and customs border points are seeing an increase in digitisation which is set to continue.
“Given the numerous inefficiencies at many ports in Africa, there are growing business opportunities in connectivity and digital payments, sensory equipment, and software design to boost productivity and deepen regional integration,” a recent report by FintechSolutions stated.
It added that “Increased digitalisation of private and public trade-related services will spur intra-regional trade and allow African businesses, particularly consumer-facing ones, to realise increased trade gains from better access to the continent's large consumer base.”
Cross border payments revolution
Gone are the days where companies such as Western Union and MoneyGram dominated money transfer in Africa. The growth of mobile money and open banking within African countries has seen more operators thinking of how to ensure cross border money transfers and payments are seamless. Payments is a central core to the development of inter-Africa trade and as such, opens a great opportunity for local innovators to solve related issues.
Paystack, which was acquired by US-based payments company Stripe for US$200 million in 2020, was a flagship development underlining the improving payment system across Africa. Since then, companies like Flutterwave, Chipper Cash and MFS Africa have taken huge investments to grow payments and cross border money transfers.
Flutterwave earlier this year raised US$ 170 million to become a unicorn. Chipper Cash recently got an extension funding of US$ 150 million to be valued at US$ 2 billion, while MFS Africa grew its business after funding other fintech and acquiring others.
Crypto and digital currencies
There is a shift to adopt cryptocurrency in Africa like never before. Fuelled by the hurdles of cross border payment, many young Africans have taken crypto and digital currencies seriously.
“The use of cryptocurrencies in Africa is on the rise, as digital currencies offer a swift, convenient, and direct peer-to-peer channel for remittance payments, international commerce, and savings,” a report by Brookings said.
Kenya, Nigeria, Tanzania and South Africa are leading lights in the adoption of cryptocurrency according to research firm Chainalysis. “Not only has Africa’s cryptocurrency market grown over 1200% by value received in the last year, but the region also has some of the highest grassroots adoption in the world, with Kenya, Nigeria, South Africa, and Tanzania all ranking in the top 20 of our Global Crypto Adoption Index,” the research company said.
It added that as the third-fastest growing cryptocurrency economy, Africa also has a bigger share of its overall transaction volume made up of retail-sized transfers than any other region at just over 7%, versus the global average of 5.5%.
“One important trend in Africa has been the continued growth of P2P cryptocurrency exchanges over the last year,” Chainalysis said.
Tech talent enhancement
A recent Financial Times article, titled A Big Tech talent war threatens Kenya’s Startups, drew a lot of reaction from the Kenyan tech scene with founders stating that it is hard to get qualified talent since they have been swooped by big tech giants such as Microsoft.
With companies like Andela raising US$ 200 million to grow their remote platform to hire technology talent from Africa, remuneration for expert talent has gone beyond what the local startups can afford. However, this opens more opportunities for upcoming talent and underlines the quality that Africa has in tech talent.
In turn, Africa can then produce world-class startups and solutions not only for the continent but also for the world. Lack of engineering talent has always seen enterprises in Africa lag behind developments, but this can change if we have more opportunities to develop and sculpt quality engineers.
In the coming years, we expect to see quality software engineers emerging from the continent and taking up several international jobs.