6.28.2016

The Business of Technology in Africa: Where Are the Opportunities?

In the first post of this series, I shared my own personal experiences around starting a technology business in Africa. In this second part, I’d like to dive into two areas where I’ve seen the greatest levels of activity, and, if in my opinion, the attention is justified.
E-Commerce
The likes of Jumia and Konga have made a huge splash in the Nigerian e-commerce space, and while they have received a great deal of praise, they have also received significant criticism some of which raise important questions on the readiness of the African market for e-commerce.

The focus of many platforms have been around payments and providing merchants with access to customers beyond their immediate storefronts. While some adaptations have been made, such as cash on delivery as an alternative to electronic payments and personalized onboarding for merchants, the e-commerce space is still missing out on a few key questions which have limited success in the space.

Some of the questions that could unearth more opportunities in the e-commerce space are:
  • Who are the platform’s primary target customers? Are you focused on building a buyer-centric experience, a seller-centric experience or both? Each of these group’s different needs will require different approaches to prioritization.
  • If you know the target customers, have their needs been appropriately prioritized? For example, is it correct to assume that sellers prioritize having customized storefronts, or is order fulfillment a more pressing challenge?
  • Which part of the value chain do platforms have the capacity to support? Will they hold inventory and manage a fleet of vehicles for delivery, or will these kinds of processes be outsourced to third parties?

Social Applications
Some entrepreneurs have tried to leverage Africa’s growing population of young and avid technology users by building social applications. Many of these applications have focused on modified approaches to instant messaging and picture sharing.

While many of the applications are free, the models for monetization are often heavily reliant on advertising revenue. Though the potential exists, there are again a number of questions that still remain unanswered and as a result success has been limited in this space. Some of those questions include:
  • Should entrepreneurs focus on building local substitutes to global social applications like Facebook (this has been the pattern in countries like China, largely due to government restrictions), or should they be focusing on value-added tools which build on existing behaviors?
  • How do products interact with data? If there is a heavy reliance on it will local data costs and accessibility have an impact on how the product is used?     

While these two sectors focus on very specific examples, they do provide a starting point for you to reflect on how to identify opportunities in the African technology ecosystem. Interested in learning more about how you can identify the right opportunities? Send an email to info@startsmartgh.com.


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