Technology offers Africa a tremendous opportunity for growth, prosperity and opportunity. Africa’s computing history dates back to 1921 when South Africa took delivery of its first tabulating equipment from the then Computing-Tabulating-Recording Company which later became IBM. Subsequently, several units were deployed to the country, and by 1959 IBM installed the first actual data processing system in Johannesburg. A few years later, The Africa Centre d’Informatique du Rwanda took receipt of Africa’s first computer in 1980. This paved the way for internet adoption. Today, Africa is facing multiple challenges.
While Covid was first and foremost a health crisis, the economic impact continues to be severe for parts of the continent. The war in Ukraine has added further pressure on supply chains and food security. And Africa’s rapid population growth – 60% of the population will be under 24 by 2025 – creates a further pressing need to generate economic opportunity and ensure people and families can earn a living. Whilst some countries have non-existent technological capability or low capabilities, others either show potential or already have adequate technological capabilities for industrialization. The rapid spread of the internet across the African continent has been heralded as a key driver of prosperity and a sign of the continent’s technological coming of age.
Facts & Figures
- The average technological capability in African states has almost doubled, increasing from 25% to 41% which is linked to increasing internet penetration and rapid diffusion of digital technologies across the countries, according to Technological Capability and Industrialization in Africa, authored by Gideon Ndubuisi et al. It sampled 50 African countries between 2000 and 2018, finding strong heterogeneities in the levels of technological capabilities among countries on the continent.
- In 2023, more tech companies are developing in Africa than in the rest of the world, according to the Agence Française de Développement. With the number of fintech companies alone reaching over 678 in 2023 across Africa.
- By 2030, the continent could achieve rough parity with the rest of the world when three quarters of Africans are projected to become internet users. The economic potential is enormous: Mobile technologies alone have already generated 1.7 million jobs and contribute $144 billion to the continent’s economy, or roughly 8.5% of GDP. According to a study by the International Finance Corporation etal., by 2030 Sub-Saharan Africa will see over 230 million jobs that need digital skills.
- Kenya has a significant mobile penetration rate, with mobile subscriptions surpassing 66 million as of 2023. Mobile services like M-Pesa, a mobile money transfer solution, have revolutionized financial transactions, circumventing many issues surrounding the cash challenge in Africa. Additionally, Kenya’s digital economy is growing so exponentially that it is expected to generate 9.24% of the total GDP by 2025.
- With over 200 million people, Nigeria is home to a massive consumer base – the most massive one across the African continent, in fact. For ambitious investors looking to invest and grow big, Nigeria is the place to be. Better still, the country has over 100 million internet users, making it one of the largest online markets in Africa, an opportunity for investors in the IT & Telecom industry cannot ignore.
- South Africa boasts some of the best IT and telecom infrastructure in Africa. For instance, it ranks #2 for fastest internet on the continent, with Rwanda standing at first place. Behind more populous Egypt and Nigeria, South Africa is also home to over 41 million active internet users.
- The Rwandan government has implemented policies to promote ICT development, including the Kigali Innovation City, a tech hub designed to attract tech companies and startups, and to house financial investors, academia, and support services. The government has also allocated $100 million to the Kigali Innovation Fund to drive innovation.
- Much like Nigeria, Egypt has a large population (over 100 million people), which provides a substantial market for IT and telecom services.
- Over the last decade, tech hubs have become critical actors within African entrepreneurial ecosystems, providing much needed support for resource-constrained start-ups. An estimated 1,031 hubs operated across the continent in 2021, with the number increasing by 60% since 2019, when 643 hubs were identified. This is even more impressive when one considers that only a handful of hubs existed in the early 2010s.
- Nigeria hosts the most tech hubs on the continent (164), followed by South Africa (96) and Kenya (90). Within Africa, 53% of hubs primarily function as community-building institutions, while just 45% offer some kind of business support programme.
*Sources: UN Economic Commission for Africa (ECA); International Trade Centre; The Brookings Institution; AFR-IX telecom; World Economic Forum; Google; Africa HR Solutions.
