The Nahmias Cipher Report

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Africa's Technical Revolution

Thaddaus Beckenridge

There were many skeptics when Jack Dorsey, CEO of Twitter and small business resource Square, announced that he would be venturing to Africa in 2020.

Africa has steadily grown through the years, finally becoming free of its misnomer as the “Dark Continent.” With more than 600 active technology hubs (up from 422 in 2018), we see organizations with the local address, facilities, and support for technical and digital entrepreneurs making Africa the next big market in technology for the coming decades, and possibly the century!

Africa’s fifty-four countries have a total population of 1.3 billion people, and according to McKinsey, by 2025, more than 100 cities in Africa will contain over a million people. Others predict that population growth will push those numbers to 4.3 billion within the next century. Africa also has the additional advantage of a youthful population, with an average age of just under twenty-years-old. Many of these individuals have studied abroad, and even those who have not had similar opportunities are incredibly tech-savvy because of Africa’s long reliance on block-chain and mobile banking solutions.

With such young potential and energy, there is a transition away from traditional rural economies to more technologically driven. This revolution is powered by the massive migration of young people from rural to more urban areas, which, according to reporting, surpasses even China and India in this trend. In 2019, six African countries were listed in the top ten fastest-growing economies globally. These included Ethiopia, Rwanda, Ivory Coast, Tanzania, and Ghana emerged in the top fifteen coming in spots 1, 2, 5, 10, and 15, respectively. These countries are no longer the exception; as a whole, Africa’s overall GDP projected to reach 2.6 trillion in 2020 and increase to 4.1 trillion in 2021.

These impressive stats are attracting the attention of some of the globe’s largest investors, many of whom are positioning their companies to benefit from this rapidly emerging market to achieve maximum growth. The continent is one of the last places where economic opportunity and growth potential are extraordinary because it is virgin territory.

China has taken full advantage of this opening, exponentially building upon its long-range investments in Africa’s infrastructure projects and other projects since the 1950s. Through the Sino-Africa bilateral trade agreements and treaties, China has established businesses and projects with Saharan and Sub-Saharan African nations, investing billions of dollars.

China and Africa’s modernization efforts yield a return on investment, as companies unwilling to risk expanding into territories without a well-established consumer base or reliable supply chain are now more confident in the opportunities presented by Africa’s thriving urban centers. With so much to offer, leaders of African nations no longer have to accept the lesser share of profits.

Leaders have become more adept at negotiating agreements in the best interest of their countries. Trade agreements that preserve the African nation’s ability to achieve equitable control of the profits through various methods, such as creating reserve sectors in which no foreign entity may participate, and most often with partnership arrangements requiring a percentage of citizen ownership in the company.

These types of arrangements facilitate knowledge transfer, which is necessary for the uplifting of the nation’s citizenry. The inequity of colonialism ensured that leaders of present-day African nation’s value not only natural resources but also human capital, for, without both, freedom is illusory.

The timely implementation of technology and digital service offering by African entrepreneurs or through government partnerships has enabled citizens to access essential services during a global pandemic. There have been challenges during the quarantines, social distancing, and other measures taken to mitigate the virus’ spread. Still, it has demonstrated the need for robust technology infrastructure and entrepreneurial thinking to meet the moment.

Companies that can provide fast, secure, and reliable wireless and WiFi services are the best position to ride the next wave toward immense growth and profitability. Multinationals such as “Facebook,” have partnered with companies such as “Airtell Uganda,” and “BSC” to leverage these opportunities. This trifecta is implementing a project to deliver mobile broadband to 3 million people in Northwest Uganda. And, South Africa has also launched initiatives to connect under served communities with WiFi and has negotiated for Amazon to establish a presence in Johannesburg.

Microsoft, which has operated in Africa since 1992, also continues to expand its footprint through cloud computing. As with Western nations, cloud computing will allow African governments to more efficiently scale their technology needs by enabling off-premises solutions to deliver services that otherwise would not advance because of antiquated systems. Technology partnerships are especially crucial during this era of the global pandemic when so many vital services can only be delivered through digital and virtual platforms to reduce the spread of the virus.

Now, African governments who chose to negotiate trade agreements with global governments, and entrepreneurs seeking partnerships with corporations interested in doing business in Africa, come to the table with a new power dynamic. One which will result in the creation of long-term capital investment, hard assets, and technology, all of which will create cyclical positive earnings. Urbanization of the citizenry, higher educational opportunities, sophisticated understanding, and use of technology is fueling an era of young African consumers. They will make up the backbone of the workforce, know how to live and work in the international arena, but their heart and interest remains anchored in Africa’s ascendancy.

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