Insider The Rapid Growth of Digital Business in Africa
The latest technology firm to list on the New York Stock Exchange is not from Silicon Valley but from Africa. Jumia, an e-commerce platform with over 4 million customers in 14 African countries, saw its shares jump by around 70% on its NYSE debut day on April 12th. That put the company’s market capitalization at close to $2 billion, cementing its status as Africa’s first technology unicorn.
From the Harvard Business Review. Story by Acha Leke and Tawanda Sibanda.
Jumia’s successful NYSE listing is a timely reminder of Africa’s rapid digitization — a trend that has been hidden from the view of many global investors and executives. Africa already has 122 million active users of mobile financial services, more than half the global total. Its number of smartphone connections is forecast to double from 315 million in 2015 to 636 million in 2022 — twice the projected number in North America. Over the same period, mobile data traffic across Africa is expected to increase sevenfold.
Listen to GHOGH with Jamarlin Martin | Episode 39: Tunde Ogunlana Jamarlin talks to family wealth advisor Tunde Ogunlana, CEO of Axial Family Advisors, about estate planning and Snoop Dogg’s comment that he doesn’t need a will (“I don’t give a f— when I’m dead. What am I gonna give a f— about?”). They also discuss the growing college debt bubble, whether more free tuition will help solve the problem, and why MBAs are like the bachelor’s degrees of 30 years ago.
In our new book, “Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market,” we spotlight Africa’s unfolding digitization and show how investors and entrepreneurs from across the world can be part of it. We interview many of the pioneers at the forefront of the digital revolution, including Jumia’s co-CEO, Sacha Poignonnec.
One message stands out: digital technologies allow to recast Africa’s challenges as an opportunity to innovate and address massive unmet demand. We estimate that private consumption in Africa rose from $860 billion in 2008 to $1.4 trillion in 2015 — significantly higher than that of India, which has a similar population size. We forecast that it could reach $2.1 trillion by 2025. platform with Africa’s consumers are still woefully underserved: there are sixty thousand people per formal retail outlet in Africa, compared with just four hundred people per store in the United States.
By Jumia’s calculations, online sales currently stand at less than 1% of total retail sales in Africa — compared with 24% in China. As Poignonnec told us, “My view is that retail will move online very quickly in Africa. E-commerce might reach 15% of total retail sales over the next ten years, and then it will go beyond that.”
There are plenty of other entrepreneurs who are harnessing technology to solve deep-seated gaps in Africa’s markets. One is Mitchell Elegbe, CEO of Nigerian start-up Interswitch. He told us how, back in 2002, he observed people carrying piles of cash to pay for everything from groceries to cellphone airtime to utility bills. Today, Nigerian consumers and businesses make more than 300 million digital transactions a month across a suite of Interswitch-enabled channels. Interswitch, too, plans a global listing — which could value the company at as much as $1 billion, making it Africa’s next unicorn.
Read more at the Harvard Business Review