Seeds of Opportunity: The African Growth Series
March 2023 | Issue 3
In this week's issue, you will learn more about:
- AFRICA OPPORTUNITY: Waste Recycling and the Circular Economy
- AFRICA TREND: FDI Growth in Africa
- AFRICA TREND: Investments into Cyber Security
- AFRICA TREND: Fintech and Digital Banking
- AFRICA OPPORTUNITY: Namibia's Petroleum Industry Boom
- AFRICA OPPORTUNITY: Artificial Intelligence in Medical Imaging
AFRICA OPPORTUNITY: Waste Recycling and the Circular Economy
The recycling industry is rapidly transforming to address the world's waste crisis, and Africa has an immense opportunity to leverage the circular economy. The African Development Bank estimates the continent's waste management industry will reach USD 8 billion by 2024. With less than 10% of the 174 million tons of waste generated in Sub-Saharan Africa currently recycled, there's immense growth potential. Advanced technologies such as Artificial Intelligence (AI) powered material recognition and digital resource management platforms are disrupting the industry and increasing efficiency. Governments, private sector players, and civil society must collaborate to create an enabling environment for the industry to thrive, including investment in infrastructure, capacity building, and policy frameworks that encourage the recycling and circular economy industry. By doing so, Africa can tap into the potential of this industry and work towards creating a more sustainable future for generations to come.
African startups making significant strides in waste recycling and the circular economy include EcoPost, J-Palm Liberia, Kudoti, RecyclePoints, Takataka Solutions, Waste Enterprisers and Wecyclers.
AFRICA TREND: FDI Growth in Africa
Global Foreign Direct Investment (FDI) into Africa has continued to grow since 1974, reaching a record high of US$ 83 billion in 2021, or 5.2% of global FDI flows into the region. FDI flows into Africa have evolved over the past few decades and have remained crucial in helping the continent grow, particularly in fast-tracking infrastructure development. Craig Parker, Frost & Sullivan Africa’s Research Director, indicated, “Infrastructure development is the cornerstone of growth for any region, especially in Africa, where infrastructure development is required.” Accordingly, infrastructure investment was one of the key sectors that drove growth in Africa’s FDI flows. Technology, however, was the top-rated sector, followed by health; telecommunications; financial services; and agriculture.
Nonetheless, as discussed in a Think Tank hosted by Frost & Sullivan, foreign investors remain enticed by Africa’s infrastructure projects and the rapid growth in the continent’s technology and services industries.
AFRICA TREND: Investments into Cyber Security
One hacking group, based in an unknown French-speaking African country, stole US$11 million from 12 African countries between 2018 and 2022. The threat actor, OPERA1ER, launched over 30 successful attacks against banks, financial services providers, and telecommunication companies. Increasing investment into Africa's underdeveloped cybersecurity market is a trend across the continent.
Africa's digital economy offers growth opportunities because forecasts show that internet users will almost triple between 2016 to 2027. However, digital security infrastructure presents a significant challenge. African countries focus on building reliable electricity and internet networks to grow their digital ecosystems, but cybersecurity is not a priority. 28% of businesses do not have standard cybersecurity protocols, resulting in substantial economic consequences and vulnerabilities. Estimates show that cyberattacks cost South Africa US$570 million a year, Nigeria US$500 million and Kenya US$36 million. Over three months in 2021, the three countries recorded 81 million cyber-attacks. The revenue for data security to quadruple between 2016 to 2027. This increase substantiates the urgency to guard against cybercrime is high and leads to a consistent increase in support for African cyber security startups, such as Sendmarc, Magalix, Entersekt and Cyber Talents.
AFRICA TREND: Fintech and Digital Banking
Over the past decade, fintech innovation has played a large role in the mass proliferation of online banking in Africa. Through user-friendly and inexpensive advancements, major banks and startups have managed to foster access to financial services on a large scale across the continent. One growing trend in this sector is the influence of independent startups and their innovations on banking providers in Africa. Key innovations such as mobile money, online payment platforms (such as Flutterwave and Paystack), peer-to-peer lending, and digital savings have altered the face of banking on the continent. The recent surge of fintech developments in Africa has generated a positive outlook for revenue in this sector. In 2020, fintech revenue in Africa reached USD 3.8 billion and is forecasted to reach USD 11.7 billion by 2025. South Africa is a clear example of the positive relationship between increased innovation in fintech and digital banking in the continent. In 2021 alone, 30% of tech startups in South Africa were fintech. Considering the impact of fintech in digital banking in South Africa, there is clearly a positive relationship between the two. In 2021, South Africa ranked second worldwide in user satisfaction with digital banking services. The country's banking penetration rate has increased from 54.4% in 2010 to 79.2% in 2020 and is forecasted to reach 89.8% in 2025.
AFRICA OPPORTUNITY: Namibia's Petroleum Industry Boom
Namibia's petroleum sector is gaining traction and a local spotlight with growing upstream activities. A recent announcement released positive results for offshore drilling activity taking place 270 km offshore Namibia. The confirmed oil discovery at the Jonker-1X site, managed by a consortium comprising Shell (45%), QatarEnergy (45%), and NAMCOR NAMIBIA (10%), is the third one since February 2022. As a country with a net importing status for mineral fuels and oil, the local government has welcomed the booming upstream activities. Namibia currently has no refinery capacity but imports refined products from partners like South Africa; thus current investments are aimed at reshaping this landscape. In 2020, the country saw positive growth in exports, to US$71.68 million, up from US$43.1 million in 2019. The majority of exports (68% in 2020) are directed to local partners like Botswana, but the opportunity remains large for closing gaps in international markets amid ongoing European crises. Through collaborative efforts of the state and private sector, the Namibian energy industry is one to eye for growth opportunities, with a testament seen as more oil marketing companies seek their corporate residence in the country.
AFRICA OPPORTUNITY: Artificial Intelligence in Medical Imaging
Medical imaging, such as x-rays and computed tomography (CT) scans, are required for the diagnosis of about 30% of all conditions. At the same time, Africa has a dire shortage of radiologists. In Ghana, less than 100 radiologists serve a population of 32 million people. This ratio is even worse in Nigeria, where there is about 1 radiologist per 658,000 people.
Artificial intelligence (AI) in medical imaging is revolutionising the industry. AI can make diagnoses from mammograms 30 times faster than the average radiologist, at a 99% accuracy rate. The improvements in speed and accuracy result in fewer false positives and unnecessary biopsies. Ultimately, the technology enables radiologists to work more efficiently and to serve more patients.
AI-driven medical imaging technology is penetrating the market in unexpected ways: The technology has been developed and adopted across Africa, even in less-developed countries such as Zimbabwe and Rwanda. In South Africa alone, companies developing medical imaging devices using AI have received about USD 2.5 million in private equity and venture capital funding. The adoption of complementary technology – particularly portable x-ray machines – is expected to drive further growth in AI technology in remote, underserved African locations over the next decade.
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To find out more about opportunities in Africa, please get in touch with Lynne Martin.
