Seeds of Opportunity: The African Growth Series
October 2022 | Issue 1
In this week's issue, you will learn more about:
- ERP Myth - Success lies in the technology
- The Application of Technology in Renewable Solutions
- Fintech in Sub-Saharan Africa
- Growing Private Capital Investments in Sub-Saharan Africa
ERP Myth - Success lies in the technology
Shocks to global and local supply chains result from increasing geopolitical tensions, natural disasters and an array of other factors. This volatility has led executives to adopt and implement digital solutions such as Enterprise Resource Planning (ERP) systems to reduce disruptions and maintain business operations. This rise in ERP use has led to many misconceptions about the software, in particular the role people play in the success of the system for their organisation. We, at Frost & Sullivan Africa, have worked with SYSPRO to develop a whitepaper detailing the truths behind 16 common myths that occur along the four lifecycle phases of ERP systems. From deciding to get one, selecting the most suitable ERP, and implementing the system to the continuous management of the ERP. This post highlights the implementation myth – ‘Success lies in the technology’.
Humans are both the keystone and bane of most technology deployments. Research reveals that organisational (i.e. human) change is placed on the backburner whenever companies implement an ERP but these issues, which include governance problems, resistance to change and process redesign challenges, are the most common reason for ERP budget overruns or failed implementations. To bust this myth and ensure the smooth implementation of an ERP, companies should consider the human response to the process and technological change that comes with the system. One strategy executives can consider is creating a dedicated team of internal ERP leaders with external consultants focused on change management for the company to avoid budget overruns and delayed or failed implementations. Winning people over and uncovering the 16 common myths is crucial for a company to attain the most value out of its ERP.
The Application of Technology in Renewable Solutions
As Africa, along with the rest of the world, transitions from fossil fuels to an increasingly electric world, more energy will be produced by decentralised, renewable energy sources. These grids will add complexities to energy grids worldwide as renewable energy sources have varied production sources than traditional sources. Furthermore, the proliferation of distributed energy resources like wind turbines and solar panels will require organised balancing of the energy to ensure that the supply matches the demand without collapsing the grid. This is where technology tools will become more crucial in meeting the demands of various markets. Technologies such as AI, Machine Learning and IoT can provide better management and oversight of electrical grids while improving an electrical grid's reliability, efficiency, safety and security. AI will become essential when switching from centralised power generation and distribution models to decentralised models, where smaller, localised power grids (for example solar farms) will generate more power. Al can further coordinate the integration of these networks while forecasting energy demand and managing the distribution of resources to ensure that power is available at the time and place it is needed. Digital Twins, a virtual replication of a physical system, can help solve supply and demand ambiguity by better preparing industry professionals for various scenarios that could affect the grid. Coupled with AI, the Digital Twin can test-drive complex systems and predict where things could go wrong. This planning through technology will become increasingly more important as more renewable energy systems come online.
This paradigm in energy infrastructure will involve significant levels of automation to manage the latest technology platforms and the financial frameworks required by markets to facilitate energy trading and distribution. Technologies such as IoT and IoE (Internet of Energy) are best suited to address these challenges. Its application will enable utility companies to conduct real-time, data-driven decision-making and predictive maintenance to drive efficiency while improving customer experience and satisfaction.
Fintech in Sub-Saharan Africa
In Sub-Saharan Africa (SSA), the use of mobile money is prominent. In fact, the World Bank Global Findex database of 2021 highlights that between 2014 – 2017, the share of the adult population that held a mobile money account doubled in this region. The report indicates that this may be linked to unbanked members of the population. A clear example of this is Kenya, where 23% of the internet users in the country rely on mobile payment methods – 2% less than the global average in 2021. Another indication of the popularity of digital payments in SSA is Digital PayGo, a Zambian fintech firm that functions to enhance the online payment arena for SMMEs, which has partnered with South African Ukheshe (an SMME ‘smart box’ that generates application programming interfaces (APIs)). Ukheshe offers a comprehensive suite of services that includes an allowance for QR payments, virtual card payments, SoftPOS, digital onboarding, and instant access to funds through the API. The result of this partnership between two start-ups founded within the Southern African Development Community is that it will allow for convenience and safety of payments, as well as digital financial solutions, which will ease the way in which SMMEs in Zambia currently conduct business. This is in line with the Government Technology (GovTech) conference, which was hosted in Durban this September, and brought together over two thousand delegates across Africa, in the private and public sectors, including Zambia’s minister of science and technology, to focus on ICT infrastructure and how technology can enable the efficiency of services.
Growing Private Capital Investments in Sub-Saharan Africa
The first half of 2022 closed on highs for Private Capital Investments in Sub-Saharan Africa (SSA), speaking to the regions growing appetite for growth. As recorded in the African Private Equity and Venture Capital Association’s (AVCA) latest flagship report, H1 of 2022 displayed a record of 338 deals, worth $4.7 Billion in cumulative value, projected to close at $7 billion by the end of 2022. Despite challenges with inflation and the remaining fears of a global economic downturn, Africa reached key milestones in various sectors. Venture Capital (VC) deals alone, recorded a cumulative value of $3.5 billion raised between 300 companies, while increases of 29% (from 2021) were also recorded in private capital exits. As seen for 2021, Fintech companies led the deals secured, accounting for 103 private capital investment deals in H1, while industrial sectors followed. The start-up landscape in the region has never been more exciting, with West Africa, East Africa, and Southern Africa being breeding grounds for growth, with some highlight deals including companies like Sun King, GridX, Sanergy, etc. Key contributors to the positive deal activity that the region is seeing and is projected to see include growing sizes of investments collaborated efforts between international investors and domestic venture capital firms, and well-managed/implemented investment funds in key sectors. As the last growth frontier for various technology, the region's potential is limitless, if efforts continue to implement targeted strategies that cripple its progress at all scales.
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To find out more about opportunities in Africa, please contact Lynne Martin.
