Seeds of Opportunity: The African Growth Series
March 2023 | Issue 4
In this week's issue, you will learn more about:
- AFRICA OPPORTUNITY: Kenya’s Digital Economy
- AFRICA OPPORTUNITY: The benefits of start-ups in the construction industry
- AFRICA OPPORTUNITY: Empowering Female Entrepreneurs
- AFRICA OPPORTUNITY: Growth and Innovation in the Agricultural Sector
- AFRICA OPPORTUNITY: The Natural Gas Opportunity in Africa
- AFRICA TREND: Trust in Artificial Intelligence Healthcare Solutions
- AFRICA OPPORTUNITY: Tanzania's $30Billion LNG Development
AFRICA OPPORTUNITY: Kenya’s Digital Economy
Kenya's digital economy is a goldmine of opportunities waiting to be explored. In 2022, the digital economy raised USD 4.07 billion in revenue, and the projection is even more promising, with an expected revenue of USD 5.45 billion in 2025. This growth is fuelled by the eCommerce sector, which accounts for over 75% of this revenue. The electronics and media segment contributes 30.1%, while fashion accounts for 21.2%. These figures show a lot of potential in the digital economy in Kenya, and businesses can increase their profits by tapping into this opportunity.
AFRICA OPPORTUNITY: The benefits of start-ups in the construction industry
The construction industry accounts for 40% of the total infrastructure budget and employs over 1 million South Africans each quarter. This industry is critical in creating an enabling business environment, providing opportunities for small and medium-sized enterprises (SMEs). SMEs are essential to the economy as it employs nearly 80% of the country’s workforce. A well–functioning construction sector can create an enabling environment essential in attracting investment, promoting innovation, and supporting SMEs. The role of SMEs within the construction industry can therefore be not underestimated, as these businesses act as the key suppliers, contractors on independent projects, and sub-contractors supporting more significant projects and construction companies. As both these sectors can fuel growth for the other, they both are vital in creating a livelihood for millions of South Africans. Thus, improving and maintaining the construction industry is imperative to unlocking the country’s economic and social devolvement. Furthermore, industrywide cooperation and increased efforts from SMEs to improve their internal operations will benefit the entire industry as construction projects see better results while employment and income rates improve.
AFRICA OPPORTUNITY: Empowering Female Entrepreneurs
Google has announced three initiatives to empower women entrepreneurs in Africa; Google for Startups Accelerator Africa: Women Founders Cohort, the Hustle Academy for Women-Led SMEs and the #WomeninIT social media series. Google has selected 15 startups from various parts of Africa for the first Google for Startups Accelerator: Women Founders Africa Program. The 12-week program, starting this month, includes one boot camp-style training programme each month. The Hustle Academy is a training program for women-led small and medium-sized enterprises (SMEs). It gives participants access to Google products, resources, tools, technology, mentoring from industry experts, networking opportunities and connections with investors to help scale their startups. The cohort has five Kenyan startups, three Nigerian startups, two Rwandan startups, and one each from Ghana, Tanzania, Cameroon, South Africa, and Congo. The #WomeninIT social media series celebrates inspiring women in Africa’s technology sector who are breaking barriers and impacting the continent's technology, business, entrepreneurship, innovation, and start-ups.
Folarin OreoluwaAiyegbusi, Google's head of startup ecosystem for Africa, expressed excitement at supporting women are addressing critical issues across the continent. These initiatives can significantly affect Africa's tech ecosystem and empower women entrepreneurs often underrepresented in the sector.
AFRICA OPPORTUNITY: Growth and Innovation in the Agricultural Sector
The African Continental Free Trade Area Agreement (AfCFTA) is set to play a vital role in developing Africa’s agricultural economy. Currently, agriculture accounts for one-third of the continent’s gross domestic product (GDP) and is responsible for the livelihood of 50% of the population. While the free trade area, projected to host 1.7 billion people and oversee USD 6.7 trillion in consumer spending by 2030, will transform many industries in Africa, agriculture is projected to be the primary beneficiary of the Agreement. One of the clear benefits of the AfCFTA is the increased intra-African trade, which will assist in reducing foreign agricultural imports. Africa imports USD 50 billion worth of agricultural products annually, which is expected to decrease due to intra-African trade (projected to increase by 574% by 2030). Within this growing sector, innovations in science are flourishing, such as the use of artificial intelligence (AI). Forecasted to have an estimated 4.2% impact on the continent’s GDP by 2030, AI has wide adaptation in agriculture. The incorporation of AI into this sector is already widely accepted by farmers, with Digital for Agriculture (D4Ag) boasting over 33 million farmer registrations and is forecasted to reach 200 million by 2030. Utilising internet of things (IoT) solutions in agritech stimulates outputs in the agrarian sector. It therefore boosts food security and economic gains through AI market price predictor apps, AI translators and data processors geared toward increasing food production in Africa.
AFRICA OPPORTUNITY: The Natural Gas Opportunity in Africa
Africa has massive natural gas reserves across the continent. As of 2021, these reserves have been estimated to equal 626 trillion cubic feet (TCF). In the global context, the continent holds around 13% of the world’s natural gas but has the lowest electrification rate. Africa should use its natural gas reserves to lift its population from economic poverty and drive economic development. While renewables are the future, the continent needs some baseload energy sources. And that’s where natural gas comes in, as it burns considerably cleaner (up to 50%) than coal and offers an economically viable opportunity to the continent, given Africa's vast deposits. Several African countries, such as Ghana, Gambia, Nigeria, Kenya, etc., have ambitious climate targets. Still, these are conditional on receiving international financing support from the developed region, which is not forthcoming and continues to fall short. Natural gas should be used as a bridging base load energy source. Gas should be a “clean” baseload energy supply while alternative clean fuels are being developed (e.g., green hydrogen). These alternative fuels can utilise the natural gas infrastructure (e.g., pipelines, OCGT, etc.) with minor repurposing required. Moreover, natural gas can be a source of export revenue in North Africa, given Europe’s struggle with access to natural gas since the Russo-Ukrainian war and its current over-reliance on the American gas supply.
AFRICA TREND: Trust in Artificial Intelligence Healthcare Solutions
As the adoption of healthcare solutions driven by artificial intelligence (AI) grows across Africa, the focus is increasingly placed on implementing the appropriate policies and measures that will enable the technology to thrive and continue to grow in the African market.
Although Africa lags behind the rest of the world in some of these measures, such as national strategies on AI, great strides are being made. As of 2022, various African countries, including Mauritius, Rwanda, Benin, Nigeria, and Ghana, have adopted AI policies to ensure AI technology's equitable and ethical adoption.
The presence of national strategies on AI is an essential step towards fostering trust and acceptance of AI-driven healthcare solutions, which are crucial drivers of the adoption of AI. However, despite the fact that only a small number of African countries have implemented policies on AI, there is great enthusiasm for AI-driven technology on the continent. Developing countries have greater trust in and acceptance of AI systems than their developed counterparts: About 55% of South Africans trust AI systems, compared to only 15% in Finland. Furthermore, whereas 62% of clinicians in the Middle East and Africa believe that their clinical decisions will be based on AI in ten years, only 46% of clinicians in Europe and 47% in North America believe the same. These figures indicate that the necessary socio-cultural factors are in place to drive both physicians and patients in Africa to embrace AI-driven healthcare solutions.
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AFRICA OPPORTUNITY: Tanzania's $30Billion LNG Development
Tanzania is expanding its energy capacity in East Africa and beyond. In a recent announcement through the Ministry of Energy, the country is positively progressing toward its largest LNG project. Key stakeholders of the $30 Billion LNG facility, Shell and Equinor, announced the official starting the contract preparations for the development. The ball is expected to roll even faster from here with the project's final investment decision expected by 2025. The project was ranked as the 9th largest LNG export capacity (project) in 2022 alongside projects in the United States, Russia, Canada, Mexico, etc., In Africa, it is also among the leading infrastructure investment projects in the oil and gas space, with its value being the same as the Rovuma LNG Terminal. Africa hosts gas reserves at 626 trillion cubic feet (TCF). Thus, the combined 24 trillion tcf of gas to be developed by Shell and Equinor in Tanzania is the tip of the iceberg and a significant opportunity for developing the region's economy and energy resilience.
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
