digital revolution africa companies

Africa is a land of entrepreneurs. Few companies can offer salaried jobs, the inhabitants set up their business to live. From the canteen installed on the roadside under the parasol of her “garbadrôme” in Abidjan, to the SME offering IT services in Nigeria, many are thus embarking on entrepreneurship. This is key to job creation on the continent: the population is growing exponentially, and 450 million young people will be added to the workforce in the next 20 or 30 years.

But as Jean-Michel Severino says, to succeed “African entrepreneurs must move mountains” : infrastructure costs are high (energy, logistics), access to markets not always easy. Obtaining funding can quickly turn into a nightmare. In addition, the majority of entrepreneurs are “informal”: they pay little tax, receive no assistance, and also suffer from a generally disastrous business climate.

In this context, good news: the digital revolution can make life easier for companies and help them develop, sometimes exponentially!

Funding in 10 seconds thanks to digital

90% of African companies are SMEs / VSEs. They provide 60% of the continent’s jobs but 80% receive no funding. In this context, digital credit has its place. Banks and microfinance institutions in particular allow customers to apply for credit online using their smartphone, allowing very rapid disbursements. Orange Bank Africa has been offering since 2020 in Côte d’Ivoire a credit of a minimum amount of 5,000 FCFA over one month, renewed as many times as the customer requests, as long as he repays on time. The request is processed in 10 seconds! Traditional microfinance companies, such as Advans, present in 6 African countries, have reinvented themselves in order to offer digital loans. To the east, Kenya is becoming a global digital financial services 4.0 hub, with around twenty applications allowing businesses to finance themselves online.

Live sales on Instagram

To reach more customers, the internet is a great tool. E-commerce sites allow sellers to offer their products to a wider target. Chari, a Moroccan B2B platform, also located in Tunisia, allows local shops (the well-knit network of traditional grocers) to order their stock online and be delivered in less than 24 hours. The company aims for a turnover of 25 million dollars in 2021 and has raised 5 million dollars to continue its expansion in French-speaking Africa. Trade Depotin Nigeria provides similar services to 40,000 distributors (women selling at street stalls). In Kenya, Twiga Foods, the electronic business-to-business food distribution platform, has just closed a funding round of $ 50 million, in particular with Creadev.

In addition, digital marketing to individuals (B2C) is booming, and social networks are an unparalleled visibility vector for entrepreneurs. Lactacare, a Kenyan company selling cookies that stimulate breast milk production, has grown thanks to Facebook and Instagram: they allow communication around the product by highlighting customer reviews, making inexpensive advertising and selling online, without necessarily opening a physical store.

Towards African administrations 4.0?

The administrative procedures for setting up a business are cumbersome and costly. They often involve having to travel to slow administrations that have sometimes set up Kafkaesque systems. But their digitalization is also advancing: in Ghana, since the adoption of the new company law in 2019, companies can carry out all their procedures relating to the trade register online. In Senegal, companies will be able from this year to file their income tax return online, and fintech InTouch already allows you to pay all your bills related to public and essential services online (water, electricity, telephone, etc.).

Young African entrepreneurs ride unicorns

This digital revolution is particularly felt in four countries: Egypt, Nigeria, Kenya and South Africa, where seven famous “unicorns” have appeared in recent years, these start-ups valued at more than one billion. of dollars. Fawry and Egypt, OPay in Nigeria, and even Wave in Senegal, show the way for African entrepreneurs large and small: even if not all entrepreneurs are destined to set up fintechs on a global scale, models of success exist, which can inspire generations to come.

(*) Former Advans Group legal manager.

(**) Co-founder Okan Partners.