Uwem: My name is Uwem Uwemakpan. As for what I do, I wear so many hats. I have a podcast that speaks to change makers and people doing great things in Africa, either as founders or as C-Suite executives. I also see myself as a connector between venture capital and founders that need it. At the same time, I advise founders on the various stages of their journey as they scale and gain clarity on how they want to build their businesses. And finally, I’m the Head of Investments at Launch Africa’s Fund II.
V A: If you were going to write a book about Africa’s tech ecosystem based on your experience, what would be its title, and what genre would it fall under?
Uwem: That’s an interesting question. I haven’t considered that. But I think, based on my experience, its title would be something like “The Land of unrealised potential.” There are so many untold stories about what founders and other people are building on this continent. And this “book” will talk about how Africa’s challenges, from gatekeepers to governments and culture, are either helping them grow or stopping them. As for what genre it will fall under, I don’t know yet.
Speaking of untold stories, most reports about African tech revolve around Nigeria, Kenya, South Africa and Egypt. Why does this huge gap exist?
Uwem: It’s a mix of things, really. Firstly, money and attention work hand-in-hand. Wherever money flows, attention follows and vice versa. Also, most of the indices for rapid growth are present in these economies. If you compare them to countries like China and India, you will see many similarities in the primary elements that made those countries grow fast. Population, infrastructure (in terms of telcos), mobile penetration and access to cheap data are some of these metrics. So it’s easier to build and scale businesses in some countries than others. The kinds of regulators present in countries also play a part because it’s easier to repatriate your earnings and get good taxation agreements in some places than in others.
Another point is that some do better with storytelling. As I said, money and attention follow each other. When everybody starts talking about investing in a particular region, FOMO will push many to invest there, whether or not the fundamentals add up. That is what campaigns like Nigeria’s “Good People, Great Nation” movement aimed at. Another way this attention comes to these markets is through the diaspora. Many people who went to study outside Africa have either become founders of startups in their home countries or played a part in hyping the founders.
The third reason, which is related to the second, is that people want to invest where there are potential exits. So when investors hear of stories like Paystack, Flutterwave, and Wave, they become more open to investing. But the other side to FOMO is that many great countries and companies get sidelined. And this often happens because local investors are not doing the work to identify them.
Let’s double down on the “attention” part. What tech trends have caught your attention recently?
As you already know, there is a lot of attention on fintech. And that’s not bad because no other sector will function if financial services don’t work. Also, it’s easier to scale a fintech once you have regulatory backing. So I know fintech is going to be huge in Africa.
During COVID, many of us thought health tech would be the next big thing. But as we’ve seen, it’s hard because aside from getting regulatory backing, you have to patiently educate and re-educate your target market for major scaling to happen. So it’s a long game, and I am excited to see players in this sector do just that. I think it is positioned for hypergrowth in the coming years because 60% of Africa’s population is under 25, and if you can make these people use your services, healthcare will be different in this continent.
And because we have such a large population of young people, I am very interested in agri-tech innovations. If the majority of Africans are under 25, then we have a lot of people to feed. So those involved in improving farm productivity and those finding better ways to move produce across countries have a huge market.
Ed-Tech is also becoming more interesting because it’s now more about upskilling people.
AI and data analytics are promising, but they have a three-pronged challenge. Firstly, Africa does not have the regulatory part sorted out. Nothing really guides the way we collect, store and analyse data as a continent. Europe, for instance, has the GDPR. Also, we have a data problem. And thirdly, we need to train more people in this field. But these things are also opportunities. Companies that can harness data from social media and other platforms and use them to create personalised services for customers will likely outperform their competitors. Also, those who invest in building competency in AI and data analytics will become big over the years.
Renewable energy also has a bright future in Africa, but it requires a lot of patient capital. We’ve heard stories of blackouts in South Africa, Nigeria, and several others. This continent has a power problem, and that means an opportunity for renewable energy.
Aside from the “Big 4,” what other countries are you excited about?
Quite a lot. There’s one right across the (Nigerian) border: Ghana. Economically, they are experiencing a bit of a wobble at the moment. But I think they are one country to look out for. Francophone Africa has massive potential too. Countries like Ivory Coast and Morocco hardly feature in the conversation, but they are doing very well. I know that cultural nuances affect the way investors from Sub-Saharan Africa see these countries. But once they figure out their internal politics, that bloc will become a force to reckon with. They all speak a common language (French), and that opens a lot of opportunities for cross-border trade.
Mauritius seems quiet, but its tax regime can make it Africa’s Switzerland. They have also grown their GDP consistently for about ten years.
Overall, the best places to look out for are what I’ll call Tier-2 cities. These cities are close to the major cities and are modelling their features.
Your “book” is gradually coming together. We’ve talked about the parts of the story that make you happy. What parts don’t make you happy?
Hmm. The first would be that we’re highly competitive but compete against the wrong things. We focus more on competing against one another than the forces holding us back. It’s the reason you have xenophobia in some countries. We’re not very big on collaboration. There’s no reason why the AfCFTA, for instance, is taking forever to implement. Why should someone have to go through France to ship something to Senegal? Nothing justifies cross-border payments being so expensive within Africa. It’s just a lack of willpower among governments and people to change things.
Also, we have a lot of work to do in our educational system. Not everyone has to go to university, but schools need to give relevant knowledge. There is too much focus on being book-smart and too little skill transfer.
Largely, the political class have failed Africans. They choose not to do better. I was in Egypt in 2019, and I listened to their president share his goals for the country and how he would position it for investments. Guess what? Venture capital poured into Egypt in 2021-2022 like never before, and startups have scaled. That’s what political will can achieve. People might call Paul Kagame a dictator and many other names, but his political will has also helped Rwanda’s tech sector. That trait is not very common among African leaders, and it needs to change.
What events do you expect to see in the next five years in African tech?
I believe more collaborations and partnerships across businesses and governments will get us to where we ought to be in the next five years. So it’s great to see some countries roll out startup bills to help founders in their respective economies.
I would love to see more regulatory frameworks and support in the coming years. Hopefully, we’ll have more sandboxes for people to test out their ideas and more grants for founders to go out and execute.
We will also need to understand tech more accurately. Tech is more than software. It’s anything that makes systems more efficient and makes life easier for people.
I would like for us to see more talent development in the next five years. Many young people actually want to learn skills and become employable, so it would be great to not only teach them but also create pipelines for them. We need more senior talents, especially now that many existing ones have left Africa or are leaving.
Our biggest problem right now is foreign capital coming into the continent. We need a healthy mix of foreign and local players backing founders. People still see it as risky business to fund startups. It’s easier to measure how much potential markup they can get from, say, an oil tanker. So it’s safer to take a $20 million loan from the bank to fund that. Outcomes on startups, on the other hand, are a lot less predictable. But if we tell our stories better, I’m sure that will change. We also need alternative sources of funding. I’d love to see pension funds investing in the ecosystem.
In the next five years, we’re likely to see more financial inclusion. Digital identity will play a part in that, and we’ll probably see the spillover effect in healthcare. Speaking of that, there has to be a lot of diversification in the coming years. We can’t all focus on fintech.
Lastly, to get to where we ought to be in five years, we have to harness our diaspora. That’s something I’ve been cracking my skull on for a while. We need to figure out a way to harness their resources and expertise to improve our ecosystem.
