With 54 countries, a population of 1.37 billion, and the fastest population growth rate in the world, the continent has been on the radar of every type of company along the value chain, from big global corporations, to early-stage startups. To fully understand Africa’s potential as a place that can catalyze businesses and innovation, it’s important to stop seeing it as one big block, and begin looking at individual countries and groups. For example, while the top 5 poorest countries in the world are in Africa, the continent is also home to 6 of the 15 fastest-growing economies in the world, underlining the vast diversity. When taking under consideration the vast effects of Covid, the economies of Ethiopia, Uganda, Ivory Coast, Egypt, Ghana, Rwanda and Kenya withstood the impact of the pandemic so successfully that they were among the world’s 10 fastest-growing in 2020.
Natural resources, a young population, and an entrepreneurial spirit
The reasons for the massive growth are plentiful. Africa’s abundant natural resources have always come in handy, and with recent increases in commodity prices many economies across the continent are experiencing financial success. With a median age of 19.7, and almost 60% of Africa’s population is under the age of 25, making it the world’s youngest continent, driving record-breaking demand for new jobs, and establishing it as a crucial market for testing new technologies.
Continuing on with demographic trends, as population is projected to double over the next 30 years, the continent will also soon become the fastest-urbanizing region in the world, with more than 80 percent of its population growth projected to occur in cities. 25 of the 100 fastest-growing cities in the world are in Africa, and their income per capita is more than double the continental average, making them attractive markets for global businesses.
Finally, a flourishing middle class is leading the continent’s consumer power. Consumer expenditures in Africa are expected to rise to $2.1 trillion by 2025 and $2.5 trillion by 2030, more than doubling the 2015 level, according to the Brookings Institution. Household consumption has increased even faster than its gross domestic product (GDP) in recent years, and that average annual GDP growth has consistently outpaced the global average.
Moving on to technological motivations, growing mobile penetration and internet usage are another important catalizator, and African connectivity has seen major investments in the past decade, with the region now boasting nearly 10 percent of the world’s Internet users. Alongside connectivity, tremendous growth in access to mobile technology is driving growth, as the GSM Association reports that Sub-Saharan Africa has over 500 million unique subscribers.
Noticing these nuances and many more, global giants, as well as small, new startups are rushing to establish local presence. Amazon launched AWS services in South Africa in 2018, Google’s first African AI lab opened in Ghana, Alibaba’s global trade platform opened in Ethiopia in 2019, Microsoft launched its first Africa Development Centre (ADC) in 2019 and opened Africa’s first hyper-scale data centers in South Africa, and Twitter recently announced its opening HQ in Ghana. It is becoming increasingly clear that massive opportunities for growth, diversification, and innovation are abundant, and that the ground is fertile for various types of innovation at scale.
The best possible point of entry
Positioned at number 3 in the world’s fastest growing economies list, Rwanda has become a prime location for global and local companies to establish their African operations. The country’s Nominal GDP has risen from USD 2 billion in 2000 to USD 10 billion in 2019, and GDP growth is expected to average 6.7% from 2021 to 2025 according to Focus Economics.
With a private sector-driven economy, Rwanda is ideal for newcomers seeking to establish their presence on the continent. According to the World Bank’s Doing Business 2020 report, Rwanda was ranked 38th globally and 2nd in Africa for its ease of doing business.
With attracting new businesses to the country, various reforms have been implemented In the past two years, and getting electricity access, starting a business and dealing with construction permits has become much easier.
Across Rwanda, the opportunities for new businesses are soaring. It is now possible to register a business in less than a day, and for free. Many fiscal and non-fiscal incentives for national and foreign investors are available, for example, newly formed small and medium-size enterprises are exempt from paying the trading license tax for their first two years of operation. The Kigali Special Economic Zone (KSEZ) formed by the Government is set to increase private sector investments and to develop industrial/non-agricultural sectors.
Albeit a fairly small country, with 13 million residents, the population is very young, tech savvy, and keen to adopt new innovative solutions, according to Disrupt Africa, making it an ideal place to launch and test a tech startup. With a strong focus on ICT, 90% of national territory is covered by the 4G network, as the country also boasts affordable broadband access.
Another important, and even crucial factor when it comes to doing business in Africa, is the country has been maintaining a high degree of political stability and public safety.
These efforts are a part of meticulous planning by the government, working tirelessly to establish the country’s place as a global hub for innovation. One of the latest activities includes the Rwanda Innovation Fund (RIF), managed by Angaza Capital, supporting international companies and entrepreneurs while they enjoy a great starting point for pan-African development.
Africa is the next frontier for technological development, and Rwanda is one of the best ambassadors for testing and scaling various technological endeavors. This is the time for entrepreneurs and investors to enter the continent’s new era as a global leader of innovation.
Yariv Cohen is an entrepreneur and investor,leading sustainability-driven companies in Africa and the Middle East
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