With digitalisation as a key enabler of organic growth in greenfield projects in Africa, technology startups are well placed to capitalise on the desire of larger and established corporations wanting to move into various enterprise technologies in the region, according to research conducted by GlobalData.
Recent tie ups – including Safaricom’s deal with Kenyan SaaS startup tappi, American security firm Unartificial Labs tapping Tunisian startup Enova Robotics, and British payment processing firm partnership and financial inclusion firm Paymentology partnering with Zambian fintech startup Union54 – point to this trend.
Ismail Patel, senior analyst: enterprise technology and services at GlobalData, says: “Africa remains a price-sensitive market not only for consumers but also for corporate buyers. This means that technology enablement beyond the deployment of costly physical infrastructure will be a space occupied by smaller vendors who are both less costly and seeking to build their own profiles in the region.”
GlobalData analysis finds Africa is seeing burgeoning growth in the number of tech startups across cybersecurity, IoT, fintech, SaaS, APIs, analytics, blockchain, and AI. Mergers and acquisitions (M&A) activity associated with these startups has picked up over the past decade, and the number of contractual deals with startups, both inside Africa and beyond, is growing.
The expectation is that this expansion will continue to grow as there is plenty of room for organic growth across key sectors, including rural communities and small and medium businesses (SMBs), where digitalisation is a prime enabler for next-gen technology adoption and boosting national economies. Still, the key buyers for these startups will remain the large African corporate enterprises looking to either partner with them or bring them in-house via acquisition.
Patel concludes: “Egypt, South Africa, Nigeria, Kenya, and Tunisia have emerged as the tech startup capitals across Africa. Tech enablement is being fueled by capital raising success stories across the board, from debt financing and governmental grants to angel and venture capital investments, all of which are encouraging the startup trends. In its own way, the region is responding to the global technological boom.”