24 Oct 2021 / Article

The making of African unicorns

 

Startups valued at over $1 billion, popularly referred to as unicorns, have been emerging across Africa, with at least three clinching the billion-dollar valuation this year alone.

African digital economy champions are mainly fintech and e-commerce startups, riding on the continent’s youthful and growing population, rising internet penetration, and the application of digital technologies that have the potential to improve day-to-day life.

Increasing venture funding for African tech startups has been vital to the expansion and maturation of the ecosystem. In the first six months of 2021, African VC funding reached a whopping $1.19 billion, with 95% of deals worth $1 million and above.

 

Digital education as a first step

Jumia (e-commerce) and M-Pesa (mobile money) are among Africa’s foremost digital champions. But while the idea of buying household items on the former and sending money through a mobile phone using the latter are mainstream among Africans today, convincing people in the early days wasn’t a walk in the park.

“Early on, the huge challenge we faced was breaking down the mental barriers,” Juliet Anammah, Chief Sustainability Officer of Jumia Group and Chairwoman of Jumia Nigeria said in a discussion during the recent virtual Africa CEO Forum.

“This was both in terms of convincing sellers to list their products on an online platform and buyers to do their shopping online.”

Jumia’s JForce — a nationwide network of independent Nigerian sales consultants that sell items supplied by Jumia, and earn a commission on purchases — was key to overcoming the “mental barriers,” Anammah said.

Similarly for M-Pesa, the use of agent networks was key to getting Kenyans, and broadly East Africans, to embrace the new solution after its launch in 2007. This is according to Sitoyo Lopokoiyit, M-Pesa Africa CEO and Chief Financial Services Officer, Safaricom.

“The first thing is customer education. That was very key at the beginning,” Lopokoiyit explained during the three-way discussion focused on the experiences of Jumia and M-Pesa in building innovative businesses at scale and anchored by the Managing Director & Partner of BCG Casablanca, Amane Dannouni.

Beyond e-commerce and fintech, African innovators are building solutions delivered through basic digital technologies like mobile phones, and finding use cases across various sectors from healthcare and education to agriculture.

 

Building a ‘customised journey’

As interest grows in newer technologies such as artificial intelligence (AI) and machine learning (ML), players in the African innovation landscape are expected to leverage these more advanced concepts going forward, to improve outcomes and deliver better user experiences.

“As tech evolves, so do consumers. Today, they don’t just want to buy things, they also want a personalised experience,” Anammah said.

“That means we have to build a customised journey for each user based on their interactions with our platform using AI and ML. And in the future, we could move from things like personalisation into predictive experiences for consumers.”

To offer a better experience for users, Safaricom recently launched its long-awaited M-Pesa Super App, which comes with an offline mode and a mini-app functionality for its about 30 million customers in Kenya as well as its other markets.

 

Data-centric model

“The super app was necessary as part of our plan to improve customer experience and considering most of the smartphones used in the region have small memories to take many applications,” Lopokoiyit said.

For M-Pesa, he sees opportunities for new technologies such as AI to aid Safaricom in leveraging huge volumes of consumer data being aggregated on the platform, to not only better serve users but also third-party organisations.

“There are several data links behind M-Pesa on how consumers use telco services to shopping patterns,” Lopokoiyit said. “With AI, we can harness these in an ethical way, not only for our benefit but also for other organizations that need them to boost financial inclusion of Africans.”

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