October 2018 Trend Watch: Emerging Trends Watch in Africa
Accelerated growth seen last year across Africa is expected to continue into the rest of 2018 and into 2019. Much of that growth is due to increased economic and financial transactions across sectors. Africa is the global leader in mobile money and it is an important component of Africa's financial sector. This has opened banking to whole new segments of the population.
There were also several new business reforms implemented in 2017 in multiple countries, the World Bank reports. Malawi, for example, adopted a new law setting clearer rules related to bankruptcy procedures and set up a new credit bureau. Nigeria now guarantees borrowers the right to inspect their credit data from the credit bureau and made it easier to start a new business by allowing electronic stamping of registration documents. And Ghana has taken considerable steps--like closing several under-performing banks--to strengthen the banking sector and increase investor confidence.
These reforms help create more possibilities for investors and new business across the globe and in sectors such as technology, healthcare, clean energy, consumer goods, and real estate. Here are some emerging trends expected to continue to take shape.
1. Blockchain Utilized to Create Secure, Verified Banking Records
Opportunities for businesses and individuals to utilize blockchain are emerging across the continent. Simply put, blockchain is defined as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The World Bank Group estimates that 17 percent (~350 million people) of the world’s unbanked population (~2 billion adults total) is in Africa.
Blockchain technologies can be utilized by investors to surpass outdated banking and other financial systems. Blockchain systems can help create a more secure, inclusive, and fair economy by keeping comprehensive records of public funds. A comprehensive record system could help fight fraud and corruption in both the private and public sectors.
2. New Investment Opportunities (in Infrastructure, Energy, and More)
According to the Brookings Institute, although fears about debt consolidation and a lack of public financing continue to plague many African nations, private sector investment can help alleviate some of that pressure. Investment opportunities in education, energy, agriculture, consumer goods, banking, infrastructure, and urban markets are immense. For example, investments in renewable and conventional energy sources can be used to solve infrastructure gaps for sources of power in different countries. Household consumption continues to go up, leaving the floodgates open for a variety of consumer goods business to support the need.
3. Water- and Energy-Saving Design
Cape Town’s water crisis at the beginning of this year was a wake-up call across Africa. Builders have had to adapt, and now the demand for designs that conserve water and energy is at an all-time high. Features such as solar panels, dual-flush toilets and energy-saving appliances will continue to be in demand, even though Day Zero has passed. On a broader level, changes to infrastructure including replacing outdated water sources and designing entire buildings that meet energy-efficiency standards will bring a wave of new business opportunity in the upcoming years.
4. Creative, Affordable Housing
Nigeria and several other countries continue to face a housing crisis as cities become increasingly populated. Nigeria is at an approximately 17 million-unit housing deficit, and Kenya is dealing with a 2 million unit housing deficit, according to the International Finance Corporation. Affordable housing solutions are a non-negotiable need. Creative solutions to the housing crisis — for example, crafting homes from shipping containers and other low-cost recyclable materials — are a real opportunity for builders and real estate firms in the future. Some African companies, such as South African-based Berman-Kalil Housing Concepts, are already creating sustainable housing in places like Cape Town by converting shipping containers into affordable housing units.
5. Drones
Drones have found a unique home in the African business market. They can be used to deliver goods and medicine to remote areas. Hospitals, NGOs (non-governmental organizations) and other agricultural organizations are already utilizing drone technology. The opportunity for private sector to utilize drones is still untapped. Some examples include using drone technology to track the effects of climate change or deliver home goods to people in remote areas. In an encouraging move, Kenya recently legalized the commercial and private use of drones, citing the hope of a commercial and social impact. Other countries have yet to follow suit.
Takeaway
The World Bank reports a total of 83 business reforms were adopted in Sub-Saharan Africa alone in 2017. They included reforms that made it easier to register a new business, establish and access credit agencies, trade across borders, and create and obtain construction permits. These reforms, plus new investment opportunities in sectors like technology, clean energy, consumer goods and real estate, all signal that a positive business outlook will continue. As more jobs are created and emerging technology catches on, the future looks bright for entrepreneurs and investors.