This renaissance period in Africa’s tech growth is being championed by a group of on-demand, subscription-based and peer-to-peer startups that are built around making people’s lives easier through fuss-free technology.
It’s 8 p.m. and I’m starving. I consider chewing on the cover on my mobile for sustenance. I’m waiting for Joycee Awojoodu, the founder of ORÍKÌ, a luxury skincare brand based in Nigeria. She’s exploring the expansion of her products to South Africa, and wants to find interesting and more convenient ways to solve her customers’ skincare problems. Skincare on demand, she says.
I’m meeting with Awojoodu to discuss her ideas of what e-commerce and technology can do for any business on the continent. Her main idea now revolves around piloting the concept of a digital beauty consultant that creates beauty packages to which customers can subscribe. All they have to do is answer a few questions and the consultant will email ways to solve their skin issues and suggest products that they can have delivered on a quarterly basis.
In the last five years, 11 African startups have raised around $560 million (R7.6 billion) in funding for varying ventures in the tech sector. From e-commerce platforms to router alternatives, all have benefited from increasing investor appetite in the continent’s startup ecosystem. And as 2016 rolls on to its close, it seems there’s no slowing down in investments, despite economic difficulties in some markets. And why not? African businesses are not only starting to see their own potential but the universal value of their ideas and products.
There are a number of companies succeeding in this, including South Africa’s SweepSouth, a company that takes the bother out of cleaning your home. The once-off service allows you to book—on your mobile or tablet or PC—a housekeeper to clean, wash and iron however many times a week you’d like. Another South African startup, RainFin, uses a peer-to-peer model for personal loans, allowing users to borrow from or lend to people quickly and easily using the platform.
“The more successful startups going forward in Africa will be the ones that look at the convenience issue,” says Knife Capital’s Keet van Zyl. “I think more African startups are starting to realise that they need to start solving basic African needs and problems. One of the avenues to do that is opening up another e-commerce channel. It is easier to adopt behaviour than change culture.”
However successful these companies turn out to be at serving consumers, there needs to be success in the business space too: models that create a sustainable ecosystem for businesses like these, rather than just heavily relying on critical mass for success.
“Business models around these subscription-based businesses need to be diversified to not just benefit users but also address sustainability. Often the real business models that enable these businesses to become profitable are something different to the obvious use-case: making use of the underlying subscriber base and adding payment options, add-ons, insurance products or other related functionality,” says Van Zyl.
Nigerian entrepreneur Victor Asemota argues that there’s a new kind of “on-demand” model emerging in Africa, one whereby individuals serve the needs of groups of people with a common problem, and provide a much-needed service such as grocery shopping. He says companies like Mile12Market.com and BalogunMarket.ng are now interfacing actual traditional markets to provide this service to people online.
African startups are beginning to think differently about how they approach business. Entrepreneurs are thinking about the African consumer’s immediate needs. They’re looking to address latent trust issues as well as convenience. Recently launched Shypmate is a peer-to-peer shipping company aimed at Africa’s growing online shopping audience. It allows users to purchase an item online, and rather than pay expensive shipping costs or lose out because the site doesn’t deliver to their location, it has the product delivered by someone already travelling to the customer’s area.
Ghana’s Tress is an Instagram-like app for hair enthusiasts that allows users to get tips as well as discover new hairstyles from like-minded individuals. According to the app, it’s a “passionate community of black women from around the world, sharing and discovering new hairstyles.”
These subscription-based services are a growing trend, but they need to be major opportunities that can operate anywhere and which grab the attention of investors. This is a big challenge for African entrepreneurs when it comes to scaling a business across a continent with a potential consumer base of 1.2 billion people. In 54 countries with more than 1 000 languages and varying tax structures, different ways of doing business, and connectivity issues, are these 1.2 billion problems or opportunities for solving systemic problems that simply need localisation?