This document discusses the growing business opportunities in Africa as the continent's economy and middle class expand rapidly. It notes that Africa's GDP has grown significantly in recent decades, consumer spending is projected to reach $1.4 trillion by 2020, and over 300 million Africans have joined the middle class since 1980. Meanwhile, technology entrepreneurs are emerging to build startups that address African needs in industries like agriculture, small business tools, and entertainment. Innovation hubs and accelerators are also supporting these entrepreneurs. Overall, the document presents an optimistic view of Africa's economic potential and growing private sector.

1. THE NEW
BUSINESS OF
AFRICA

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“The New Business of Africa”
Email: jon@appfrica.com
Twitter: @jongos, @appfrica, @statfrica
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by Jon Gosier

3. #GOODISPROSPERITY

4. WHY AFRICA? WHY NOW?
The African business landscape is rapidly changing. Currently, the
global social sector spends around $200 billion in Africa. Total foreign
direct investment in was $45.8 billion in 2011.1
In comparison, by 2020, African consumer facing businesses are
projected to generate $400 billion in revenue.

5. THE RUSH FOR RETURNS
“The rate of return on foreign investment is higher in Africa than in any
other developing region.”
“Africa’s economic pulse has quickened, infusing the continent with a
new commercial vibrancy. Real GDP rose by 4.9 percent a year from
2000 through 2008, more than twice its pace in the 1980s and ’90s.
Telecommunications, banking, and retailing are flourishing.
Construction is booming. Private-investment inflows are surging.”
- McKinsey

6. 0
3.5
7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (f)
Africa Sub-Saharan Region
REAL GDP GROWTH (Percent Change)
Despite the economic downturn, African GDP seems to be recovering,
the Sub-Saharan region has been noticeably stable since 2010.

7. AFRICA’S GROWING MIDDLE CLASS
327 million Africans have moved into the middle
class* (34% of the continent’s population). Of
that group, 128 million belong to a more stable
middle class while 44 million are in the upper
class.
Africa’s middle class has grown 183% since
1980.
* In this context, middle class is defined as being individuals who have an
average daily per capita expenditure of between $2 and $20 per day or
an annual income exceeding $3,900. The middle class is projected to
grow to 1.1 billion (42% of the population) by 2060.
34%
66%
African Middle Class
0
200
400
1980 1990 2000 2010

8. 327 million Africans have moved into the middle class. Of that group, 128 million belong to a more
stable middle class while 44 million are solidly upper-middle class.
0
200
400
1980 1990 2000 2010
326.6
204.4
157.5
115.3
127.9
98.6
83.9
64.2
44.738.130.522.7
83.2
60.553.4
41.4
198.7
105.8
73.5
51.1
Floating Class Lower Middle Upper Middle Stable Middle Class Less Stable Middle Class
AFRICA’S GROWING MIDDLE CLASS (In Millions)

9. 198.7 million are considered to be ‘floating’ and are at risk of falling out of the middle class and back
into poverty. Combined with the stable middle class, they make up the current 326.6 million.
0
200
400
1980 1990 2000 2010
326.6
204.4
157.5
115.3
127.9
98.6
83.9
64.2
44.738.130.522.7
83.2
60.553.4
41.4
198.7
105.8
73.5
51.1
Floating Class Lower Middle Upper Middle Stable Middle Class Less Stable Middle Class
AFRICA’S GROWING MIDDLE CLASS (In Millions)

10. AFRICA’S GROWING MIDDLE CLASS (cont’d)
“Recent estimates put the size of the middle class in the region in the
neighborhood of 300 to 500 million people, representing the
population that is between Africa's vast poor and the continent's few
elite. Africa’s emerging middle class comprises roughly the size of the
middle class in India or China.”
- The Middle of the Pyramid: Dynamics of the Middle Class in Africa

11. AFRICA’S GROWING MIDDLE CLASS (cont’d)
600 million Africans are mobile phone users. By the end of 2013, this
number is expected to grow to 735 million.
African consumer spending is projected to reach $1.4 trillion by
2020.
African productivity is growing by nearly 3% year on year.

12. MIDDLE CLASS ENTREPRENEURSHIP
Africa’s middle-class boom is leading to the creation of new
opportunities for growth on the continent. Among the most exciting
are technology companies being started by individuals between 18
and 35 years old.
These startups attract new types of investors to the continent -
investors who are willing to take bigger risks, at earlier stages.
These companies also offer new ways of serving African consumer
demand, and foreign consumer demand for African products, services,
and destinations.

13. DRIVERS OF ENTREPRENEURSHIP
Much like the phenomenon in developed nations, this startup boom is
the result of several converging trends:
• The rapidly growing population of Africans under the age of 30 and their desire
for jobs.
• The falling prices of internet and mobile connectivity and improvement of
infrastructure.
• The proliferation of mobile phone usage by African consumers.
• Rapid urbanization and the migration of rural populations to cities.
• Foreign investors looking for opportunity in Africa’s emerging consumer
market.

14. A LOOK AT AFRICA’S
UPCOMING ENTREPRENEURS

15. EXAMPLES OF AFRICAN TECH STARTUPS
Matatu, a video game from Uganda that replicates a popular local card game
iCow, a Kenyan service for crop and livestock farmers that helps them improve crop
yields up to 300%
Dropifi, a customer engagement and contact management solution for businesses
SleepOut, a web app making it easier for travelers to book accommodations
Minishop, a turnkey mobile/web/accounting system for shop owners
SliceBiz, a Ghanian crowdfunding platform attempting to leverage the diaspora to
fund businesses

18. BENEFITS OF A HEALTHY STARTUP ECOSYSTEM
These startups (among many others) are offering solutions to diverse
sections of the market. Examples...
Entertainment
Enterprise
Agriculture
Small Business Accounting
Access to Capital/Credit
These areas have historically often been overlooked by the
humanitarian sector.

19. BENEFITS... (cont’d)
Additionally, showcase conferences like ANGEL FAIR, DEMO AFRICA
and PIVOT EAST are attracting investors from around the world.
Investors in Africa have traditionally been interested in Agriculture,
Real-Estate, Energy, and Resource Extraction. The emergence of
African middle class tech entrepreneurs is attracting a different kind of
investor and helps to fuel the boom of consumer activity.
The result is new drivers of growth, investment, and job creation for
the continent.

20. ENABLERS OF AFRICAN ENTREPRENEURS - TECH &
INNOVATION HUBS
In addition to drawing the attention of Investors, African startups have
drawn the attention of groups who aim to support the greater
ecosystem of startups across the continent.
Local innovation hubs like ActiveSpaces in Cameron, the iHub in
Kenya, HiveColab in Uganda and others, offer facilities, events, and
resources that cater to the needs of these fledgling entrepreneurial
communities.

21. ENABLERS OF AFRICAN ENTREPRENEURS - TECH &
INNOVATION HUBS
These hubs usually offer shared facilities with resources that would
ordinarily be capital intensive for any nascent business to acquire. This
includes computers, mobile phones, servers, desks, machines --
everything a business needs to function.
There are more than 33 such innovation hubs across Africa.

22. ENABLERS OF AFRICAN ENTREPRENEURS - TECH &
INNOVATION HUBS
There are so many hubs across so many different countries, in fact,
that a network organization called AfriLabs was founded to serve as a
sort of ‘hub of hubs’. Through its network, AfriLabs reaches more
than 1,200 of these emerging companies and more than 3,000
individuals.
AfriLabs serves as a central point to monitor and communicate with
the entrepreneurial activity occurring across its network of hubs.

23. ENABLERS OF AFRICAN ENTREPRENEURS - HUB
NETWORKS
Organizations like IndigoTrust, Omidyar Networks, Hivos and others
are humanitarian organizations who are funding these hubs thereby
‘enabling the enablers’.
It remains to be seen whether or not these hubs across Africa will be
effective at sustaining themselves or the entrepreneurs making use of
their space without donor funding.

24. ENABLERS - ACCELERATORS AND INCUBATORS
Incubators like The Savannah Fund, 88MPH, and the MEST Incubator
provide an additional layer of support for middle class entrepreneurs.
These incubators prepare entrepreneurs for investment or invest
directly, have onsite courses lasting anywhere from a few weeks to a
few months designed to help entrepreneurs sustain their businesses,
engage investors, and manage early-stage growth.
Accelerators like Apps4Africa focus on providing similar resources but
over multiple-years, from the earliest stage to growth.

25. Incubators &
Accelerators
Innovation Hubs
(Co-working Spaces, Hubs, Labs)
Investors
(Venture Capitalist, Angels)
Startups
NGOs
Hub Networks
Customers
(Consumers, Enterprise, SMEs)
Universities
(Local, International)
Government
(City, Country)
Policy
AFRICA’S ENTREPRENEURIAL ECOSYSTEM
Fiscal Exchange
Non-Fiscal Support
Legislative
This work is licensed under the Creative Commons Attribution-ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/.

26. THE $100 MILLION+ CLUB

27. AFRICA’s $100M TECH FIRMS
While there are a number of technology and media firms worth at
least $100 million or generating that much in sales that operate in
Africa, there only a few that are truly ‘African’ as qualified by the
origin of their founders and the primary operations of their business.
A few that meet this criteria are:
Seven Seas Technologies (Kenya. Est. Worth: $100< million)
Mara Group (Uganda. Est. Worth: $300< million)
Naspers (South Africa. Est. Worth: $5< billion)

29. A Post ‘Aid vs. Trade’ Debate
How can Africa retain more of the wealth, raw assets, and talent it
yields to create lasting prosperity?
Where is the growth? How do we continue to support it? How do we
find it?
Reinvest in what works.
Invest in youth.
Invest in the future.

30. Conclusions
Africa’s Entrepreneurial activity is responsible for creating jobs,
solving societal problems, satisfying consumers and increasing foreign
trade. It is critical to the transformation of the continent and its
people.
Investors, NGOs and Governments play an important role in
supporting this sustained growth - particularly because not doing so
risks allowing new members of the middle class to fall back into
poverty.

31. Conclusions (cont’d)
Globally, various technologies are increasingly disrupting industrial
employment, agrarian labor, and human service jobs. ICT, Tech and
Innovation are not the future because they are trendy...they are the
future because they present a clearest path to sustained growth and
sustainability for the continent’s young population.
The barriers to this future are systemic failure of education across the
continent. Investing in young people skilled in these areas and the
networks that support them is at present the only alternative to the
failures of a formal education system and job market.

32. Annually, the global social sector spends over $200
billion dollars. Total foreign direct investment in
Africa was $46 billion in 2011.
$62 billion dollars in remittances to Africa annually.
Untapped Wealth
140 million Africans living outside of Africa (commonly referred to as the African
diaspora). 44 million Black-Americans in the US (Africans more than two generations
removed) with spending power of nearly $1 trillion dollars. 24 million Afro-
Caribbean $47.4 billion (Combined GDP of Haiti, Jamaica, Barbados, Suriname, and Trinidad and
Tobago combined)
200
62
46
Global Social Sector (AID)
Foreign Direct Investment (FDI)
Remittances

33. The African diaspora,
and African wealth is
spread across the world.

34. CONNECTIVITY &
PENETRATION
Internet Penetration
Continent:120 Million users (12%)
2005 - 2011 Growth Rate: 428.7%
Mobile Penetration
Continent: 600 Million users (65%)
2005 - 2011 Growth Rate: 380%
Mobile Broadband
Continent: 273.1 Million users
2005 - 2011 Growth Rate: 446%

35. AFRICA’S TOP 5 INTERNET
COUNTRIES (circa 2010)
Nigeria
Population: 150m+
Internet users: 11 million
GDP: $235.92 billion
Morocco
Population: 32m+
Internet users: 15.4 million
GDP: $100.22 billion
Egypt
population: 82m+
internet users: 21.5 million
GDP: $229.53 billion
South Africa
Population: 50m+
Internet users: 6 million
GDP: $400.24 billion
Sudan
Population: 34m+
Internet users: 4 million
GDP: $55.1 billion

36. IMAGE CREDITS
“The True Size of Africa” by Kai Krause
“The Fifth Estate” 2013 film. All images and clips are the property of DreamWorks, Touchstone Pictures, Participant Media,
Reliance Entertainment. All Rights Reserved.
CITATIONS
McKinsey “What’s driving Africa’s growth?” http://www.mckinsey.com/insights/economic_studies/
whats_driving_africas_growth Acha Leke, Susan Lund, Charles Roxburgh, and Arend van Wamelen
Wikipedia http://en.wikipedia.org/wiki/Estates_of_the_realm, http://en.wikipedia.org/wiki/The_Fourth_Estate, http://
en.wikipedia.org/wiki/Fifth_Estate
“How can Africa move away from aid dependence?” http://www.bbc.co.uk/news/world-africa-22270164
“Black incomes are up, but wealth isn’t” http://www.pewresearch.org/fact-tank/2013/08/30/black-incomes-are-up-but-
wealth-isnt/
“Tapping Migration Wealth to Fund Development” http://www.un.org/africarenewal/magazine/august-2013/tapping-
migration-wealth-fund-development
“Rich and Successful Booming Africans” http://msongo.blogspot.com/2013/04/rich-and-successful-blooming-africans.html
African Economic Outlook http://www.africaneconomicoutlook.org/en/data-statistics/table-2-real-gdp-growth-
rates-2003-2013/
IMF Regional Economic Outlook, October 2007: Sub-Saharan Africa http://www.imf.org/external/pubs/ft/reo/2007/AFR/
ENG/sreo1007.pdf
IMF Regional Economic Outlook, October 2009: Sub-Saharan Africa http://www.imf.org/external/pubs/ft/reo/2009/afr/eng/
sreo1009.pdf
African Development Bank “The Middle of the Pyramid: Dynamics of the Middle Class in Africa” http://www.afdb.org/
fileadmin/uploads/afdb/Documents/Publications/The%20Middle%20of%20the%20Pyramid_The%20Middle%20of%20the
%20Pyramid.pdf

37. This work is licensed under the Creative Commons Attribution-ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/.
“The New Business of Africa”
Email: jon@appfrica.com
Twitter: @jongos, @appfrica, @statfrica
Want more in-depth analysis and
research like this? Subscribe for free at
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by Jon Gosier

38. “Africa’s Quantified Self.”
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