Startups in Africa confront the pandemic
As COVID hits Africa’s economy hard, young entrepreneurs have declared war on the disease. Many startups have found creative ways to resolve added challenges caused by the pandemic.
The Nigerian entrepreneur Luther Lawoyin’s fourth startup is a food cooperative platform, PricePally, through which several households can place a joint order of groceries, and benefit from lower prices.
In 2019, just before the start of the coronavirus pandemic, Lawoyin’s wife suggested that an e-commerce platform would enable bulk food deliveries in the Nigerian city of Lagos.
“My wife writes down everything we spend. I looked at the data and was surprised by how much we pay for food,” the young entrepreneur told DW.
“We came up with the idea of buying in bulk for us and thought it could be a solution for a lot of people,” Lawoyin said.
Lawoyin’s is one of many African startups that have thrived throughout the pandemic. Africa has suffered disproportionately from the global economic depression caused by the disruption.
Economic activity in sub-Saharan countries shrunk by 3.3% in 2020, according to preliminary calculations by the World Bank.
Despite the pandemic, many African startups are thriving. International investors have noticed.
The total venture capital for African startups grew to $1.31 billion (€1.08 billion) in 2020, up from $1.27 billion in 2019, according to the think tank Briter Bridges.
And the winner is … fintech
“2020 took everybody by surprise,” Nicholas Kendall of GreenTec Capital Partners, an investor that specializes in African startups, told DW.
“It was a slow year, and the winners were determined by who was able to adapt,” Kendall said. “Despite what is happening, the number of deals in Africa has continued to grow. African startups continue to be very attractive to international venture capital, and Africa is always growing.”
Leading the way are startups with innovative financial solutions. “Fintech is still king in Africa,” Kendall said.
“But all the sectors that have managed to go digital have been successful. It’s all about adaptability.”
Fintechs in Africa alone accounted for 31% of total investment in 2020, according to Briter Bridges.
Two out of three African adults don’t have bank accounts, creating a huge market for digital financial services.
COVID drives innovation
Clean energy has the second biggest share of investments. Governments and private investors in East and West Africa are focusing on solar startups to bring electricity to remote locations.
Because of the pandemic, interest in the health sector is also growing. The World Health Organization (WHO) found that the COVID pandemic in Africa had spurred the development of more than 120 innovations in health technology. They represent one-eighth of the roughly 1,000 anti-pandemic technologies worldwide analyzed by the WHO.
Source: dw.com