The need for virtual banking and online services during Covid-19, combined with faster connectivity and some early success stories, has attracted rising amounts of international capital to African start-ups. While these investments remain relatively small — a total of $1.4bn in 2020 — things have reached a tipping point. FairMoney, a Nigerian fintech, raised $42m in a funding round led by Tiger Global Management, a New York hedge fund. FairMoney has received the go-ahead from Nigeria’s central bank to take deposits. Last year it disbursed small loans averaging $65 and worth a total $93m to roughly 1.3m people and microenterprises. There are now four African start-ups, loosely defined, that have reached unicorn status with a valuation above $1bn. One is Fawry, an Egyptian payments platform that went public in 2019. The others are Flutterwave, Jumia and Interswitch, which all have operations in Nigeria. Jumia, an online retailer, is listed in New York.
Africa is getting more connected. Google and Facebook are building undersea cables that will link more than 20 countries with Europe and the Middle East. Liquid Intelligent Technologies, part of Zimbabwean entrepreneur Strive Masiyiwa’s Econet Global, is linking east to west Africa with fibre optic cable. Gaps will be plugged by low-orbiting satellites from the likes of Elon Musk’s Starlink. Smartphone penetration is rising fast. Young entrepreneurs are stepping into a void left by unimaginative public policies and shoddy infrastructure. Typical is Samrawit Fikru, an Ethiopian woman who founded Ride, a taxi-hailing app. Young Africans have tapped into international networks. FairMoney was co-founded by Laurin Nabuko Hainy, a German-Nigerian man. It has launched a business in India, part of a trend of African start-ups taking on other emerging economies. There is also a shortage of African corporate venture capital beyond the early stages. African start-ups attract US and, increasingly, Chinese investment. But most established African business leaders prefer traditional sectors such as food-processing, import monopolies, mining and hydrocarbons.