New report: Investing in African technology services (en)
Trade and retail, financial services, healthcare and agriculture offer the best opportunities for information technology and business process management (BPM) companies keen to participate in Africa’s fast-paced growth, according to a new report by the International Trade Centre (ITC).
The current pandemic has also accelerated a trend towards using digital products and services, opening new opportunities.
African tech firms have played an important role in the transformation of the continent and are well positioned to capitalize on rising demand for digital services. African Market Trends in Technology Services: 11 Country Profiles provides valuable information that investors, entrepreneurs and governments can use to support this transformation.
The publication, based on research and interviews, analyses the tech sectors of 11 sub-Saharan African countries: Kenya, Nigeria, South Africa, Côte d’Ivoire, Democratic Republic of the Congo, United Republic of Tanzania, Zambia, Uganda, Benin, Mali and Burkina Faso. It examines information and communication technology infrastructure, government incentives, the regulatory environment and other factors that support tech and business process outsourcing service providers.
More importantly, the report also identifies the growth sectors with the largest needs for digitalization support that can be tapped into by African technology companies.
The COVID-19 pandemic has highlighted the importance of distributing risk geographically to cope with future crises. Social distancing means offsite delivery of services and outsourcing are more essential today than ever before. This gives African countries a chance to get a bigger share of the information technology and business process management (IT/BPM) markets.
‘These trends represent an opportunity for digital service providers in Africa,’ says ITC’s Executive Director Pamela Coke-Hamilton. ‘Emerging firms across the continent are bringing ingenious business models and innovation to the digital technology sector, adapting their business models to new requirements and revamping their competitive offerings.’
Information and communication technologies account for 6%–10% of total service exports in most African economies. Faced with the need to create jobs for youth and reduce reliance on traditional industries such as agriculture, mining and commodity exports, governments are promoting technical and digital sectors.
The COVID-19 crisis has hindered these efforts, while at the same time accelerating the digitalization process across the continent.
The report finds that African policymakers are working to improve access to education, train graduates and motivate their tech sectors and service providers to help develop talent. Nevertheless, while large economies such as Kenya, Nigeria and South Africa have made great strides – developing next-generation mobile and digital networks, for instance – smaller African countries still have a long way to go. Most have made rapid advances in mobile phone and mobile internet penetration, the report finds, but the overall tech infrastructure requires further development, and so does the frequently narrow supplier base of local IT and BPM companies.