The fourth annual Global Corporate Venturing Symposium, which took place in London this week, featured an Africa summit, where a range of experts made the case for greater corporate investment in Africa.
In a keynote speech, Marcin Hejka, managing director of Intel Capital, said it was time to challenge the negative public perception and media portrayal of the region, which can often be deceptive.
The region is routinely viewed as being overly fragmented, an issue that Hejka stated in actuality is a much smaller problem. In fact, companies in Africa can find it much easier to expand into neighbouring countries than in other regions, especially, said Hejka, when compared to Europe.
Hejka described how the region’s reputation can lead to investors being overly cautious when it comes to expanding their portfolios there, but this “presents opportunity for those willing to take the risk.”
Africa is scaling quickly as one of the fastest continents for growth in areas of technology entrepreneurship, and it also has a rising middle class. Hejka invited investors to take a step back when considering Africa as a region for expansion, with the fuller picture more promising now to investors and entrepreneurs than ever before.
Although Africa is beginning to be seen as a hub for the growth, over the past few years, “there has been a growth in activity, with funding growing from 3-10% over the last few years,” he said, adding that the African ecosystem is still crying out for further investment.
Hejka compared India with Africa, claiming that although they have roughly the same microeconomic picture, gross domestic product and population, technology consumption is higher in Africa, with the region switching on at a rapid speed.
As a result, the growth of mobile technology is driving the continent’s ecosystem to the extent where it is leapfrogging others, but this is not being borne out in early-stage investment.
“We are seeing tremendous growth in the technology ecosystem across Africa,” he said. “India is getting corporate venturing investors, Africa is not.”
Elsewhere at the symposium, a panel made up of experts deliberated over what to watch out for in emerging Sub-Saharan Africa markets over the next five-to-ten years, the role of corporate venturing and what firms should be doing to best position themselves to best enter these spaces.
Moderated by Allen Taylor, Endeavor, the panel was made up of:
Alex Steel, Syngenta
Markus Thill, Robert Bosch Venture Capital
Adrea Bohmert, Knife Capital
Anthony Siwawa, VPB.
Overall, the panel emphasised how far and how fast African infrastructure was progressing, with an environment for developing e-commerce quickly becoming established.
Five years ago there was one subsea cable connecting Africa with the rest of the world, meaning satellite costs were expensive and opportunities for ecommerce to emerge were limited. However, in the last five years, seven additional cables have been completed, reducing costs and creating a greater availability.
Overall, markets are being limited by supply, not by lack of demand. Andrea Bohmert noted how quickly Groupon was able to take advantage of the digital media space when it entered South Africa, meeting third-year targets in just four months.
Following the panel, a keynote on the role of the government in welcoming corporate venturing to Africa was given by Williams Nkurunziza, Rwandan High Commissioner, who described how East African governments should be enticing investment from international brands and building relationships.
Nkurunziza described how Africa is an enormous market ready to be tapped into, rich in natural major resources, with 88% of the world’s platinum supply located in Africa.
Rwanda is an example of this potential. The genocide in the 1990’s precipitated an economic collapse but the Rwandan economy has since rebounded to grow by about 600%, not because of resources but because the government has put in place the necessary infrastructure for businesses to grow.
More widely, Nkurunziza noted that there is a lack of appropriate capital to drive growth, and a gap in funding between early and later stage companies. Greater capital expertise and technology is needed for advances to continue.
Nkurunziza added that the establishment of relationships will need to continue in order for opportunities to be maintained. Despite that, he stressed, the time to invest in Africa is now.