Africa's high cellphone penetration, coupled with growing urbanisation, has resulted in what Standard Bank notes as a "compelling trade and investment opportunity" for multinational corporations. However, analysts say local firms could play a bigger role in developing innovative solutions.
The big four bank says the number of cellphone users in Africa has multiplied 33 times since 2000, while Sub-Saharan Africa's economic growth has exceeded 5% a year for more than a decade, giving the continent a 4.1% share of global gross domestic product.
Sim Tshabalala, joint-CEO of the Standard Bank Group, says the growth offers opportunities for companies willing to invest, while the US could start catching up to the scale of investment made by Chinese and European companies.
Mixed results
Roan Murray, CEO of payment solutions company Switching House, notes that although multinationals continue to invest large sums in the continent, it sometimes results in Euro-centric solutions that would take too long to gain traction in an African context. "Some solutions require well-established infrastructure and, in many cases, cater for people who already have access to smart devices or laptops.
"What we end up seeing in those situations is technology that can make a great difference in the future - not now."
Mark Walker, director of insights and vertical industries at the IDC for Middle East, Turkey and Africa, says shifting from Africa's limited satellite communications infrastructure in the 1990s - which was largely supported by European and some American firms - was the first indication of how localised solutions could flourish.
Walker says the success of Chinese investment is often based on their ability to cater to the continent while focusing on affordability, interoperability and usability of their solutions.
"Africa is price-sensitive and if you look at what the likes of Huawei and ZTE have done, their solutions have also been able to operate alongside other existing devices, while they also provide technical support to improve uptake." He says Chinese companies were "late to the party" by investing from the late 1990s onwards, but their strategy could also benefit local firms.
Adapting African approaches
Walker notes multinationals trump African-based technology companies from a manufacturing point of view, but this should not stifle the pursuit of localised solutions.
"We could still perform better in applying our local knowledge to adapting international approaches and coming up with our own technology solutions. Looking at solutions such as Absa's Payment Pebble shows an African solution to an African payment problem."
Similarly, says Walker, the success of M-Pesa in countries such as Kenya and Tanzania demonstrates the continent can play a leading role in capitalising on its unique context. "If you get a technological solution right in Africa, you could find solutions almost anywhere as we have some of the most challenging environments to make solutions work."
Tshabalala expects US firms to make inroads into Africa on the back of Barack Obama's Power Africa Initiative, which launched last year and aims to double access to power in Sub-Saharan Africa. "US companies can do very well in Africa provided they put in the effort to understand the continent's markets in detail, rather than looking at the continent as a single, homogenous entity," he says.
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