With $6bn in total disclosed funding in 2021, Africa is seeing record-breaking levels of investment – an encouraging sign of things to come. There are, however, well-known hurdles that face the continent, such as mobile connectivity, lagging physical infrastructure and regulatory issues. All of which act as barriers to a ‘Digital Wakanda’ [‘Wakanda’ a fictional African country that has advanced and futuristic technology that’s home to Marvel superhero Black Panther].

Digital Wakanda:

The term Digital Wakanda was coined in November 2021 by Lacina Koné, ‘Smart Africa’s’ CEO. ‘Smart Africa’, a partnership of 32 African countries, The World Bank and the African Union, is tasked with developing the continents’ digital infrastructure. In order to achieve a more digitally connected Africa, the organisation supports countries launching flagship projects, such as Rwanda aiming to build a Smart City, South Africa developing AI and Blockchain and Côte d’Ivoire investing in Cybersecurity. By co-ordinating laws and supporting the scaling of pilots, Smart Africa hopes to build an attractive regulatory environment for technology investors by 2030. But how likely is this? 

Over this two-part series, we’ll explore the pragmatic enablers and blockers to realising a ‘Digital Wakanda’.

The landscape

In order to understand whether a Digital Wakanda is likely, let’s first look at this topic more broadly. 

Africa’s powerful economic growth since 2000 has been well documented – sitting at 5% in GDP year on year (far above the global average of 2%). A key reason for their success? The flow of foreign direct investment (FDI) into the continent. This trendline, like so many others, was intrinsically linked to welfare of the Chinese economy – China are a major investor in African physical infrastructure – and saw a responsive dip in 2015 when China’s manufacturing trade industry slowed. This was exacerbated by the COVID-19 pandemic, following which GDP shrunk by 2.1%. That being said, Africa’s Real GDP growth rate is soon expected to surpass that of Europe and North America. This is, in part, due to the relatively modest fatality rate in relation to other world regions, as well as China’s economy recovering.

So, what’s the big deal?

This deals landscape suggests that Africa could, in fact, realise a ‘Digital Wakanda’ by their 2030 milestone. But, is the rate of deal acceleration sufficient? One such indicator is investment into the private sector and venture capitalism (VC). There is a strong case to invest in Africa, who now boast nine unicorns including Francophone Africa’s first unicorn, ‘Wave’. This is a mobile money platform without account management fees, currently based in Senegal and Côte d’Ivoire. Let’s also consider the $6bn of disclosed funding reported across Africa in 2021. This record level is over triple what was seen in 2020, and yet 65% of the total investment amount can be attributed to just 4% of deals made on the continent. Other notable companies raising Africa’s investment profile are the success stories of OPay (Mobile Money Service), Chipper (African payments service backed by Jeff Bezos), Jumo (Financial services suite) and Flutterwave (Payment infrastructure provision). As demonstrated, most of the investment (63%) is headed for FinTech, followed at a distance by Logistics (7%) and EdTech (6%). An example of where an investment in an African FinTech can be worth the risk is ‘Jumia’ (dubbed the Amazon of Africa) – Africa’s first unicorn to list on the New York Stock Exchange. In early 2021 it was trading between $40 and $60 with 6.8m active customers in the last quarter of 2020, up from 6.1m in the corresponding quarter of the previous year. Perhaps most promising of all is that some experts predict that in the next 12-18 months we could see 40+ African companies (‘Soonicorns’, i.e. potential Unicorns) raising above $50bn of investment.

What does this all mean…

This investment comes from a blend of governments (USA, UK, France, South Africa, Japan and Canada), and corporates (Softbank, Tencent and Toyota). Most notably perhaps? A 5-year investment of $1bn from global behemoth Google – a clear mark of confidence. This is primarily to focus on internet connectivity, helping entrepreneurs and small businesses succeed using the internet and a renewal of investment for non-profit initiatives across the continent. Google also announced a $50 Africa Investment Fund in November 2021, aimed at state start-ups. 

Investment in the continent on this level is not just encouraging. It seems to suggest that Smart Africa’s vision for a Digital Wakanda might just become a reality… 

Read part II to understand more, and to find out what factors stand in its way.