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AFRICA: Trends Shaping the Innovation Space on the Continent

Africa is a continent full of global curiosity, a growing consumer base, modern aspirations, entrepreneurial ambition and homegrown innovation. While there are plenty of challenges – from energy supply and infrastructure to health and education – a growing labour force and emerging middle class promise new opportunities for the continent, and for brands willing to invest the time and money.

We see six key trends to watch for this continent on the move:

1. Moving Millennials

The continent’s population of 1.1 billion is set to grow to 2.3 billion by 2050. And contrary to global trends, Africa’s demographic is getting younger; currently around 43% of Africa’s population is under the age of 15.

Young Africans are optimistic, independent, outward-looking, proud of their heritage and connected. While they have an appetite for global trends, African music, fashion, art and literature, in particular, are also finding new audiences worldwide, through the efforts and entrepreneurial ventures of young Africans. Brands can also tap into these areas if they enable and encourage this two-way dynamic and foster new, creative collaborations between global and local.

2. Moving up in the World

The number of millionaires in Africa (160,000) is growing at double the rate of elsewhere in the world. But for more brands, it is the rising middle class that present the biggest opportunity. In Sub-Saharan Africa, there are more than twice as many people considered middle class today as 30 years ago; which equates to 45 million households with discretionary income.

However, there are still tough choices to make in how to spend that – with many consumers using up between 10% and 20% of their monthly salary on pre-paid air time. As the cost of connectivity continues to come down, disposable income will increase. But consumers still want to buy aspirational and localised goods, rather than products that have been re-purposed or recycled for a secondary market.

3. Moving to the City

You can watch the pattern of consumer spending change with almost 200 new malls anticipated in the next two years. This is also a result of another major trend: urbanisation. By 2050, 60% of Africans will be living in cities or urban areas, opening up new communication channels and access to consumers for brands.

Life in a thriving African city isn’t always neat and tidy, nor easy. Lack of transport infrastructure means a lot of people spend hours commuting, while poor electricity services make it hard to charge mobiles and get online. So companies that can solve a problem – providing entertainment on Taxi TV or free WiFi and charging stations – can broaden a brand’s reach and win over customers.

4. Moving to Mobile

Most Africans will have their first experience of the Internet on a mobile device, as smartphones and tablets will account for four out of five broadband connections in Africa in 2016. Statistics can confuse, as mobile penetration swells to more than 90% by 2020, while unique mobile subscribers will reach 504 million (a 49% penetration).

Ownership of multiple phones is a commercial practicality (getting the best deals on different networks at different times of day), as well as a statement of consumer power and choice. While networks need to stay on their toes to retain loyalty, consumers vote with their phones – and mobile operators are often the top Facebook pages, with likes and shares showing the huge impact and appreciation of the ability to connect.

5. Moving in to the Future

There are upwards of 170 technology hubs across Sub-Saharan Africa. Entrepreneurs are working on products and services in every sector: education, health, agriculture, energy and more. Start-up competitions are attracting students and seasoned business people to solve some of the biggest problems people face day to day. Understanding this dynamic, working with entrepreneurs on the ground, will help brands focus and tune in to where they can make an impact.

Success stories like M-Pesa, the most successful mobile financial service (MFS) in the world with more than 17 million users in Kenya, has enabled numerous core products and services and attracted global attention. Brands should be aware that 63% of mobile money services currently provide an API to third parties, so brands can also make use of these payment mechanisms if they can provide valuable and useful transactional services.

6. Moving the Gender Bias

A woman is 14% less likely to own a phone than a man in low / middle income countries, yet the benefits of connecting women are huge including, but not limited to, access to education, employment, security, efficiency and more.

There are approximately 250 mobile health (mHealth) services in Africa – more than the USA, Europe, Middle East and Asia. Many consumers are willing to pay a premium for mHealth services, which means it is a good access point for operators, but can also offer other organisations an opportunity to reach an under-serviced demographic – women and mothers.

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