By Adam Miller, 16 August 2021
Africa. What do you think of when you read that word? Is it the wild animals of the Savanah? A land mired by poverty and instability? Unique and hidden away cultures like the Maasai? A land of hardship but endless optimisim?
Whatever you're thinking, I bet it isn't financial technology, AKA fintech.
The reason I bring up fintech, is that recently, I invested in the pre-series A round of a Ugandan fintech company called Asaak, alongisde my friends Sachin and Max.
You might think I'm crazy right? A combination of Africa, pre-series A investing and the fintech industry would be enough to scare off most folks.
Whilst all early stage investing is risky, we didn't blindfold ourselves and throw darts on a board. We made a considered bet that there's significant potential in Africa for a thriving fintech industry and that the industry can have profound social impact on people.
This article will shed light on that thesis and accompany our deal memo to Asaak.
While many African nations are at a 'developing' stage, there is an enormous amount of growth ahead for the continent, which is raising the bar for opportunities. This growth can clearly be seen regarding population, money and connectivity.
Population
Currently standing at 1.2 billion people, the African continents population is set to double by 2050, to 2.4 billion off the back of high birth rates. In a world where developed nations are seeing declining birth rates and ageing populations, this growth has profound implcations. It means that in 30 years time, Africa will represent 25% of the worlds population and make up a huge chunk of the worlds working age population.
If nothing else changes but this population growth persists, Africa will see its relevance in the global economy almost double in 30 years time. At this point, we will see mass population centres in countries like Nigeria, with over 400 million people, and the Democratic Republic of Congo, with nearly 200 million people.
Money
In just 10 years time, we will see Africa's combined upper and middle class reach an enormous 600 million people. This is almost double the size of the USA's current population, presenting a huge set of future consumers.
Whilst African purchasing power is not as significant as the US, the continents people are set to contribute to over $2.5 trillion of consumer spending by 2030. This will create a mass influx of spending into consumer businsses, which makes the area much more attractive to recieve VC funding.