3 ways investors can navigate Africa’s mobile markets

As investment opportunities go, Africa’s mobile market is about to have its day in the sun.Two-thirds of the sub-Saharan population own mobile devices, and 86 percent of Kenyan households use mobile financial products. The number of smartphones in the African market is expected to grow from 67 million in 2013 to 360 million by 2025, unleashing new possibilities in data and information access for consumers while easing reach to potential markets by entrepreneurs.

This uptick in mobile usage is redefining Africa’s socio-economic landscape. With applications and platforms including money transfer, search engines, news aggregators and more, this technology is not only empowering people socially, but it’s also providing much-needed data collection in an extremely fragmented geography.

For investors, this means greater visibility to the target market through an online presence, especially on social media.

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But impressive growth and increased investments brought new sets of problems that both the government and the private sector need to address if they want to achieve sustainable development.

Africa’s Information and Communications Technology

Increased internet and mobile phone penetration will revolutionise Africa’s markets. In addition to selling mobile financial services, apps, and other products, the industry of information and communication technology (ICT) is bridging the information gap that previously limited consumers’ purchasing options.

This shift necessitated a new focus on adapting to consumer trends, which we’ve seen in the South African taxi industry’s restiveness toward Uber. While the rise of mobile will undoubtedly play a role in Africa’s investment and online revolutions, many sectors are unprepared for the onslaught of ICT disruption.

The ICT boom has led to a proliferation of mobile phones and tablets, and consumers generate limitless data volumes each day. Many African countries don’t have the infrastructure to manage that data, let alone leverage it for more effective governance. Big data analytics could massively impact Africa’s development rate and dispel its image of inefficiency, which would encourage more investors to expand into the region. But until those systems are established, many ICT opportunities will go to waste.

Despite these concerns, investors can successfully navigate Africa’s growing economic opportunities. Africa’s markets require a keen eye and a focused strategy in these three areas:

• Understanding income disparities: Africa’s market sees extreme divides between consumers with high purchasing power and low-income spenders. Mobile telephone providers like Safaricom and Airtel meet demands at both ends of the spectrum by marketing smartphones to their urban-based, wealthy demographic and feature phones to the less affluent. Companies expanding into Africa need to account for gaping income disparities that lead to radically different consumer behaviour.

• Catering to the young: sixty-five percent of Africa’s population is under 35, making it the youngest population in the world. Entrepreneurs ignore Africa’s youth at their own peril. This demographic represents a vibrant and highly dynamic market, especially relative to ICT trends. Opportunities and challenges among these consumers will increase as access to information and mobile services improves.

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Countries such as Ethiopia and Mozambique are particularly lucrative long-term targets for ICT investments. Ethiopia has one of the lowest ICT penetration rates on the continent at only 3 percent, but 67 percent of people there first used the internet on mobile phones. Entrepreneurs should see the situation in Ethiopia as an immense opportunity to develop, scale, and market low-cost, easily accessible ICT solutions to the more than 90 million potential customers there.

• Focusing on enhancing consumer utility: By and large, Africa’s consumption habits are predominantly utility-driven, and the ability to address prevailing socioeconomic challenges stand out as a strength in value proposition. In Kenya, Kopo Kopo is enabling business ventures to leverage on the fast growing mobile money network to ease payment with convenience by customers. Such innovations boosting consumer utility are bound to continue shaping the business landscape in the years to come.

Africa is a region rife with opportunities born out of unique challenges, and the mobile market is no exception. Investors can seize these opportunities to a lucrative end result, as well as raised prosperity for the region itself.