10th December 2019
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Over the last couple of years, Africa has been at the center of the global migration debate, particularly in Europe and North America. However, there is a trend in the rising number of people on the continent who are creating new and innovative products and services that are starting to catch the world’s attention, and attracting millions of dollars from both local and international investors.

Their secret: they focus on solving Africa’s unique problems.

In this article, you’ll get a glimpse of 5 of the most promising business opportunities in Africa that are creating wealth and jobs on the continent, and will very likely make more millionaires this year. And you will notice they all have one thing in common: they focus exclusively on solving tough problems.

Let’s meet them…

1) African food brands for export

Every year, Africa loses thousands of jobs and billions of dollars in potential income by exporting unprocessed, non-value-added commodities like raw cocoa and coffee beans. When these commodities are transformed into premium chocolate and gourmet coffee by factories in North America and Europe, Africans spend even more money to import the value-added products back to Africa. As a result, while chocolate and processed coffee represent a lucrative global market that is worth over $100 billion annually, thousands of African cocoa and coffee farmers remain trapped in extreme poverty.

By focusing on ‘Made in Africa’ organic chocolate bars made from cocoa beans which are harvested and processed in Ghana, FairAfric is targeting ethically-conscious consumers in Europe with its impressive range of organic chocolate brands. Ethiopia is widely acknowledged as the birthplace of coffee, and is one of the world’s largest coffee bean producers. It also has some of the oldest coffee crafting techniques passed down over centuries.

Photo Credit: Fairafric

Still, when you mention coffee, most people are likely to think of ‘Starbucks’ and not Ethiopia.That’s why Garden of Coffee, an emerging coffee brand from Ethiopia, could be a game-changer for the continent. Founded in 2016 by Bethlehem Alemu, the business roasts 5 types of Ethiopia’s legendary coffee and ships them to over 20 countries, including Russia, Sweden, Germany, and the USA.

2) Virtual education

To compete for limited job opportunities, Africans in the labour market are investing in higher or specialised academic degrees, diplomas, and certifications in order to make their CVs (résumés) more impressive, and boost their chances of employment, promotion, and career progression. The truth is the traditional business model of sprawling, location-based, and come-to-us-if-you-want-to-learn university campuses can no longer match the current growth and sophistication of demand for higher education on the continent. People want flexible learning options that allow them work, learn, and earn, all at the same time.

Photo credit: African Virtual University

Africa’s higher education systems are ripe for disruption and there are already a few interesting entrepreneurs, investors and players leading the charge.To address the current and future skills shortages in this market, smart entrepreneurs and investors are cornering a potentially lucrative market by focusing on flexible and scalable business models that are cost-effective, yet profitable.

The growth in the virtual education space will be one of the most interesting business opportunities in Africa to watch this year.

3) Fashion and Apparel

Fashion is a $2.4 trillion global industry. But Africa currently only owns a very thin slice of it. The global fashion industry has a vast and complex value chain that stretches from the farmers who grow cotton, silk, and other natural fibres, to the massive production factories in Asia that spin the fibres into a wide range of textiles.

Thankfully, some creative entrepreneurs are starting to squeeze out some space for Africa in this vast and lucrative global chain. This year, two significant opportunities in the global fashion value chain will further open up to entrepreneurs and investors in Africa who are keen for a bigger share of this massive industry.

The first opportunity is in apparel production. With rising labour costs in China and parts of South East Asia forcing more factories to seek alternative locations in Africa – where labour is cheaper — several apparel producers are already setting up shop on the continent.

Popular African fabric

The second opportunity that stares in Africa’s face is fashion design and retail. A growing number of brilliant and creative fashion designers is emerging from the continent, and the world is starting to take notice. There are vast opportunities in potential partnerships with big and established fashion brands, distribution arrangements, e-Commerce possibilities, and artisanal and exotic fashion pieces.

On top of these international opportunities, there is a growing domestic market of over 600 million young and fashionable Africans who now take pride in wearing locally-inspired fashion.

4) Film production and distribution

Africa’s film industry is the second largest in the world (by volume) after India’s Bollywood, and produces more films than America’s Hollywood.

But the industry’s history of low-budget and low-quality productions, and a distribution system dogged by piracy, have held back its potential. Despite these shortcomings, African movies have proven to be very popular on the continent, and among the African diaspora.

Photo credit: Facebook

Africa’s local cinemas are also getting a boost. With more than $60 million invested in developing new cinemas over the last decade, the growth in cinema visits has led to a rise in box office pickings, thereby cutting out the pirates and ensuring more money ends up in the pockets of film producers.

In countries like Nigeria, the film industry contributes up to $3 billion to the economy. Beyond its ability to create a large number of jobs, a booming film industry in more African countries would have significant spill-over effects on local economies by supporting a wide range of small businesses.

5) Digital financial services

No other emerging industry in Africa is attracting as much international capital and backing like fintech right now. In 2018 alone, fintech startups in Africa raised $284.6 million from investors, almost half of all the funding raised by African tech startups in the whole year.

It’s hardly surprising why there is a gold rush in Africa’s fintech industry. Over 60% of Africa’s adult population is unbanked. Up to 350 million of them own and use phones, but fewer own a bank account or have access to formal financial services. That’s a huge market indeed.

Photo credit: Daily Express Naija

By using mobile phones and the internet, fintech entrepreneurs across the continent are deepening financial inclusion and unlocking incredible market opportunities in financial services. And the opportunities range from processing payments and money transfers, to savings, and access to credit.

Current estimates project that over the next 3 years, Africa’s fintech industry will grow by at least $40 billion and contribute up to $150 billion to Africa’s GDP by 2020. It’s this huge market potential that’s making investors fall over themselves to invest in African fintech companies.

In the last 12 months, two fintech startups from Kenya (Branch and Tala) raised $135 million. In Nigeria, four companies — Cellulant, Paga, Paystack and Lidya — attracted a total of $72.4 million. And from South Africa, Jumo and Yoco received $68 million.

So, which business opportunities in Africa do you see?

The original article appeared in Small Starter

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