Technology-enabled businesses like fintech, delivery, and ride-hailing, power and energy, and real estate tend to dominate the narrative of sectors with the highest current and future growth potential. But with many African countries going through one or more of inflation, debt distress, conflict, and foreign currency shortages, businesses in these and other sectors are being challenged to wither the economic storms. While these challenging economic conditions are set to continue into 2024, here are five businesses that, at least in the short term, could see a surprise uptick in revenues.
Debt distress has been the story of the continent’s major economies in 2022 and 2023 as the post-COVID era of cheap money and low-interest rates gave way to rising global interest rates that have pushed on the brink of collapse. While a few like Zambia and Ghana have successfully negotiated with international finance institutions and bilateral lenders like the IMF and Ethiopia obtained a temporary freeze on repayments in 2023, this has resulted in high lending rates for businesses and liquidity crunches for banks.
Enter microcredits- a service formalised many years ago from pawnshops into the financial services industry thanks to the adoption of mobile money services like Mpesa. In 2024, these services are expected to increase in popularity because they address the challenges of new borrowers who are cash-strapped and the unique liquidity of banks who are facing both liquidity and regulatory caps on lending as central banks try to rein in on inflation by restricting money supply. While it is touted by many governments as a solution to addressing financial inclusion challenges, it is expected to lull in a new class of borrowers into the market.
- Renewable energy
The renewable resources sector in Africa continues to gain momentum as countries prioritize sustainable development. Solar and wind energy projects are prominent, addressing the continent’s power needs. Investments, government initiatives, and international collaborations aim to boost renewable infrastructure, making it a promising sector for economic and environmental progress.
While this has been a growing trend for many years, the availability of pay-as-you-go business models for power systems is likely to wither supply-side issues pegged by foreign-currency shortages for small-scale solar devices and distribution efficiency challenges of on-grid solutions.
- Phone refurbishment
The number of mobile and internet users has been consistently growing for the last twenty years with 570 million Africans now having access to the internet. While the barrier of access has been challenged by the relatively higher cost of data, the biggest challenge for the adoption of technology-enabled services continues to be the high cost of mobile devices for larger segments of society.
Throughout the continent, this has seen the rise of two relatively broad use cases of mobile device adoption with advanced cases of adoption of the latest devices supporting 5G technology in high-end market segments followed by a larger population of basic or no mobile phone access. As seen in other high-growth markets in China, India, and South Asian countries, this has started a relatively unnoticed trend of businesses that are now supporting the refurbishing of existing smartphones, a second-hand market for the purchase and sale of older models of popular brands like the iPhone and Samsung Galaxy, and a burgeoning accessories/local cloud services market that is seeking to tap into storage needs.
“People understand that they cannot live without a smartphone, but don’t have the means to buy a new one,” says Frank Kwabena, a vendor in a small phone refurbishment shop at the Makola market in Accra, Ghana. “So, they come to us trying to buy old phones or ask us to redo a phone they got from a friend or relative here or overseas.”
While these services appear to be the playground of micro and small businesses across the continent, 2024 could see telcos and their resellers trying to organise the market around these trends subject to regulatory approval.
The African Games and Betting industries are some of the outliers in different economic settings. Whether it is the promise of more winnings for the wealthy who get into it for fun or the promise of changed fortunes for the unassuming, bettors are increasingly swayed to adopt what is fast becoming a huge business.
“Betting is pretty much recession-proof,” says Fortune Mhlanga [real name withheld], who owns a chain of five betting stores in South Africa. “And the harder the economic times, the better it is for our industry. We offer different short-term cash alternatives starting from 5 rands ($0.30). So, it can also be a huge volume business.”
While the continent’s larger economies have better-established businesses in the sector, the next growth is expected to come from the new 4 with Senegal, Cote d’Ivoire, Tanzania, and Zambia seen by industry experts as the winnings for the industry could even be larger.
- And of course, healthcare
Several healthcare trends are likely to grow in Africa including telemedicine, healthcare innovation, epidemic preparedness, data analytics, and vaccination programmes. These trends reflect a broader global shift towards technology-driven, preventative, and community-focused healthcare, with specific adaptations to address Africa’s unique healthcare challenges and opportunities.
Likely to emerge strong in 2024 would be the addition of technology-enabled services that address mental health, services that enable informal medical practices, and services that help to cut down the delivery time and inventory mismanagement in the pharmaceutical value chain.