The bottom-up approach of the African private sector makes all the difference

African success stories are multiplying in the private sector, each more inspiring than the next. A striking fact explains some of the dazzling successes whether start-ups, telecommunications companies or banks: a bottom-up approach, which starts from the realities on the ground to design solutions adapted to needs, from the most local to the most global. And not the other way around, which consists of plating imported goods or services without adapting them to demand.

Indeed, an object such as the razor has the same use all over the world. But the way it is sold will change everything in Africa, where you have to consider the pace of transactions and maturities, which are not necessarily monthly as in Europe. The logic is rather that of “daily expenditure”, the famous “DE”* as it is called in Senegal. This DE ensures that purchasing power is adjusted on a day-to-day basis for products sold at retail. That’s why a bag of 10 razors is less likely to be purchased than each piece individually.

In other areas, market adjustment leads to perfectly innovative products on a global scale, as seen with M-Pesa, the e-wallet that has made the Kenyan mobile network operator globally known. In doing so, the solution invented in Kenya has been replicated in much of the continent. It is part of the daily lives of Cameroonians and Malagasy alike, not to mention the African diasporas who send money to their families back home. As indicated in the latest GSM Operators Association (GSMA) report on the digital economy in sub-Saharan Africa, the continent hosts nearly half of the world’s active mobile money accounts.

Microfinance and meso-finance allow telecommunications companies and banks to reinvent themselves, as seen in Senegal and Zimbabwe, with the respective examples of Wari and Econet Wireless. The main lesson of these successes is that the potential of the informal sector should not be underestimated, a word that has a pejorative connotation in itself, while it is synonymous with remarkable dynamism.

“The private sector is currently the main source of employment on the continent”

These initiatives contribute to an ad hoc regional integration, which is carried out on a daily basis in economic terms. An online trading company founded in Nigeria and later expanded to other countries made headlines this year due to its listing on the New York Stock Exchange. Upstream, many other African private groups are advancing telecommunications infrastructure. Tens of thousands of kilometres of fibre-optic cables are being laid across the continent to link countries together, with a vision that does not care about linguistic or cultural borders, but relies on a demand that can only be exponential.

Internet access, which stood at 23% in sub-Saharan Africa in 2017 according to World Bank figures, is expected to jump to 39% by 2025 according to the GSMA report. The expansion of this access not only makes Africa a new frontier for global growth. It is also one of the Sustainable Development Goals (SDOs), and nourish high hopes for faster growth through digital technology.

The private sector is currently the main source of employment on the continent. The extent of these successes in this sector must be appreciated by policy-makers and the great lesson to be learned from the African private sector for policy-makers in Africa can be summed up in these few words: starting from the field to identify needs. There is not necessarily a need to call for help, but to consider actions in a sustainable way, with future generations in mind. There is only profit to be made from it, from every point of view.

*DE: daily expenditure

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