African Economic Trends: 2010-2019

Oil & Gas, Digitalization, Fintech

From oil and gas to digitalization and Fintech: the changes that have shaped Africa over the past decade.

The oil and gas industry in Africa has undergone dramatic changes over the past decade. Advancements in oil prospecting technologies have led to discoveries that have seen a number of nations joining the ranks of Africa’s major players in the traditional upstream space.

In recent years, Mozambique, Uganda, Tanzania, and others have become poised to transition from their traditional role as gas importers to that of potential producers, a reshuffling of Africa’s oil and gas ecosystem which bodes well for the industry’s outlook in the coming decades.

This is particularly true as stalwart oil and gas titans such as Angola and Nigeria remain relatively strong.

African nations recovered gradually but sufficiently from the 2014 dip in oil prices worldwide, and as prices steadily increased in the latter part of the decade, major energy companies began building oil refining and production infrastructure close to the new areas of oil and natural gas discovery.

During this time, a handful of counties, such as the Republic of Congo and Equatorial Guinea, joined OPEC.

Among the new discoveries and project investments of the past ten years, Africa’s oil and gas industry began to take notice of another trend that has been steadily transforming its operational environment—digitalization.

While the integration of digital technology throughout Africa has given oil and gas companies increased productivity and improved safety standards, experts have noted that the ubiquity of “digitally-behind” assets, such as legacy fields—which account for 30% of all production in Sub-Saharan Africa—have positioned the sector as fit for disruption by more technologically-inclined producers. The digitalization of Africa from 2010-2020 can perhaps most readily be observed in the surge in cell phone and mobile Internet penetration across the continent.

Since the beginning of the decade, Sub-Saharan Africa has witnessed its number of mobile Internet subscribers quadruple, and over the past two years, the number of smartphones in use across Africa has doubled.

By 2017, countries such as Nigeria and Kenya were reporting that as much as 80% of their respective populations owned mobile phones.

As the years passed, broadband cables stretched further and further across the continent, with schemes such as Google’s Project Link fitting a number of cities, including Kampala and Accra, with fiber-optic cable networks.

The economic implications of these efforts have been far-reaching. Mobile Internet access has given farmers living in remote areas the ability to, for example, check crop prices before selling their produce to avoid price gouging, and it has availed budding entrepreneurs with access to the digital capital necessary to get their businesses off the ground via online mobile banking services.

An Africa flooded with new mobile phone users has also given rise to a new African Fintech (financial technologies) industry.

Even at the outset of the decade, M-Pesa—a platform allowing transfers of small amounts of money via mobile phone—was beginning to take hold among the countless Africans who had little or no access to formal banking systems.

Now, dozens of other similar services, such as Wari, in Sengal, and Zoona, in Zambia, are used by hundreds of millions of Africans.

Throughout the decade, data has consistently suggested that Fintech is an area set to disrupt traditional money transfer services such as Western Union. Accordingly, since 2015, Fintech companies in Africa have accrued over USD320 million in investment, and the industry as a whole has expanded over 60% during these last five years.

As Africa moved toward digitalization, tech investors began to take notice in other areas, as well as of related opportunities. Andela, a company that trains software developers, opened branches in Nigeria, Kenya, and Uganda.

Jumia, a courier service, was launched in 2012, and it now spans 12 countries to offer home delivery services to an emerging African consumer class.

Foreign tech giants, too, have made moves to stake their claims in the African tech industry.

Just this year, Microsoft announced plans for a development center that will hire local engineers to work in artificial intelligence, and Huawei unveiled plans for two new data centers in South Africa. Recent figures about capital raised for African tech startups suggest that interest in this sector will continue well into the next decade. Between 2017 and 2018 investments surged over 300% percent. “Silicon Savannah” in Nairobi and “Yabacon Valley” in Nigeria are emblematic of the potential for big tech in these countries and across the wider continent.

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