By
TBY
| Angola | Feb 04, 2022
Increased adoption of technology during the pandemic has strengthened Angola’s start-up ecosystem.
The spread of COVID-19 has accelerated the adoption of digital technology across the world, and Angola is no exception.
Virtually all sectors have been affected, but SMEs and innovative entrepreneurs have been particularly quick to adapt.
One such company is Roque Online, a start-up that connects small informal producers with businesses in the formal economy.
Its client base has grown from 250 to 36,000 members in just three years.
Restrictions to curb the spread of COVID-19 led many small producers in the informal sector to discover the Roque Online application as a way to sell and get paid using mobile money.
Under normal circumstances, vendors sell in open-air markets, but the pandemic opened up opportunities to expand businesses in the online world and, in turn, formalize part of their activity. As a result, 2020 was a year of rapid growth for the company, which was launched in 2019.
Appy Saúde is another Angolan start-up that has seen its business accelerate with the pandemic. Launched in 2017, the company provides information about pharmacies, doctors, and hospitals to users.
In the pandemic context, Appy Saúde became an essential tool to know where basic products such as face masks were available, thus reducing shortages.
The platform also makes it possible to contact doctors and health insurance companies, increasing the use of formal services.
As in the rest of sub-Saharan Africa, informal economic activity is one of the main problems with the Angolan economy.
Although the government has managed to reduce informality in recent years through a program called PREI, it still represents 40% of the economy.
In addition, more than 80% of the population works in the informal sector, according to the statistics institute, the Instituto Nacional de Estatística (INE).
In this context, start-ups can address local problems to leap from informality to formality. These agile businesses focus on finding solutions to the problems of the poorest, such as lack of employment.
Kubinga, for example, is a mobility services start-up that employs about 180 drivers who are paid by bank transfer. Thus, workers may come from the informal sector, but they become part of the formal sector when they are paid.
Luanda on the rise
Luanda still lags far behind other African powerhouses such as Cape Town, Lagos, and Nairobi. The combined value of all African start-up ecosystems is USD6.6 billion. Of that amount, USD6 billion, or 90.1%, is concentrated in five cities: Cape Town, Lagos, Johannesburg, Nairobi, and Accra, according to The Global Startup Ecosystem Report 2021, prepared by the research firm Startup Genome.
However, the country is starting to appear in international rankings such as the Global Startup Ecosystem Index 2021 report prepared by StartupBlink. Though the Angolan capital still has a long way to go, ranking 952nd out of the 1,000 cities part of the study, it is important to note that this is the first time Luanda was included.
Names like Roque Online, Appy Saúde, Mano, Mamboo, Tupuca or T-Leva are just some of those responsible for the vibrancy of this start-up culture.
According to the Ease of Doing Business 2020 report, two of the biggest challenges faced by Angolan entrepreneurs are related to the processes of starting a business and the limited options for accessing credit. For example, it takes up to 36 days on average to incorporate a company, longer than the 21.5 days required in sub-Saharan Africa. These problems have a discouraging effect on entrepreneurs, with the result that many ventures do not even come to fruition.
Connectivity against inequality
The lack of infrastructure is one of the biggest obstacles to development in sub-Saharan Africa, as it hinders connectivity between people. But telecommunications can solve this problem.
Smartphone penetration is on the rise, and there are 14.6 million smartphone users in a population of 32.3 million people. That percentage is in line with the 46% penetration estimated by the GSMA for sub-Saharan Africa, a region where there will be 615 million smartphones in 2025.
Online payments are also becoming more common, with 820% growth in the Multicaixa Express system in 2020 due to the effect of COVID-19. Meanwhile, the country is already preparing to deploy its 5G network. At the moment, Angola’s leading mobile operator Unitel has invested USD25 million to develop the infrastructure that will support the 5G service. The expansion of telecommunications networks and the use of smartphones are the basis for Angolan start-ups to begin to scale.
And connectivity and entrepreneurship go hand-in-hand to help solve some of the country’s problems.
