Strategies for Africa

I launched The Flip as a mechanism to learn. In particular, to learn the intricacies of building tech-enabled businesses in Africa, specifically, from those who are doing the work.

The more I learned about the nuances and complexities of building in African markets and for African consumers, the more I felt that Western thought leadership – from Silicon Valley, in particular – is not contextually relevant for emerging markets. Perhaps this goes without saying; and yet, we still look at Silicon Valley with great deference. 

That’s not to say there aren’t lessons to learn from Silicon Valley – of course there are. But everything needs to be contextualized for the environment with which we aim to apply these lessons. More or less, that’s the objective and mission of The Flip. 

Bay Area-based product guy and investor Sriram Krishnan1  recently put together a tremendous collection of writing on tech strategy – I would recommend anyone building tech companies anywhere in the world to check it out. 

Yet, his collection on strategy has me wondering – what does a collection of emerging market and Africa-focused tech strategies look like? I thought I’d take a shot at aggregating the list. 

This list, invariably, is a work in progress. As always, if you have recommendations please drop me an email (jpn@theflip.africa) or join the conversation on Twitter!

Embedded Finance

The digitization of informal markets gives rise to the opportunity for tech-enabled companies in non-financial sectors to layer financial services on top of their core value proposition. We wrote about this recently in the context of digital marketplaces. In summary – 

Selected readings on embedded finance:

Distribution

Last week, we wrote about WhatsApp Pay and Facebook’s prospective strategy for payments in African markets. Crucial to the success of any company servicing mass-market consumers is offline distribution – for fintechs, in particular, that means agent networks for cash-in/cash-out and KYC services. 

Selected readings on distribution:

Financing

In Season One of The Flip, we published an episode on blended finance. The nature of the problems entrepreneurs are solving, and the businesses to solve those problems, often compels them to fundraise from a variety of different sources – commercial venture investors, impact investors, venture debt, grants, smart subsidies, and so on.

Beyond blended finance as a discipline, I’m interested in other models that may work well in this environment, in particular for startups that do not fit into the classic VC model. Zebra’s Unite is a movement advocating for funding mechanisms startups that do not wish to be unicorns, and other models, like revenue-based financing, are intriguing given startups in Africa are often achieving profitability earlier in their journey than their Western counterparts. 

Selected readings on alternative financing:

Social Commerce 

In China, there are two successful ecommerce models. The first, of course, is the “traditional” ecommerce model, led by Taobao (Alibaba) and JD.com – the equivalents to Amazon or Jumia. The other model is the “group purchasing” and “social commerce” model. Pinduoduo has popularized this model, targeting consumers in tier two and tier three cities, and leveraging built-in network effects to win customer loyalty at scale. And PDD has scaled rapidly – in just 5 years of operation, it’s currently the second-largest ecommerce platform in China and recently eclipsed $100 billion.

To be sure, there are a lot of pre-existing conditions that allowed for PDD to have such success in China – namely WeChat and payments, as well as strong supply chains and last-mile logistics – which are elements that still need to be built up across Africa. However, given the environmental considerations in Africa, I believe these models are worth exploring further. 

Source: Y Combinator

Elsewhere, there are other initiatives to better organize and formalize merchants, who are typically using WhatsApp as a marketing tool. Meesho in India is one such example.

Selected readings on ecommerce:

General/Other


  1. Sriram grew up in India, so I’d have to imagine he’s probably more knowledgeable, understanding and empathetic about emerging markets than your average tech employee in the Bay Area. Yet his writing, it appears, is largely directed at the SV tech scene.
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