The Rise of African Platform Companies



At one time, the potential for a digital divide, which would separate opportunities between those who had access to the Internet and those who did not, generated considerable concern. The fear was that regions like Africa would remain stuck on the wrong side of the divide, causing the region to fall further behind in economic growth and opportunity.


While there remain important gaps, the more dire predictions have not panned out. Indeed, Africa’s digital transformation is taking place more quickly than many expected, with interesting and significant consequences. Fiber optic networks, smart devices and a host of other digital capabilities are not only opening up new business opportunities across Africa, but also new ways of organizing business.


One way we have seen this happening is through the rise of enterprises that leverage platform business models. Like their counterparts in North America, Asia and Europe, platform-based enterprises are facilitating interactive ecosystems that connect people, organizations and resources in ways that enhance the efficiency of matching, exchange and innovation. In the process, platforms are making it easier for people across Africa to find and purchase goods, get rides, find accommodations, better manage physical assets like tractors, access movies, make payments, locate jobs and much more.


In collaboration with Dr. Olayinka David-West, a professor at the Lagos Business School, we undertook a survey of platform companies operating across the Sub-Saharan region. An initial list of more than 600 digital/tech companies yielded a final list of 42 leading platform companies.


The platform companies identified through this analysis are quite young — most have been launched since 2010. They represent vibrant experimentation with new approaches to organizing and managing business.


The survey offers insights into where they are located, the scope of their coverage, the sectors in which they operate and the mix between indigenous and foreign players. It also highlights three key hubs for platform activity: West Africa (Lagos), East Africa (Nairobi) and Southern Africa (Cape Town and Johannesburg).



The survey found an interesting blend of foreign and local capabilities being brought together in the formation of African platform companies. There are few indigenous only or wholly foreign-owned platform companies. Many are a blend that combine capabilities and resources brought from the global marketplace with African entrepreneurship and deep knowledge of local markets.


While there remain many challenges, not the least of which is building a strong pool of managerial talent to lead these companies, the opportunities for further platform growth seem quite large. Also, and perhaps most promising, as generators of solutions to operational challenges, platforms offer a way to catalyze markets and advance economic development and job creation throughout the region.


The full report is available at: https://thecge.net/category/research/the-emerging-platform-economy/


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