Afridigest Week in Review: Reaping Africa's demographic dividend

Africa will soon have the world’s largest working-age population, but taking advantage of this depends on the right investments, policies, and institutions.

Emeka Ajene

Jun 26, 2023

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If you’re new here: welcome — this Week in Review is sent on Mondays, the Fintech Review goes out on Sundays, the Content Corner or Intelligence Brief goes out on Wednesdays, and an original essay occasionally goes out on Saturdays. For past essays and digests, visit the archive & Afridigest.com. And with that said, let’s get into it!

Week 25 2023: June 18-24

🔦 Equity & Debt Fundraises

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💰 Investor Activity

Seedstars Youth Wellbeing Ventures, a fund backed by Seedstars and Swiss foundation Fondation Botnar, officially launched. The fund has a $20M mandate to invest in pre-seed to Series A African startups that help improve youth wellbeing; Senegalese logistics platform Chargel is the first investment in the portfolio.
South African accelerator Grindstone expanded internationally with the launch of the Grindstone UK & Channel Islands program.

🕵️‍♀️ In case you missed it

NEWS

The IFC is providing a $207M long-term loan package to SEACOM to boost broadband access in sub-Saharan Africa. The project is focused on supporting the digital transformation of SMEs in Djibouti, Kenya, Mozambique, Rwanda, South Africa, Tanzania, and Uganda.
The French Embassy in Senegal and Africa-focused French game studio Masseka are investing a combined ~$330K (€300K) to establish Dakar as a gaming hub in West Africa. The funding will be used to create a hybrid incubator/game development studio that will offer paid training to Senegalese mobile game developers.
Malawi, Zambia, Zimbabwe, and Botswana agreed to scrap mobile roaming charges. The initiative is part of a move to create a single SADC digital market.

🎰 OPPORTUNITIES

Early-stage African fintechs interested in the Egyptian market are invited to apply before July 15th to the DMZ Cairo Fintech Bootcamp powered by EBank.
African fintechs are invited to apply before July 21st to the 2023 Ecobank Fintech Challenge. The ultimate winner will be awarded a $50K cash prize.
Seed to Series A African startups building sustainable agriculture solutions are invited to apply before July 28th to the Thrive Global Impact Challenge.

The last word

💭 Just my thoughts

Harvard economist David Bloom is credited with coining the term ‘demographic dividend’ — the idea that countries that have a “disproportionately high share of working-age adults” have a unique window of opportunity for rapid economic growth. (See, for example, his 1998 paper (PDF) on economic miracles in Asia.)

And nowhere else in the world is that idea more salient than in Africa.

Source: Reimagining economic growth in Africa. PDF. McKinsey. 2023.

The continent will soon have the world’s largest working-age population, according to McKinsey and the UN, but whether it’s able to reap its potential demographic dividend depends on the right investments, policies, and institutions.

Bill Gates, in his speech this wee, (skip to the 5m23s mark) in Lagos, Nigeria, underlined this point:

“Talented young people…are the world's most important asset and that's good news for Nigeria because it has one of the biggest young populations in the world. It's continuing to grow and that represents, with the right investments, a lot of incredible skills and passion to tackle the tough problems.”

And similarly, the Goldman Sachs Investment Research team stressed this point in a recent report on the impending rise of Africa and other emerging markets.

“By 2075, … with the right policies and institutions, seven of the world's top ten economies are projected to be emerging market economies.”

Source: The path to 2075. Goldman Sachs.

But what might an example of the right policies be?

An example came this week at the Inclusive Fintech Forum in Kigali (start the video from the 51m mark) from MFS Africa’s Founder & CEO Dare Okoudjou.

He encouraged policymakers in the audience to embrace ‘passporting’ — allowing firms licensed in one country to operate in another country without having to obtain further approvals.

“If you get your Payment Services Provider (PSP) license here in Rwanda, and then want to go to the DRC, you have to repeat the whole thing again. When you put that together with the size of the markets, it makes everything very constrained… Passporting would be a huge relief for companies…because you can just [get licensed in] one jurisdiction. It would also free up capital and time for startups and help [us] to see bigger and better companies on the continent.”

In essence, Okoudjou sees greater pan-African integration as one of the main pathways to reaping Africa’s demographic dividend and there’s a lot of wisdom in that.

“There is a real force in demography that’s playing in Africa’s favor. If we want to fully use it, we need this market to come together...But it is not a reality until we actually make it.” — Dare Okoudjou

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