Africa is emerging as a hotbed of AI innovation, with startups across the continent leveraging the technology to address local challenges, create social impact, and fuel sustainable growth.
According to a recent report by the AI Media Group, there are over 2,400 AI companies in Africa as of 2022, with South Africa, Nigeria, Kenya, and Egypt leading the way.
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AI and the shift to digital
In a number of industries, including banking, healthcare, education, and agriculture, digital technologies are being adopted more quickly as a result of the COVID-19 outbreak. By offering solutions that improve service accessibility, quality, and efficiency, artificial intelligence (AI) is a key enabler of this breakthrough.
For instance, mPharma, a Ghanaian health tech business, optimizes the supply chain of necessary medications using artificial intelligence (AI) to lower prices and increase availability. The AI-powered educational firm uLesson, located in Nigeria, uses student strengths and weaknesses to tailor learning experiences for each individual learner. To increase smallholder farmers’ earnings and productivity, Kenyan agritech firm Farmshine utilizes AI to connect them with customers and service providers.
AI and Its Social Impact
AI is also being utilized to address some of the most urgent social and environmental concerns in Africa, such as poverty, inequality, climate change, and conflict. By providing data and insights, AI can empower marginalized communities and make opportunities and resources more accessible to them. It can also assist elevate their voices and demands. For example, DataProphet, a social enterprise in South Africa, uses artificial intelligence (AI) to reduce waste and emissions by improving the quality and efficiency of manufacturing operations. In order to improve food security and livelihoods, the Ugandan NGO Wadhwani AI use AI to tackle crop diseases and pests. Blood and medical supplies are delivered by drones using artificial intelligence (AI) by Rwandan firm Zipline, saving lives and enhancing patient outcomes.
AI and its potential for growth
AI is a source of innovation and expansion for African economies in addition to being a tool for problem-solving. AI may assist startups and enterprises in opening up new markets, producing jobs, and bringing in more money. In Africa, artificial intelligence (AI) has the potential to boost GDP by $1.2 trillion by 2030, or 4.5%, according to a McKinsey analysis. The obstacles African AI businesses face—such as a lack of capital, talent, infrastructure, and regulations—need to be addressed if they are to reach their full potential. They can, however, be supported by a number of opportunities and programs, including the African Institute for Mathematical Sciences, the Google AI Research Center in Ghana, the AI Media Group’s AI Expo Africa, and the AI Union’s AI strategy.
Artificial intelligence is changing Africa and opening up new doors for entrepreneurs, companies, and society as a whole. Innovators and growth-oriented across several industries and areas, African AI startups are leading this revolution. In addition to partnering and competing with international firms, we anticipate seeing more AI startups launch, grow, and prosper in Africa in 2024. We are eager to observe and encourage Africa’s AI future, which is bright and exciting.
Ways to Invest in AI Startups in Africa
The creativity and development of the continent can be positively impacted and made more profitable by investing in African AI businesses. Market fragmentation, regulatory instability, infrastructure deficiencies, and a lack of skill are some of the risks and challenges that come with it. That’s why, before investing in an AI firm, it’s critical to conduct thorough research and due diligence.
Your goals, tastes, and available funds will determine the best approach for you to invest in African AI firms. The following are some potential choices:
Acquire shares in publicly traded firms that create artificial intelligence software and produce the technology needed to execute AI programs. By using any online brokerage platform to purchase and sell shares of listed businesses, this is the easiest and most accessible way to invest in AI. Nonetheless, Africa has a dearth of publicly traded artificial intelligence businesses, and the majority of them are diverse conglomerates with a smattering of AI rather than pure AI players. Mobile money, voice assistants, and chatbots are just a few of the AI-powered services provided by telecom provider MTN Group. DigiFarm, an agritech platform, and M-Pesa, a mobile payment network, are two more telecom products that Safaricom employs AI to improve. An online and media firm called Naspers funds AI startups all over the world, including the ride-hailing service [Swvl] and the edtech app [Byju’s].
Invest in exchange-traded funds (ETFs) that emphasize artificial intelligence (AI) firms. An index, industry, or topic is tracked by an ETF, which is a group of equities. Investors who wish to have exposure to AI without selecting particular stocks will find them to be an appealing option due to their low fees, liquidity, and diversity. Though most of them are headquartered in other continents like the US or Europe, there aren’t many exchange-traded funds that target AI businesses in Africa. Investing in businesses that use artificial intelligence (AI) to develop or improve goods and services, including [Nvidia], [Alphabet], and [Amazon], is one way that the US-based ETF [Global X Artificial Intelligence & Technology ETF] utilizes AI. Another US-based ETF that invests in businesses creating or utilizing exponential technologies, like artificial intelligence (AI), biotechnology, and robotics, is called the iShares Exponential Technologies ETF. Companies that use this fund include Microsoft, Tesla, and Intuitive Surgical.
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Invest in venture funds with a focus on artificial intelligence companies. In exchange for stock or ownership stakes, venture capital funds are financial pools used to invest in high-potential, high-risk, early-stage enterprises. Along with providing the entrepreneurs with expert advice and mentorship, they grant access to unique and potential prospects. Only knowledgeable and accredited investors should consider them, though, as they also have high minimum investment requirements, lengthy commitments, and poor liquidity. Furthermore, the majority of venture capital funds that support AI businesses in Africa are situated in other continents, such the US or Europe, and there are very few that concentrate on these companies exclusively. One such venture capital fund, [Partech Africa], is based in Africa and invests in technology startups all over the continent. Among these are AI startups like [mPharma], a health tech startup that uses artificial intelligence (AI) to optimize the supply chain of essential medicines, and [uLesson], an edtech startup that uses AI to customize learning experiences for students. Additionally, [TLcom Capital] is a pan-African venture capital fund that makes investments in technology startups all over the continent. Among the companies it backs are AI startups like [Okra], a fintech platform that connects bank accounts and financial data, and [Kuda], a digital banking platform that uses AI to offer personalized financial services.
By angel networks or crowdsourcing websites, you can directly invest in AI firms. Websites that match individual investors with entrepreneurs looking for money are called angel networks and crowdfunding platforms. In addition to facilitating interactions between investors and entrepreneurs, they provide an opportunity to participate in innovative, impactful, early-stage firms. Only daring and seasoned investors should choose them, though, as they also come with a high risk, poor liquidity, and no information. Moreover, the majority of angel networks and crowdfunding sites that target African AI firms are located on other continents like the US or Europe, and there are very few that do so explicitly. An edtech startup called Savvy uses artificial intelligence (AI) to match students with mentors, and a fintech company called ZayZoon uses AI to give employees access to their wages. Another example of an AI startup is [WeFunder], a crowdfunding platform based in the US that enables anyone to invest in startups for as little as $100. [AngelList] is another US-based crowdfunding platform that allows accredited investors to invest in startups, including AI startups such as [Flutterwave], a fintech startup that uses AI to enable cross-border payments, and [Zipline], a health tech startup that uses AI to deliver blood and medical supplies by drones.
You can see that there are a number of options, each with pros and cons of their own, for investing in African AI companies. For this reason, before making any investing decisions, it is crucial to perform your research and evaluate your impact goals, return expectations, and risk tolerance. Although it takes time, effort, and vision, investing in African AI firms can be profitable and have a significant impact.
