In January, the economic outlook for Africa for the year was very bright. The African Development Bank had predicted a 3.9% growth in 2020 and then 4.1% in 2021. However, the coronavirus hit and upended the global economy.
Less than two months after coronavirus hit, the United Nations Economic Commission for Africa (UNECA) revised the continent’s growth projections. At the time the projections were revised, there were only 61 confirmed cases of the coronavirus in Africa. The projections were reviewed downwards to 2%.
A few weeks ago, The World Bank noted that Africa is headed for its first economic recession in over 20 years. These gloomy figures can be attributed to disrupted value chains as well as reduction in FDI and remittances. Also, direct hits to sectors such as tourism and oil are also a factor.
While no industry can truly be free of this recession, tech-enabled sectors may be more likely to withstand these shocks. Digital technology is getting a boost as people find new ways to work and communicate and sectors take their services online.
In the face of the coronavirus, what sectors are most likely to survive and grow? Below are sectors that would thrive in the midst of these economic crisis.
How is the Fintech Sector Surviving?
In an era spurred by stay-at-home orders and risk of infection in the handling of cash Mobile payments will become more popular. Companies like Kenya’s Safaricom M-PESA, and Nigeria’s Paga are enabling that shift by reducing transaction fees during this period. M-Pesa and Paga are both mobile money services that have been in operation in both countries.
Even prior to coronavirus, fintech was the largest destination for venture capital investment in Africa. The fintech sector was responsible for attracting over 50% of the $1.34 billion raised by African startups in 2019.
Through tech-based solutions, companies in Africa have pioneered mobile money and introduced new approaches to online payments, lending, and investments in a region where retail banking and consumer lending remain underdeveloped. The coronavirus is likely to further accelerate this trend as more people manage their finances digitally.
In the wake of the coronavirus, traditional classroom learning has taken a backseat. This has caused an acceleration in the adoption of e-learning as schools attempt to minimise interruptions to learning for their students. According to OECD head of education, Andreas Schleicher, “All the red tape that keeps things away is gone. People are looking for solutions that in the past they did not want to see.”
Several education innovators have developed new, promising solutions to enable students to continue learning while at home. Tanzania’s Ubongo recently launched its Ubongo Toolkits platform. The Ubongo platform is a large library of quality, African-made early learning materials and educational resources for kids aged 0-14. It covers various topics from early numeracy, pre-literacy, and social and emotional skills to engineering, science, and technology. Meanwhile, in Kenya, Eneza Education has partnered with telco giant Safaricom to offer a government-accredited curriculum designed and refined for feature phones. If these technologies take hold across countries searching for solutions to scale quality education, they may spur more widespread use of digital tools in the classroom and remote learning in the post-coronavirus world.
Africa’s fragile health systems can only cope with a small number of infected patients at a time. This is due to the number of limited hospitals and the lack of enough medical personnel. Technology can help the region bridge these healthcare gaps by providing software for self-assessment and symptom checking. This would free doctors to attend to severe and urgent cases. Wellvis, a Nigerian company has created the COVID-19 Triage Tool through which users can check their COVID-19 risk category. The Tool also provides for remote medical consultations. Moreover, technologies can support the delivery of medical equipment to remote places reaching places where they are urgently needed.
Zipline, a medical drone company currently operating in Rwanda and Ghana, for example, is currently holding emergency stocks of masks and gloves so that they can be delivered to hospitals and clinics within minutes. Meanwhile, Ghanaian start-up, mPharma, a prescription drug manager for providers and payers in Africa, is developing software that will enable doctors to schedule tests and receive results once completed. Should these technologies be widely adopted during the coronavirus pandemic, they are unlikely to be rolled back when the crisis subsides.
Amid a pandemic, one cannot be fully certain that a sector or company will survive let alone generate returns. However, due to the nature of the coronavirus, tech-enabled companies are likely to witness increased demand. From individuals, businesses and even governments to bridge existing healthcare gaps.
For investors looking to build a recession-resilient portfolio or business leaders looking for new opportunities, fintech, digital education, health and other tech-enabled sectors are better equipped to thrive during this pandemic.