Why Jack Dorsey and other major tech figures are suddenly interested in Africa

Key Points
  • The Square and Twitter CEO says he plans on spending up to six months in Africa and that “Africa will define the future.”
  • Microsoft, Facebook and Google are all involved in the continent with accelerator programs — Visa, Mastercard and Salesforce are making venture investments in African start-ups.
  • Early Facebook investor Jim Breyer says Africa "presents some fundamental leapfrog opportunities" that have been unlocked through the rise in mobile phones and other platforms.
Prakash Singh | AFP | Getty Images

Jack Dorsey is in good company when it comes to Africa.

The CEO of Twitter and Square announced last month that he would spend up to six months in the continent next year, with few specifics. But he's one of dozens of U.S. CEOs and global venture capital investors seeing potential for technology disruption — and returns — throughout the continent.

"We're seeing a lot of the investment opportunity and growth happening in the tech sector," said Witney Schneidman, a Brookings fellow with the Africa Growth Initiative and former deputy secretary of state Clinton administration.

"Jack Dorsey is in the right place at the right time and investing the appropriate amount of time to begin to understand the complexity of the African market."


Africa has a young and booming population, which Schneidman said makes it a "natural market for any tech entrepreneur." The 54 countries in Africa have a combined population of 1.3 billion people with an average age of 19, and more than half of global population growth over the next 30 years will happen there, according to a recent UN report. Africa also has the largest population of underbanked and unbanked people in the world, making it appealing for companies in financial tech and payments.

Jim Breyer, an early Facebook investor and partner at Accel Partners, likened the investment opportunity to China in the early 2000s. Breyer, who's now the founder of Breyer Capital and Co-Chairman of IDG Capital based in Beijing, said promising businesses in Africa haven't necessarily invented something new — they're finding "novel ways to leverage technology."

Former Twitter CEO on Jack Dorsey's tenure and move to Africa
Former Twitter CEO on Jack Dorsey's tenure and move to Africa

"Africa similarly presents some fundamental leapfrog opportunities that have been unlocked through the use of mobile phones and other technology platforms," said Breyer. "We're seeing some of the smartest individuals from top academic institutions in the U.S. and elsewhere return to the African continent, thereby contributing to a growing talent pool of entrepreneurs and developers."

Venture bets

Major tech companies are taking notice and have launched start-up accelerator program to help get more companies off the ground. Microsoft said in May that it will spend $100 million over five years on its first African development center, starting in Kenya and Nigeria. Facebook and Google both have African accelerator programs for local start-ups.

Chinese conglomerate Alibaba has a similar program. In December, Alibaba co-founder Jack Ma published an op-ed in the New York Times outlining the "next digital revolution" driven by African entrepreneurs.

Some companies are going the venture capital route and placing strategic investments in African start-ups. Visa, for example, announced a 20% stake in African consumer-payments product PalmPay.

Online payment processor Flutterwave, based in Lagos and San Francisco, is another popular bet. It has partnerships with Uber and Alipay and has raised money from Salesforce Ventures, Mastercard, and Google Developers Launchpad, among others, according to Pitchbook.

Breyer backed Ghanian healthcare company mPharma in 2017, which earlier this year acquired Kenya's second-largest pharmacy chain. He has also backed e-commerce company Sokowatch, Africa Health Holdings, Jetstream, and Apollo Agriculture.

Infrastructure opportunity

Part of the opportunity is a lack of existing, legacy systems. Ben Lynett, another early investor in Sokowatch and founder of Lynett Capital, said that's often an opportunity, not an obstacle.

"What we're now seeing is missing infrastructure that tech can solve," said Lynett, who began investing in Africa in 2016. "You have a lack of infrastructure and a potential leap-frog effect where things haven't been build, but 2019 technology can come in and figure out what makes sense and apply it in a unique way."

Valuations are also more "reasonable," Lynett said. Of the more than 400 start-ups worth $1 billion or more only two are based in Africa, according to CB Insights.

Chinese venture investors have been upping their bets in the region. Two Nigerian fintech firms — Opay and PalmPay — raised more than $220 million from Chinese venture capital investors in the fourth quarter of 2019.

With those opportunities come headwinds. Lynett said scaling and finding enough technology-focused talent can be a challenge. Brookings' Schneidman said knowing the rules and "ensuring the rules are consistent" across the 54 countries in Africa "can be a challenge" as well as finding local partners in that market can also be a headwind. But as valuations skyrocket in the U.S., there may be increased interest abroad.

"The venture capital world and Africa are still working hard to find each other," he said. "The returns aren't what investors are used to in the U.S. and Western Europe so we don't see a flood at this point — but we do see people who understand the market."

Why Uber bet big on Careem
What is Careem?