Last year Facebook became the second largest e-commerce company in Africa after Jumia, the industry leader. The American social media giant did not celebrate that feat, though, because it never promoted itself as an e-commerce firm. But as global technology brands penetrate African economies, it is becoming evident that most local startups are experiencing new levels of competition, which could potentially disrupt their operations.
Can African Tech Startups Succeed in a World Dominated by Facebook and Google?
How winner-take-all dynamics affect local economies.
March 06, 2018
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Summary.
Across African markets, information and communication technology (ICT) has offered new ways of exchanging information and transacting business efficiently and cheaply. It has also changed the dynamic architectures of the financial, entertainment, and communication industries and provided better means of using the human and institutional capabilities of countries in both the public and private sectors. Yet while ICT has produced great gains, the internet itself could cause massive dislocation in local economies in Africa. By offering high-quality products at little to no cost, these global companies are straining local entrepreneurs, making it difficult to compete. There are a few options for local startups to consider to survive in such a system: creating sectors with offline components, relocating to the U.S., or building on existing infrastructures. Over time, though, the best response would be to invest in education and infrastructures that can help the continent compete and create category-king companies in global commerce.