Lagos-based investor reveals tech investment opportunities in West Africa
How we made it in Africa asked Lagos-based Brian Waswani Odhiambo, a partner at venture capital firm Novastar Ventures, to highlight the verticals within West Africa’s tech industry that excite him most from an investment perspective. Here is his response.
1. Fintech / embedded finance
Apart from the sheer size of the market opportunity in financial services across Africa, fintech is also an enabler for many other products and services. Payments, credit, insurance and remittances are all key capabilities that others can leverage to increase access and affordability for the end customers.
Without the ability to collect payments, for example, a company like MAX – which provides asset financing and driver management services to taxi owners and operators across Africa – can’t collect payments for the various vehicles it finances. Similarly, the ability to make payments to suppliers globally via remittance companies enables local businesses to import products that they then sell into the local markets. Fintech products are also highly scalable across geographies and can be very high margin.
We are increasingly seeing companies that did not start out offering any finance products begin to partner with fintechs or in some cases develop their own financial offerings embedded into current offerings, e.g. B2B e-commerce companies.
While agriculture may not be as sexy as fintech and therefore hasn’t attracted a lot of attention from entrepreneurs relative to other industries, I believe that this is a market ripe for disruption. In West Africa, specifically, the agricultural sector is largely underdeveloped as countries have focused on other sources of income. However, as we saw with supply disruptions that occurred with the war in Ukraine, for example, countries need to develop local food production systems to diversify from an overreliance on imports. In order to achieve some level of self-reliance quickly enough, technology and innovation will have a big role to play. I am constantly on the lookout for interesting agtech businesses.
This is a bit of a catch all category but any business that leverages technology to address climate change – either through reducing carbon from the atmosphere or transforming existing industries to become more sustainable and green – is of interest to me. Climate change is an existential problem and we are running out of time to prevent disastrous levels of warming. There are good examples of companies that are both commercially successful and generate environmental value. We need more of these.