Africa's Emergent Tech Sector: Characteristics and Development Implications

Abstract

This study examines the characteristics of Africa's tech sector and its implications for development. Using a database of technology firms in Africa, we show that start-ups are increasingly attracting funding across Africa, especially in underdeveloped sectors such as finance, retail, and transportation. We then illustrate that African start-ups’ digital technologies are often tailored to local contexts to attract, connect, and retain customers. Finally, we discuss transmission channels and review the existing evidence on the impact of digital technologies, particularly platforms, in Africa. We conclude that digital platforms hold significant development potential by addressing key market and government failures, as documented for the expansion of mobile money, but that the impact of other platforms, such as e-commerce, may be more ambiguous than expected. Consequently, there is an urgent need for more evidence on the impact of emerging digital technologies on African individuals, firms, and farms to guide effective policy responses.