Africa’s digital opportunity isn’t evenly distributed.
Four NEKS countries — Nigeria, Egypt, Kenya, and South Africa — are home to about a third of Africa’s population cumulatively, but attract ~75% of the total funding raised across the continent.
Why is that?
Here’s some data.
NEKS countries account for:
- ~51% of the continent’s GDP
- ~51% of the continent’s mobile subscriptions
- ~50% of the continent’s developers.
- and more.
While Total Addressable Market (TAM) is a relatively well-known concept — and sometimes population is used as a loose proxy for it at the country/regional level — there’s a concept called ‘Digital TAM’ that’s worth keeping in mind.
Writer Mario Gabriele alludes to it in an essay on specialist frontier market VC firm Sturgeon Capital:
And Sturgeon Capital’s own Alexander Branton puts it bluntly:
Today, Africa’s digital opportunity — as calculated by a mix of smartphone ownership, internet usage, digital payments, GDP (per capita), and other inputs — is concentrated in the four NEKS countries.
That said, there are a number of upcoming venture markets across the continent that are earlier in their digital supercycles and offer interesting risk/return opportunities to ride the long-term digitization wave.
Interested in hearing more about these opportunities and potentially investing in the most promising ones? Fill out this form and I’ll be in touch.
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