From the perspective of the African future, digital business models have a vital role in influencing the development of African societies. For the first time African economies are able to create equal economic links with Western economies and are able to attract interest from all over the world. Growth numbers in digital market are staggering, although the future is not as straightforward as one could expect. Now it is great moment to look at what are the successful digital business models in Africa and how does the future looks like for African digitalization.

1. The Future of Digital Business
Models in sub-Saharan Africa
September 2016

2. Contact information
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Amatka (Pty) Ltd
www.amatka.com
info@amatka.com
+27 (0)79 618 6570
Unit 608, 6th Floor
76 Regent Road (The Point Tower)
Sea Point 8060
Cape Town, South Africa
Amatka (Pty) Ltd is a South African company founded and owned by Finnish entrepreneurs based in
Cape Town. Amatka provides insight into business opportunities in Africa with focus on Southern and
Eastern Africa. Insight Africa also supports networking in these countries.
Tekes – the Finnish Funding Agency for Innovation
Tekes is the main public funding organisation for research, development and innovation in Finland.
Tekes funds wide-ranging innovation activities in research communities, industry and service sectors
and especially promotes cooperative and risk-intensive projects. Tekes’ current strategy puts strong
emphasis on growth seeking SMEs.

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Contents
Executive summary........................................................................................... 3
1 Introduction.................................................................................................... 4
1.1 Background ............................................................................................. 4
1.2 Defintions ................................................................................................ 4
1.3 Recommended Use and Liability Disclaimer .............................................. 5
2 Different African Digital Markets in Focus ......................................................... 7
2.1 Overview: Digital Context in Africa ............................................................ 7
2.2 Southern Africa: Promising Future or Digital Business as Usual .................. 8
2.3 Eastern Africa: Booming Economies and Mobile Money Bonanza ............... 9
2.4 Western Africa: Rise of the New Global E-commerce Unicorns ..................10
3 Cases...........................................................................................................11
3.1 Southern Africa .......................................................................................11
3.2 Eastern Africa .........................................................................................14
3.3 Western Africa ........................................................................................17
4 Scenarios for the Future of digitalization markets in Africa................................20
5 Conclusions and Recommendations ...............................................................23

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This report is all about digital business models and the future of digital business in
Africa. In the report it is presented one of the most exciting digital business models
currently found in Africa and more specifically in three geographical markets in Africa:
Southern, Eastern and Western Africa. The report is based on relevant statistics,
recent articles, publications and publicly available information. For the purpose of
analysis, also company and expert interviews were conducted in the respective
markets during the year 2016. The report is part of Team Finland’s Future Watch
Service in Africa. Future Watch service is part of TF Market Opportunities services and
coordinated by Tekes, the Finnish Funding Agency for Innovation
One thing is for sure: the main driver for the digital business models in Africa is the on-
going mobile revolution. There are currently around 900 million mobile phone
subscriptions and around 400 million smart phones in Africa - and people really are
using those phones. The growth numbers in tech space are staggering but can also be
misleading as there are also major challenges that need to be overcome. Bandwidth
problems, unavailability of skilled workforce and poor infrastructure create challenges
for digital business models to materialise at its full.
Another thing is also sure already now: African digital business models are emerging
and the context of Africa is dominant in those models. Models are home born and
focusing on solving specific African problems and often also arising from African
culture. Whether it is solving agriculture related logistics problems in Kenya or creating
“African Netflix” in Nigeria, it is important to understand the African context. And this is
the key message of this analysis, if you want to succeed in digital business in Africa,
you need to understand how culturally changeable and different Africa is. That requires
that you need to be able to adjust your offering to the local environment. This all has
its own implications for success in digital business in Africa. This analysis wants also
to give predictions about the future of digital business in Africa by understanding
current digital business models and making bold conclusions about the development
paths for the future.
Executive
summary

5. 4
1 Introduction
1.1 Background
Africa is a vast continent containing 54 countries, of which 48 exist in sub-Saharan
Africa. Africa is the most heterogeneous continent in the world – linguistically,
culturally, and ethnically. It has more than one billion people, and over 3,000 ethnic
groups speaking more than 1,000 languages.
Most economic activity in Sub-Saharan Africa still happens in the informal sector, which
accounts for more than 50% of GDP and employs more than 80% of the population. In
all African countries GDP is considerably lower than in more developed world, as well
as unequally distributed between and within economies.
There are also big challenges facing African economies that are related to water, food,
electricity, healthcare and education related shortages. Other side of the story is that
many areas are rapidly developing; internet and mobile phone usage are growing,
some urban areas look the same as in Europe, and foreign direct investments are
diversifying.
From trade perspective the biggest implication of the development is in the first place
growing demand for consumer goods, financial services and infrastructure from energy
grids to housing. At the same time b-to-b markets are immature and apart from small
and micro businesses controlled by large foreign companies. Only finance and
telecommunications sector are to a large degree in hands of Africans. Government
monopolies are more of a rule than an exception in energy, parts of transportation, and
even parts of telecommunications.
From the perspective of digitalization it is important to remember that there is no one
Digital Africa. The common denominator is increasing mobile internet penetration but
apart from that each and every country faces unique opportunities and challenges. Life
in a wealthy suburb in Johannesburg is very different from life in a village in rural Kenya,
yet both are realities happening in today’s Africa.
Reflections of Digital Africa are also different across Africa. In Nigeria local ecommerce
and entertainment are big. In Kenya, fintech has been booming for some years and
NGOs have been active in healthcare, agriculture and education. In South Africa, the
only African country with Western type legacy systems, innovative digital companies
are looking for markets outside Africa. South Africa also so far is the only African
country with significant, and highly competed, b-to-b digital market.
1.2 Defintions
Digital business models can vary from many different services and products in digital
marketplace. In this analysis digital business models have been defined in a very broad
sense, including e-commerce, collaborative economy in digital channels or business
delivered in various digital touchpoints. When it comes to African digital business
models it is important to remember the African context. Digital business models have
always an African flavour arising from cultural and economic realities.
Amatka has used well known business model analysing and describing tool Business
Model Canvas in analysing and understanding the characteristics of African digital
business models through cases. Alexander Osterwalder and Yves Pigneur are the
main authors of the book called Business Model Generation and there it is introduced
what is called Business Model Canvas. Canvas can be described as “shared language

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to describe, visualise and assess changing business models”. Canvas is made up of
nine building blocks that describe the key elements of every business model –
regardless of whether model is digital or physical. The key elements are:
1. Key partners
2. Key activities
3. Key resources
4. Value propositions
5. Customer relationship
6. Channels
7. Customer segments
8. Cost structure
9. Revenue streams
This analysis highlights especially African characteristics of digital business models
and showcase business models that possibly could not have born outside Africa.
Digital business models chosen represent existing and already well-functioning
models. This choice has been made in order to showcase what kind of models have
made breakthroughs in Africa illustrating what it takes to build sustainable digital
business in Africa.
On the other hand, it is important to bear in mind that digital business models are global
and same characteristics of digital business models relate to wherever business is
originating from. The list below shows the main business models that have flourished
during the digital business model age starting from late 1990’s. All these digital
business models can also be found in Africa – with an African flavour.
Traditional retailer business model is model where retailer is selling products and
services directly to buyers at a mark-up from the actual cost. Usually there are three
types of cost model in relation traditional retail business model in e-commerce: low
cost, cost plus and premium models.
Non-Traditional retailer business model at first looks like traditional retailer but goes
beyond by maximizing customer lifetime value. Three common variations to the non -
traditional retail model are commonly described as: freemium, long tail and razors &
blades.
All you can eat business model is about offering unlimited use of assets over a fixed
period of time. Good examples for this business model are Netflix (video streaming)
and Spotify (music streaming).
Subscription business model is about offering a product or service on a continual
basis for a fixed charge, usually weekly, monthly or yearly. Subscriptions are common
business model especially in non-material assets like media content and other
services.
Landlord business model has a key player who owns the asset and makes it profit by
charging others for the use of asset. Assets can vary from physical to virtual assets.
Broker business model is about transactions between sellers and buyers, usually
broker not even owning what is being sold and profiting from a charge on top of selling
price.
1.3 Recommended Use and Liability Disclaimer
It is strongly recommended that the readers always check the latest information;
situations in Africa can change overnight.

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Amatka has made every attempt to ensure the accuracy and reliability of the
information provided in this report. However, the information is provided "as is" without
warranty of any kind. Amatka does not accept any responsibility or liability for the
accuracy, content, completeness, or reliability of the information contained in this
report. No warranties, promises and/or representations of any kind, expressed or
implied, are given as to the nature, standard, accuracy or otherwise of the information
provided in this report nor to the suitability or otherwise of the information to any
particular circumstances. Amatka shall not be liable for any loss or damage of whatever
nature (direct, indirect, consequential, or other), which may arise as a result the use of
this report, or from use of the information in this report.

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2 Different African Digital Markets in
Focus
2.1 Overview: Digital Context in Africa
Africa is on the rise – this is what we hear from various sources. From economic growth
rates perspective this is completely true and undeniable. Africa’s consumer market is
expanding parallel with increasing size of middle class. At the same time, infrastructure
related investments are booming and contributing to the growth of the one of the fastest
growing areas in the world. There are high hopes that finally some African nations
would be able to roll out their manufacturing capabilities, which would mark a major
transformation from “Africa consuming” to “Africa producing”.
Despite problems of mismanagement and bad governance, corruption, crime, poverty
and inequality, continent’s progress will continue. One of the main contributor and
enabler to this progress is digital transformation. A transformation connecting Africa to
rest of the world, and connecting rest of the world to Africa. These real-time
connections enable Africa to change for good.
Various statistics tell about the rise of the internet economy through faster networks,
increasing internet penetration, increasing internet contribution to GDP, amount of
Facebook users, just few to mention. Positive outlooks for growth of digital capabilities
and key elements of internet economy prevail. Based on estimations it is possible to
draw only one conclusion – business potential is huge and most likely even
underestimated in many areas. Many African governments have woken up and defined
strategies to capture the potential for change. In many cases the big picture is in place
and now it is time to execute.
On the other hand, journey has just started but already now we are able to see the
possibilities for digital transformation in many sectors that define the future of Africa:
healthcare, agriculture, retail, education, transportation and even the government
sector. In the heart of this transformation are the new digital business models and bold
entrepreneurs and companies that are able to capture the essence of the
transformative power of African change.
One additional actor is important to brought up that has a vital role to play. That is the
network of incubators and accelerators funded by donors, corporations, and
governments. Various programmes and competitions are in place to identify
transformational businesses and ideas. Currently there are more than 300 accelerators
and/or incubators that operate in the field of “tech”.
With this as a background, in order to understand the future of digital markets in Africa,
it is vitally important to understand the challenges the up and coming as well as
established digital businesses intend to solve. Another objective of this analysis is to
describe digital needs of three different African regions. At the same time it is important
to understand the characteristics of specific digital business models in order to capture
the African flavour of digital business in various distinctively different African
geographical markets.
From the perspective of the African future, digital business models have a vital role in
influencing the development of African societies. For the first time African economies
are able to create equal economic links with Western economies and are able to attract
interest from all over the world. There is also possibility that with the help digital
solutions African societies are able to find tools to dismantle corruption by increasing
transparency and getting rid of non-existent or inefficient management processes. It is
also possible that Africa becomes a testing ground for up-and-coming digital

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businesses that are not able to move forward as regulative environment in their home
countries is more prohibitive. It is yet to be seen what kind of a digital future Africa has
in front of herself. However, possibilities are great as foundation for a digital revolution
do exist.
In many cases markets in Africa are digital from birth as mobile technology has made
completely new services available for almost all of the continent’s one billion individuals
without any legacies. This offers new collaboration and business opportunities for a
huge amount of people. Through digital channels, Africa will become for the first time
equal player in global market place and redeem its role as major contributor to the
global economy.
However, before starting co-operation with the last frontier market in the world,
understanding what it takes to be fully operational in African digital market is crucial.
Partly that requires understanding about digital business models.
The final objective of this analysis is to share the understanding and knowledge of
digital economy in Africa in the future.
Figure 1. Digital Africa – Facts
2.2 Southern Africa: Promising Future or Digital Business as
Usual
Southern African digital business is at the same time most advanced and most unequal
in Africa. As a large market with 55 million people and the second largest GDP in sub-
Saharan Africa, South Africa clearly is the power house of Southern Africa and drawing
the biggest portion of the investments also in digital economy. Additionally, South
Africa is the home of best African universities and network of accelerators and
incubators.
The most important reason for South Africa being the powerhouse of also digital
business in the region is that the largest corporations in African continent are South

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African. The largest banks, telcos, IT service providers, media houses, retailers, mining
companies and manufacturing companies in Africa are all coming from the tip of Africa.
This all has an effect how Southern African digital market looks like. Although there are
many interesting technology start-ups in South Africa, the volumes in digital business
are coming from start-ups that are spin-offs from traditional businesses coming from
traditionally strong and established companies.
Financial institutions are innovating and accelerating their customer processes with
digital solutions, media companies are creating new business models that are based
on new channels to consume content and services are finding new ways to create
value to customers. Digital business in South Africa is business as usual as many
corporations are involved in accelerating business by focusing on digital businesses.
Is this a blessing or curse for completely new and differentiated digital business models
is yet to be seen. Whatever happens, one thing is certain: digital business and
digitalization are transforming South Africa in all sectors as infrastructure develops and
technology becomes more and more easy to use. On the other hand there are some
bottlenecks that are related to relatively advanced usage of ICT and legacy systems
that are in place in many companies. Although saying that, South Africa is currently the
most obvious choice for digital business landing to Africa from abroad.
2.3 Eastern Africa: Booming Economies and Mobile Money
Bonanza
Eastern Africa is in special focus as many of the fastest growing economies in the world
are coming from that area. Although the starting point for the growth is low and partly
infrastructure driven, numbers are staggering. Also the market size of 250 million
people gives lot of promise for future growth in the region. Especially Ethiopia, Rwanda
and Kenya have transformed themselves into regional powerbrokers and are attracting
interest of investors in various sectors, including digital ecosystem.
If Africa is a mobile continent, Eastern Africa is its brightest star. One of the areas
Eastern Africa is championing the world is mobile money usage. Altogether, at least
six different major mobile money platforms exists, M-Pesa being the biggest and most
beautiful of them all. These platforms make Eastern Africa the most advanced mobile
money region in the world. In Kenya only there are almost 40 million mobile money
subscribers and estimated 80 % of all transactions are done by using mobile money
platforms.
Mobile money infrastructure has created also something bigger around itself.
Ecosystems draw attention from all over the world and have created new innovations
that could become the big success stories also internationally. Currently fintech is the
single biggest area to draw investments in digital sector.
As elsewhere in Africa, also in Eastern Africa access to market is controlled by
monopolies and to operate in the market one has to accept a lot of inefficiencies and
bottlenecks. To solve that problem, digital solutions have a role to play. Digital solutions
and technologies could help creating transparency in processes thus making it faster
and cheaper for companies and consumers gain access to services previously
controlled by a few actors.
Digital solutions might also help bypassing corruption, a problem that still exists in
many Eastern African countries. Generally speaking, digital business models that cut
down the role of middle men and ease the pain of mismanagement are one of the most
exciting digital business models one can find in Africa.

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2.4 Western Africa: Rise of the New Global E-commerce Unicorns
The size of Western Africa and especially Nigeria as largest economy in Africa is huge.
Around 450 million people living in Western Africa makes it a most populous region in
the Africa. The population is growing placing a huge stress on infrastructure as well as
ability of societies to deliver basic services to the citizens. These conditions have a
large impact on how digital landscape in the region looks like and how these models
are build.
Everyday problems people have with transportation and physical movement has
created impressive e-commerce platforms. Not surprisingly these e-commerce
platforms have become extremely popular and already now have grown into world
class e-commerce innovations. One of the best examples is the all-in e-commerce
platform Jumia that sells basically everything West Africa wants to consume and has
grown into the unicorn class. E-commerce platforms have also created ecosystems
around them that attract investors and innovators that make e-commerce one of the
brightest stars of digital business in Western Africa. Especially well represented in
these ecosystems are home-grown innovations that make electronic payments
possible and secure.
As practical challenges people are facing in their everyday life are getting worse,
people want to stay home and consume entertainment from home. Parallel with e-
commerce platforms, entertainment and film industries are gaining momentum.
Already now, huge growth and funding has been seen in film industry and especially
through online streaming which has already seen its own mega successes like iRoko
which has become the biggest online platform for African entertainment. In
entertainment business, growth rates are staggering. In Nigeria alone entertainment
industry revenue grows 25% annually. This means that a lot is expected from new
innovations around entertainment industry. What is even more important, West African
entertainment industry tells African stories by Africans. Increasingly these stories are
produced and consumed in digital format.

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3 Cases
3.1 Southern Africa
Discovery health and Vitality program
Every individual has its own perception what a healthy lifestyle is. Diet, sleep, exercise
and mind-set are normally considered as the building blocks of healthy lifestyle. In
South Africa, a company called Discovery Health has conceptualized this healthy
lifestyle with great international success. Although the concept includes many non -
digital elements, it is a great example how digitalization nowadays is an integral part of
great business successes also in Africa. Figure 2 presents main elements of the
business.
Figure 2. Main elements of Vitality business
Discovery Health is South Africa’s largest health insurer and has launched Vitality
program already in 1997. Vitality program is a fully integrated wellness program to
engage people to maintain and improve their wellbeing. Foundation of Vitality
programme is Discovery Health Medical Scheme (i.e. health insurance) which gives
people an opportunity to join Vitality. Vitality is currently one of world’s leading science-
based wellness programs, where healthy life choices are encouraged and incentivized.
Currently the programme has over 6 million customers.
Programme is built on three steps: 1) understanding your own health situation, 2)
improving and tracking it and 3) enjoying rewards about healthy choices. Vitality points
are the corner stone of the rewarding scheme and the motivator to do healthy choices
when buying nutrition, preventive health care products and exercising. Choices are
motivated by cash as well as leisure and travel benefits. Digitalization is supporting the
whole business all along the path to gain healthy lifestyle.
Vitality has partnered with the main gym chains and created device called Gym Tracker
that collect the data of gym visits by the members. Also partnerships are created with
the main supermarket chains and members get cash backs from healthy food they buy.
Same applies to the main sport gear shops that are incentivizing members by sport
gear purchases. The heart of the vitality is the data that tracks the path to wellbeing
and is able to motivate further improvement of the health of the members. Everything
delivered and shared in MyData context digitally.

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The following Figure shows the Vitality digital business model that can be described as
a hybrid of All you can eat and Non-traditional retailer business model.
Figure 3. Vitality business model
Hepstar
Hepstar is South African travel insurance broker distributing travel insurance services
digitally with footprint across the globe. Service is targeted to insurance companies,
travel suppliers and cost conscious travellers alike. Customer value is related to
proving new revenue streams to suppliers and insurance companies as well as cost
savings to travellers. Figure 4 shows main elements of Hepstar business.
Figure 4. Main elements of Hepstar business
For that purpose, company has developed online platform that connects insurance
providers, travel organisers and customers. Hepstar technology is built around
processing engine that integrates various online systems and delivers value to
stakeholder by analysing relevant data and giving recommendations on best travel
insurance options available. Hepstar API is a practical technology tool providing the

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connections needed for the platform. Through integration it is possible to automate the
process of receiving and delivering travel insurance services.
Different travel related insurances are digitally available from expanding network of
suppliers ranging from traditional travel baggage and health insurances to sport and
gadget insurances combined with car rental insurances.
Value proposition of Hepstar is simple and easy to understand. For customers platform
search and find the best possible insurance with best possible price, bring travel
insurance companies more customers and for travel organisers additional revenue –
all done with the help digital platform that connects the main players in the marketplace.
Figure 5 presents the Hepstar digital business model that can be described as a pure
broker platform business model.
Figure 5. Hepstar business model

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3.2 Eastern Africa
M-Pesa and Other Mobile Money Platforms
When talking about digital business in Eastern Africa, it is not possible to forget to
mention the mobile money platforms. These platforms that have disrupted money
transferring market have made East Africa as a frontrunner in mobile money market in
the whole world. Altogether, there are currently six different mobile money platforms
but the biggest of the all is M-Pesa owned by Vodafone. Kenya is the biggest market
for the service and it is run by Kenya’s biggest telecom operator Safaricom. In the figure
6 it is presented main elements of M-Pesa business.
Figure 6. Main elements of M-Pesa business
M-Pesa has digitalized the wallet of the people in Kenya. Kenyans are able to send
and receive money as well as pay for bills and transact easily and safely when buying
and selling goods. Core service is mobile money transfer but it has grown payment
platform as well personal bank account.
M-Pesa was launched in 2007 by Vodafone to Safaricom and Vodacom for Kenya and
Tanzania. M-Pesa soon became a success in Kenya (but not that much in Tanzania)
and spread quickly currently having over 20 million active accounts in Kenya alone. It
has also expanded to other geographical locations: Afghanistan, South Africa (from
where it withdrew in 2016), India, Romania and Albania. M-Pesa operates with PIN-
secured SMS text messages. Users are charged small amount of fee for transferring
the money. M-Pesa also acts as a branchless banking service as money could be
deposited and withdrawn from the agents selling airtime or acting as micro retailers.
M-Pesa has had a significant impact on the whole fintech ecosystem that now includes
various mobile money actors and software companies in addition other mobile money
platforms. In addition to creating whole industry of mobile money, these platforms have
given “bank account” to people who previously had no possibility to have one.
Interestingly M-Pesa’s business model has not succeeded everywhere where it is
launched.
The following Figure presents M-Pesa’s digital business model that can be described
as a landlord type of business model.

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Figure 7. M-Pesa business model
iProcure
iProcure is trying to solve a large scale economic and social problem by trying to re -
invent agricultural supply chain in rural Africa. Starting with Kenyan agriculture,
dominated by small farms and supply chain inefficiencies creating hardships for the
farmers by low quality corps and high transaction costs. With this in mind, digital
platform that iProcure has developed come to play a role. Figure 8 presents main
elements of iProcure business.
Figure 8. Main elements of iProcure’s business
iProcure is one of the largest agricultural supply chain platforms for rural Africa. It
provides complete procurement (fertilizers, chemicals, and other goods needed in
agriculture) service combined with last mile distribution services of goods. Farmers can
create clusters to in order to increase their negotiation power and iProcure helps them
by providing service to facilitate price negotiations as well as handles deliveries.
Additionally, the platform provides business intelligence and data-driven stock
management across the supply chain. Data has become the key differentiator by
delivering quantifiable value to both suppliers and farmers alike.
Value proposition is clear for the farmers: with the help of platform you will receive
buying power for the vital goods needed in farming in addition to in-time deliveries for
those goods.

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Figure 9 presents iProcure’s digital business model that can be described as a hybrid
of broker and non-traditional retailer business model.
Figure 9. iProcure business model

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3.3 Western Africa
Jumia and e-commerce
Jumia is a great example of Western African business opportunities in e-commerce
market. When things go right, things really go big in Western Africa, as the market for
retail and e-commerce is so huge. Jumia is number one online retailer operating with
very traditional e-commerce business model and working with mark-up prices. The
business was founded as recently as 2012 by copying Amazon’s business model.
Figure 10 shows main elements of Jumia’s business.
Figure 10. Main elements of Jumia’s business
The secret of the success is the speed of operations. Shortly after the start of the
business in Nigeria, Jumia launched warehouses in other growing countries in Africa
including Egypt, Morocco, Kenya, Cote d’Ivoire and Uganda; received $ 35 million
series B funding from Millicom and showed how the race of becoming the African online
retail champion had just started.
Competition in e-commerce market is fierce and the road has also been rocky for Jumia
as new e-commerce giants like Konga in Nigeria have arrived. One of the key
differentiator for Jumia has been its close relationship with telecom industry and mobile
technology (especially mobile applications) as key leverage for its engagement with
customers. Furthermore, Jumia has expanded its brand to various areas including
online property and online car retail. Path to all in digital e-commerce market is set for
Jumia.
Figure 11 shows Jumia’s digital business model that can be described as a traditional
online retailer business model.

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Figure 11. Jumia business model
iRoko and Nollywood Made Online
iRoko is the fastest growing digital company currently in Nigeria. The company is
estimated to have 10 million subscribers and is funded by hedge fund that once was
an early investor in Facebook and game studio Zynga. Hopes are high for iRoko which
is globally the largest licensor and streaming service for African movies and
entertainment content. Figure 12 presents main elements of iRoko’s business.
Figure 12. Main elements of iRoko’s business
iRoko believes strongly in partnerships and has become Africa’s biggest partner for
Youtube and has distribution deals with Dailymotion, iTunes, Amazon and Vimeo. The
company was founded to fill in a simple gap in the market: the founder was not find
Nigerian Nollywood films online himself and decided to develop a platform for those
films by himself. As always with successful digital business models in Africa, the speed
of development has been fast and steady.
iRoko’s main brand is iRokoTV which currently gives access to over 5000 Nollywood
film titles. iRoko has also expanded its already well-known brand into new brands like
IROKING which is music streaming service for Nigerian music. Mobile applications
have been foundation for IRoko success. Currently film content can be consumed via
an Android App in Africa and via app or online in Europe and US.

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iRoko has moved to offline distribution and supplies a number of airlines with Nigerian
entertainment content. It is currently one of the best funded digital companies in
Western Africa. The company has raised altogether $25 million investment up today.
Customer value proposition is targeted to provide Nigerian and African entertainment
content easily to everyone in everywhere in the world.
The following Figure presents iRoko’s digital business model that could be described
as subscription based business model.
Figure 13. iRoko business model

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4 Scenarios for the Future of digitalization
markets in Africa
“Any useful statement about the future should seem to be ridiculous”
--Dator’s Axiom
Scenarios are the tool for strategic thinking and one of the key methodologies used in
future studies in understanding potential futures. One of the key lessons future studies
have expressed in relation to scenarios is that futures are created actively. If that is the
case then there could be described at least three different futures: possible, probable
and desirable futures. In this analysis it is used this future study methodology to
extrapolate alternative scenarios for future of digitalization markets in Africa.
It is important to bear also in mind that reality is a non-linear and sometimes chaotic
set of trends, innovations and even small scale revolutions from time to time. Especially
true this is in Africa where societies are in the move and under a fierce political and
cultural transformation. However, the value we are able to get out of different scenarios
is that it is possible to give predictions about the specific futures that are justified based
on clear justifications. These justifications will take into consideration technological,
economic, political and social trends that are all relevant to digital business models and
markets.
Finally it is important to bear in mind, scenarios are the tools to build different futures
and one of the sign of effective scenarios is that it provokes ideas. Following scenarios
for future of digitalization markets in Africa are built on this principle in mind. In the
following it is presented three most probable or possible scenarios that are based on
trends and emerging issues and which present both opportunities and threats for the
main players in the market (also companies coming from outside Africa). Timeframe of
possible scenarios is approximately 5 years. In the scenarios it is described what has
happened during the next 5 year time in corresponding scenarios, what has been the
outcome and what are the reasons behind the change.
Scenario 1: Africa as digital powerhouse
- Africa is on driver’s seat to decide its own destiny – also in terms of digital
business.
- Africa has a clear digital business leader and its voice.
- Current digital business models cover already almost all areas of businesses
and life of the people.
- Africa is finally connected to the world and global economy in equal terms.
- Digital innovation is a two-way lane. World class innovations have started to
flow from Africa to the world that creates wealth to African people.
- Rapid expansion of smart phones and apps that African’s have always been
used to use have made Africa mobile powerhouse. New mobile related
business models are born in Africa.
- Educational institutions are focusing on nurturing African born talent and top
African universities are attracting talent to study all over the world. Links of
the educational institutions are strong.
- High tech companies have started to establish development centres in the
main growth areas in the Africa. This has further accelerated the growth of
talent pool in High tech industry in Africa.
- Also mobile and internet infrastructure has seen big improvements during the
last five years and the quality of internet is approaching developed countries
quality.

22. 21
- Venture capitalists and business angels have found Africa big time. Funding
has started to flow to African start-ups and this has given a huge boost to the
start-up ecosystem in Africa.
- Governments have understood that with the help of digital solutions and
services it is possible to tackle social and economic challenges and create
economical value to citizens. First examples of real value exist.
- Africa is considered as testing ground for new digital innovations e.g. Maas,
AI, My data etc.
Scenario 2: African digital business as business as usual
- Digital business models are the continuation of established businesses.
- Many of the digital business models are borrowed from somewhere else and
not born out of African context.
- Completely new digital business models that revolutionize businesses and
societies have not had breakthrough as established power structures have
been able to maintain the grip.
- Often digital businesses are owned and managed from outside of Africa e.g.
from Middle East and Europe
- Infrastructure needed in digital business is still not adequate to connect
people to the digital ecosystems.
- Digital business is integral part of almost all businesses but in conventional
way. Digital tools are in supportive role.
- Digital businesses have not been able to deliver big social and economic
advantages to people of Africa.
- Proper funding channels for digital business are still missing.
- Ambitious government initiatives to digitalize societies have failed and have
only worked in conference speech level.
Scenario 3: Bubble burst in African digital market
- Despite the good intentions infrastructure needed in digital business is still
immature and quality of internet connection and access to mobile services
has not improved. Infrastructure becomes real bottleneck.
- Accelerators and incubators are not able to produce success stories which
further cut down the financial abilities of the start-ups to operate
- African governments have not been able to create sustainable operating
environment for digital business models that challenge the existing power
structures.
- Mismanagement and corruption still exist and makes it difficult for start-up
companies to exist.
- High hopes of digital business to uplift Africa have faded and actually the gap
between Africa and rest of the world is widening.
- Africa is still ruled by the global corporates and donors alike that consider
Africa as a backyard of their activities. Africa is still missing its own voice and
equal co-operation is non-existing.
-
Scenario
Role of digitalization Characteristics of
digital business model
champion
Role of governments
Digital
Powerhouse
 Core of the
development of the
business and
societies- makes a
difference
 African born,
solving African
problems, creating
w ealth to the
people of Africa
 Early innovators
find Africa
 Strong facilitator
and enabler of
change – on
driver’s seat
creating
opportunities for
business

23. 22
Business as
usual
 Important but still
only contributing
role to existing
business models,
not revolutionary
and not
contributing to
change
 Champions are
existing
corporations that
are cashing in w ith
already existing
business models
 Inactive and
passive role, w orks
only in conference
speech level, not
creating the change
Bubble burst
 Minor –
development gap
betw een Africa and
rest of the w orld
has w idened
 No champions as
purely home born
digital businesses
do not have
preconditions to
operate
 Weak and
corrupted, not even
interested to
execute the change

24. 23
5 Conclusions and Recommendations
Mental agility is essential to understanding Africa today and in the future. Africa is not
one place at one time. It is third world and first world. Change in Africa is fast and deep
but above all uneven.
Africa is on the rise and digital business and African born digital business models have
role to play. There are already good examples available that Africa as a whole is ready
for digital business and capable of producing purely digital business models that
contribute to the development of societies and economies in Africa. Also global and
international digital business are proven to be successful in Africa, even much more
successful than in some parts of developed world because of existing legal frameworks
(e.g. Uber).
Road to the success is not easy though in digital business. Poverty, infrastructure
problems and inequality are still clear bottlenecks for digital business to fly high - big
time. Opportunities are there and potential for growth is huge. There it is needed also
co-operation between African and developing countries in order to materialize the
possibilities of digital business for all parties and to get Africa linked to the world and
opposite around. Important question arises: What are the preconditions for companies
coming abroad to create sustainable digital business in Africa?
One distinctive feature of the African successful digital business models is that all are
based on extensive use of partners and ecosystems. Quite often the core of the digital
business is either platform or well defined concept. Around this companies in charge
of digital business model have created partnerships that are vital to delivering the
service. This teaches us an important lesson: in order to succeed in digital business
you need to trust on partners and ecosystems and be able to work through them.
Another important conclusion that we are able to draw in terms of successful digital
business models is that it needs to be adjusted to African context. What Discovery has
done with Vitality concept is related to the fact that public healthcare is not working as
efficiently as in the developed world and people need to take responsibility on their
own health. Same is true with iProcure which has created total service concept to solve
challenges Kenyan agriculture is facing. The service concept is revolutionary and
extremely advanced business process outsourcing concept that probably would not
have been able to be developed anywhere else in the world.
Based on business models presented in this analysis, preconditions for foreign
companies to create successful and sustainable digital business in Africa include:
 Extensive use of partners (not resellers) and being part of ecosystems that
are based on clear business logic
 Working with people who understand both cultures: Western and African.
 Being able to find an African challenge and address that challenge with
locals.
 Taking local partners as equals and appreciating their skills even if they
differ from your own.
 Variety in customer base, not relying on a single source of income stream.
 Solution must be a solution, not part of a solution.
 Nice-to-haves have extremely limited opportunities.
 “Get more money” is way more useful argument than “save more money”.
Digital business growth in Africa is almost with 100% certainty the fact. Middle class is
growing and all the time more and more people will get access to digital networks. This
will create in principal terms business opportunities. Question that will remain is to
whom this growth will materialise and create business benefits? Scenarios for the

25. 24
future of digital business will teach us all yet another important lesson: as continent is
developing rapidly also the risks to operate in the market are big and needs to be
acknowledged. There is always a possibility that Africa is not able to get rid of long
tradition of mismanagement and what in developed world is called corruption. Of
course the optimistic development path is also possible that would lead Africa to co-
operate in equal terms with rest of the world. This would lead certain African born digital
business models to become global success stories.
Africa is a vast continent with 54 different countries with culturally diverse businesses.
It is vitally important to “choose your battle” in Africa and know the market area you are
addressing. It is not possible to address the whole continent at the same time. After
you have chosen the market, one thing remains the same everywhere in Africa:
business culture is built on relationships and companies also in digital business nee d
to spend time (and money) to create relationships opening doors to success. More and
more often that success has digital context.
Below is a list of recommendations for companies that are considering Africa as a
market place for digital business:
 Invest in value propositions - customer value proposition needs to be even
more well defined in Africa than elsewhere
 Understand the African context - digital business model requires good local
understanding of the challenges it is solving
 Focus on local partners - digital business in Africa takes place in ecosystems
and with partners
 Localise your services - use of locals is needed
 Be patient and prepare for delays
 Consider Africa as a place to test your business - in certain digital markets
Africa could be great testing ground for new ideas and innovations
Finally, in the below it is presented some success factors and remarks for Finnish
SME’s planning to operate in the digital business in Africa
Success factors in the field of digital solutions include:
 Value, necessity, individual benefit matter
 Simplicity even when things are complex (simplexity)
 Clearly stated business outcomes is what will sell
 Recognition of local needs, values and hierarchies both at organisational and
individual level
 Solutions for a sector specific challenge, with a fintech link and a link to real
world (with physical products also a link to logistics needed)
 Solutions that help avoiding, or at least decrease number of, a) middle-men
b) dealing with government agencies face-to-face or by phone
Take advantage of:
 Privacy policies not as strict as in Western countries, experimenting and
piloting opportunities.
 Africans are used to high degree of insecurities, “it doesn’t need to be
perfect”.
 Learn from Africans: they are used to live with high degree of uncertainty
about the future. That is quite possible close to what future looks like.