How big is the pie in Africa?
In 2020, a report projected that the digital economy would significantly boost Africa’s GDP by $180 billion or 5.2%. Investments of around $15 billion have been made to support this growth. Numerous startups have emerged to tap into this internet economy opportunity, with over $20 billion in venture capital financing. These startups are exploring different approaches to scale, mainly through tech geocentrism and tech-heliocentrism.
The geocentric approach involves building products that complement a core offering to expand market share. On the other hand, the heliocentric approach focuses on creating multiple products to address a major problem area collectively. Both approaches have their merits and are exemplified by various successful businesses.
As African companies strive to navigate the competitive digital landscape, they are adopting either geocentric or heliocentric strategies to drive expansion and achieve scale. Recent examples show startups expanding their product lines or hinting at entering new market segments to capture a larger market share.
Choosing between geocentric and heliocentric models impacts how businesses operate and grow within their industry verticals. Geocentric companies tend to integrate related product lines, while heliocentric businesses develop independent products to target various segments within an industry.
Perspective changes with time and place
While geocentric and heliocentric approaches may work well in specific contexts, expanding globally presents challenges due to differing market dynamics. Successful local strategies may not translate seamlessly into new territories, requiring businesses to adapt their approaches accordingly.
Just as ancient astronomers’ perceptions of the universe evolved over time, tech businesses must also be prepared to adjust their strategies as they expand beyond their initial markets. A rigid adherence to local success models can hinder growth in new environments.
Commonsense approaches to scaling, whether geocentric or heliocentric, may encounter limitations when transitioning to broader markets. Building a sustainable business that can thrive globally requires a nuanced understanding of diverse market landscapes and consumer behaviors.
Ultimately, the success of technology businesses in Africa’s digital economy hinges on their ability to adapt and innovate, moving beyond traditional perspectives to embrace new opportunities and challenges.
Commonsense does not scale
While local success stories can inform initial strategies, scaling businesses globally requires a more nuanced and adaptable approach. The limitations of geocentric and heliocentric models become apparent when expanding into new markets with distinct challenges and opportunities.
Embracing a broader perspective and being open to redefining scale and success are critical for tech businesses looking to thrive in Africa’s evolving digital landscape. It’s essential to be agile, innovative, and responsive to changing market dynamics to drive sustainable growth and impact.
Abraham Augustine
Abraham is a digital economy researcher and analyst based in Kigali, Rwanda. He leads a digital economy research lab and consulting group, and serves as Comms and Programs Lead at Norrsken East Africa. Read more from him on Money Myths Africa.