The View | China can beat the US in the African tech battleground if its investors form partnerships with local firms
- China can both ease concerns about its intentions in Africa and better meet the continent’s unique needs by putting its money behind those with local know-how
In the US-China trade war, Africa is turning into a technological battleground. In particular, China’s “Digital Silk Road” ambition to link emerging markets with hi-tech telecommunications hardware infrastructure has sparked fears in Africa. In Zimbabwe, a Chinese company's development of facial recognition software is compared to Big Brother, while in Mauritius politicians express unease over Huawei’s installation of 4,000 cameras.
Building on this, Chinese investors – including corporate venture arms of tech companies like Baidu, Alibaba and Tencent, as well as institutional investors – should invest in Africa’s tech start-ups. But they need to partner with local investment firms who have mastered the idiosyncrasies of African markets and can identify the next African tech unicorns.
Chinese investors have a comparative advantage over other foreign venture capital investors: they can use their experience in China to help African companies gain market share. The African market is remarkably similar to China’s before its explosive economic boom: China and Sub-Saharan Africa have large populations exceeding 1 billion people, rapid urbanisation rates and a tendency to leapfrog technologies. As Africa has leapfrogged the landline to the mobile phone, China went from cash to digital payments, bypassing cards altogether.
Given the size of China’s market and the need to bridge the urban-rural divide, Chinese companies have developed business models with the potential to cross over into African markets.