JIKKU JOSEPH: The future of API tech is African

One wouldn’t ordinarily associate cities like Accra, Nairobi, Lagos and Cape Town with digital innovation, but entrepreneurs in those cities, and others, are putting Africa on the map in that regard. For a continent that has perpetually lagged in terms of development, stability and growth, Africa’s star is finally on the rise.

Various factors are driving the continent’s surge in the tech sector. The first is an exponential rate of urbanisation. As population growth stagnates or even declines in developed  economies, Africa’s is rising steadily. According to the Organisation for Economic Co-operation and Development, these new urban centres will become home to an additional 950-million people over the next three decades. The result will be significant tech opportunities in all industries, including retail, transport, financial services and telecommunications.  

The second factor is an increasingly connected society. The internet in Africa has leapfrogged desktop and gone straight to mobile, which requires far less physical infrastructure. Google CEO Sundar Pichai reiterated this point in October when he pledged a $1bn African investment plan that will be rolled out over the next five years.

“Increasingly we are seeing innovation begin in Africa, and then spread throughout the world,” he said. “For example, people in Africa were among the first to access the internet through a phone rather than a computer. And mobile money was ubiquitous in Kenya before it was adopted by the world.”

The API revolution

The Google investment aims to improve connectivity for millions of people and drive positive change by providing seed capital for tech-driven startups. But many of those startups don’t even need Google — they’ve had no problem raising capital on their own, often bypassing traditional structures such as share offerings and instead going directly to private investors. 

One such business is Lami Technologies, a Kenyan insurtech that recently raised $1.8m through US-based Accion Venture Lab to aid its expansion. Besides its unique service offering in the region, Lami is one of many API-based fintech companies popping up in Africa, demonstrating an exciting and essential subgenre within the broader tech sector. 

API, or “application programming interface” provides a software “bridge” for two applications to interact. That enables companies to build products via third-party services, without  having to redesign their own systems for those services. In the words of Lami CEO Jihan Abass, it allows entrepreneurs to solve problems for existing financial institutions by “building on what exists and creating more value”.

In Lami’s case, their API allows financial institutions to offer digital insurance products. Similarly — and also in Kenya (via the UK) — pawaPay uses API tech in the mobile money space to create “payment rails” across various African countries. Then there’s Paystack and Flutterwave, on the other side of the continent in Nigeria, both of which are also using API to streamline payments across multiple countries. (Both have also attracted interest from international investors.)

Closer to home, I have written previously about API technology enabling South Africans to safely share transactional data with trusted third-party companies, allowing those companies to design better and more inclusive financial products.

Indeed, there seems to be no limit to the problem-solving power of API technology. The only resource required is creativity, which is in no short supply in Africa. As the continent continues to change at such a rapid rate, we’ll see more and more startups finding tech solutions for established institutions and exporting those solutions to the world. 

• Joseph is MD of personal finance app and API service 22seven.