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Still small, but massive, fast-moving and digital
For decades, the "African growth" narrative has been stuck in a time loop. From development banks to global financial journals, the message has been consistent: for Africa to prosper, it must industrialize through factories, infrastructure, commercial agriculture and a formal manufacturing base capable of absorbing the millions of young people entering the workforce each year.But one possible view from the ground, and I should note that my husband and I have lived in Africa and invested in startups across the continent for more than 14 years, suggests something different. Our sense is that the factories are not arriving fast enough, and the formal jobs are not appearing at the scale many hoped. The reality we see as we travel across Africa often looks quite different.
This reality raises a broader question: should we stop trying to fit Africa into a 20th-century development model? At a moment when technology is reshaping nearly everything we do, could Africa instead be at a point where it develops a different model of growth altogether?
The Myth of the Industrial Savior
Publications such as The Economist (Africa has too many businesses, too little business) point to Africa’s "disappointing" manufacturing performance. The continent’s share of global manufacturing value-added is less than 2%. The argument is straightforward: without a large manufacturing base to drive growth, Africa risks remaining stuck in low-productivity informal work.
But this is the 20th-century model. It overlooks recent developments, such as the massive, mobile tech-surge happening across the continent and, more recently, AI.
Some interesting news that points to a new development model could be first, that sub-Saharan Africa has more mobile money accounts than any other region of the world, combined. Another development is smartphone adoption — Africa is one of the fastest growth markets in the world. Young Africans are building and running businesses on their phones, skipping right over laptops.
Source: Our World in Data
From Micro-Shop to Tech-Enabled Business
In the past, an entrepreneur running a small shop in a local market might spend 30% to 40% of their time dealing with friction. Closing the shop to travel to wholesalers. Waiting in long lines at the bank to wire cash to a loved one or a supplier. Operating without records that could demonstrate creditworthiness.
Technology is removing much of that friction.
- Inventory at the fingertips: Apps now aggregate wholesaler inventories, allowing entrepreneurs to browse and order products directly from their place of business.
- Frictionless payments: Transactions move through digital wallets rather than cash boxes, creating a record that was previously invisible to the financial system.
- Embedded finance: That digital transaction history, the everyday "data exhaust" of commerce, is increasingly being used to unlock credit.
What once looked like informal trading increasingly resembles mobile-first, data-rich small businesses.
The Surge: Why "Small" May Be Huge
All this leads me to wonder if Africa will not develop the same way as other emerging markets. By moving directly from limited infrastructure to smartphones and high-speed connectivity, many entrepreneurs are adopting tools and market access faster than previous generations of business owners ever could.
At Renew Capital, this is one place we see momentum building within Africa’s private sector. Rather than waiting for a perfectly formalized market to emerge, we invest in tools that make the existing market more efficient. Portfolio companies such as Hypeo AI in Morocco and NjiaPay in South Africa are examples of this approach, building technology that helps founders scale businesses without the constraints of legacy infrastructure.
Africa’s jobs challenge is real. The continent needs to absorb 10-12 million new workers each year to keep pace with population growth.
But the solution may not look like a traditional industrial park. It may instead emerge from a decentralized, tech-enabled network of millions of entrepreneurs gaining access to better information, better tools and, increasingly, smarter capital.
One possible future for Africa’s private sector may not be defined by large factories, but by millions of digitally connected businesses growing from the ground up.
If that future is unfolding already, the question becomes: are investors, policymakers and institutions prepared to recognize it?
We’d love to hear your thoughts. Please share what you’re seeing and what models you think will work in what we believe will be the most exciting market to emerge in the next 50 years.
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