Africa’s digital opportunity isn’t evenly distributed.

The NEKS countries — Nigeria, Egypt, Kenya, and South Africa — are home to about a third of Africa’s population cumulatively, but attract ~75% of the total funding raised across the continent.

Why is that?

Here’s some data.

NEKS countries account for:

  • ~51% of the continent’s GDP
  • ~51% of the continent’s mobile subscriptions
  • ~50% of the continent’s developers.
  • and more.

While Total Addressable Market (TAM) is a relatively well-known concept — and sometimes population size is used as a loose mental proxy for it — there’s a related concept of ‘digital TAM’ that’s widely underappreciated and often unmentioned.

Writer Mario Gabriele alludes to it in his essay on specialist frontier market VC firm Sturgeon Capital:

[Population] size is important. For a company to succeed, it must have a sufficiently large market… [but] a large population is not sufficient in and of itself. There must be a sizeable digital opportunity to make a country interesting as a venture market.Mario Gabriele, Founder, The Generalist

And Sturgeon Capital’s own Alexander Branton puts it bluntly:

The common thread of success in frontier markets is investing in fundamentally sound businesses at the forefront of GDP digitalization and acquiring an ever-increasing Digital TAM.Alexander Branton, Partner at Sturgeon Capital

Today, Africa’s digital opportunity or digital TAM — as calculated by a mix of smartphone ownership, internet usage, digital payments, GDP (per capita), and other inputs — is concentrated in the four NEKS countries.

That said, there are a number of upcoming venture markets across the continent that are earlier in their digital supercycles and offer interesting risk/return opportunities to ride the long-term digitization wave.

Interested in hearing more about these opportunities and investing in the most promising ones? Fill out this form and I’ll be in touch.

By Emeka Ajene

Based in Lagos, Nigeria, Emeka is the Founder & Publisher of Afridigest and leads Africreate, a strategic advisory firm that helps global senior executives, corporates, and investors take advantage of opportunities in African markets. He also connects global capital to promising Africa Tech investment opportunities via investment firm Africapital. Follow him on Linkedin and Twitter.