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Africa’s “Model T” Business Model

The narrative about the challenges of doing business in Africa needs to be revised. Given the myriad products and services that remain unattainable, opportunities for market-creating innovation abound.

BOSTON – Africa is often regarded as a risky place to do business. There are success stories, like Safaricom, Flutterwave, and Kobo360. But investors tend to view them as anomalies: the fact that they are thriving, despite pervasive poverty, political instability, and widespread corruption, is a matter of luck, not proof that Africa is a “safe” investment destination.

These perceptions explain why, though Africa is home to 17% of the world’s population, its innovators received just 4.4% of global foreign direct investment in 2020. Unless they change, Africa will continue to suffer – and investors will miss lucrative opportunities.

It is true that the African business environment is challenging. But that is true of all low- and middle-income countries, including the United States at the beginning of the twentieth century. When Henry Ford proposed his Model T – an affordable car for the masses – many of his investors balked. The US lacked the necessary infrastructure, including paved roads, gas stations, and repair shops. And the average American couldn’t afford a car, anyway.

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