What Amazon’s African fintech accelerator tells us
By focusing on training and providing digital infrastructure and services, Amazon points to where it sees value in the African market.
Amazon Web Services (AWS), the cloud computing division of global e-commerce giant, Amazon, has launched a business accelerator for financial technology companies in Africa. The new program is a sign of Amazon’s growing ambitions on the continent and the direction of that ambition.
Hosted by AWS’ Startup Loft Accelerator, the program will focus on fintech and fintech-adjacent startups operating in Africa. African fintech companies receive the most venture capital funding compared to other technology categories.
In 2022, fintech startups in Africa raised over $2 billion in venture funding out of over $5 billion invested in African startups. AWS is now inviting early stage fintech companies to apply to join the first edition of the AWS FinTech Africa Accelerator. Applications close on 27 April.
2004 marked Amazon’s first foray into Africa. That year, the barely ten-year-old company established a development center in Cape Town, South Africa for its cloud computing unit, AWS. The development center focused on research to create cutting-edge networking technologies and next-generation customer support software. The investment paid off, and the South African development center was responsible for Amazon EC2, the virtual server service that allows developers to host and build scalable applications on the cloud, paying only for what they use.
In 2015, AWS opened an office in Johannesburg, and in 2017, the company deepened its South African presence by bringing the Amazon Global Network to Africa through AWS Direct Connect. By May 2018, Amazon had brought Amazon CloudFront to Cape Town and Johannesburg, increasing AWS’s 138 points of presence globally to 141. The company also began offering Amazon Route 53, AWS Shield and AWS WAF through South Africa. In 2020, Amazon opened its first African data centers in South Africa.
Last November, AWS announced that it was opening an office in Lagos.
By refining its strategy to focus on providing digital hardware and software infrastructure through data centers and AWS, Amazon is pointing to where it sees value in the African market. And that is still not e-commerce in retail. Looking at Amazon’s historical relationship with Africa, it is not difficult to see the (South Africa concentrated) pattern. The American giant has been hesitant to bring its retail operations and ruthlessly efficient delivery service to the continent. But Amazon believes in the continued growth of Africa’s digital infrastructure and services market. There is a good reason for that. In 2018, according to research by market research firm Xalam Analytics, demand for data center services in Africa grew two to three times faster than supply.
Africa is currently served by three AWS data centers, two of which are in South Africa and the third in Nairobi, Kenya.
By targeting new tech companies AWS, and by extension, Amazon is signaling that it wants to build early relationships with Africa’s future tech giants – its future target customers. Reduced revenue and net income are forcing the giant retailer to seek new locations to expand its customer base. “We’re trying to build a set of relationships that outlast all of us,” Amazon CEO Andy Jassy said on the 2022 Q4 earnings call with investors and analysts in February. AWS already counts large African companies and several startups as customers. Including Absa, Old Mutual, DPO, JUMO, Mukuru and Travelstart, among others.
In contrast, the company’s other efforts on the continent have not been as smooth. A proposed $280 million project for a headquarters in Africa has been embroiled in lawsuits and opposition from indigenous groups who say the construction will desecrate sacred lands. Amazon operates a logistics hub serving its business in the Middle East and North Africa from Egypt, in North Africa. In 2017, Amazon acquired Souq.com, Egypt’s largest e-commerce retailer at the time, for $580 million.
The AWS FinTech Africa Accelerator will train CEO and CTOs in strategy, technology team management, product development and help founders prepare to navigate the complexities of fundraising. Amazon will not take equity in the companies, nor will it offer venture debt. Startups selected will join AWS’s Activate program which will provide founders with up to $25K USD in Activate Credits and other services. Founders will also participate in workshops and one-on-one sessions with industry experts to address specific challenges facing their business.
