November 29th 2021
The Next Wave provides a futuristic analysis of BizTech and innovation in Africa. Subscribe here to get it directly in your inbox on Sundays at 3 PM (WAT).
In 2013, a Chinese app, WeChat, entered South Africa to get a slice of Africa’s teeming internet market and position itself to become the continent’s main online messaging service. But it was late to the party; WhatsApp had already started to dominate in the space.
WeChat’s long-game play in Africa was an effort at making its online messaging service its core asset and its app an integral part of customers’ life—which would make it easier for WeChat to lock people in by adding other services, such as money transfers, electricity bill payments, airtime purchase, and ride-hailing services, to its platform.
In 2015, WhatsApp had 10 million users in South Africa and WeChat had 5 million. Today, WhatsApp has 37 million users and WeChat has exited the continent. It shut down the wallet service it launched in South Africa in 2015—at the height of its success—two years ago.
In China, WeChat’s presence is a different story. The instant messaging app has over 1.2 billion users in the country. How did it achieve this feat? By becoming the world’s first “super app”—an idea other Big Tech companies are trying to replicate now.
Super apps start with a single service (also called a core asset), then they add other services or let third-party companies add mini apps at a low marginal cost, in order to make themselves a part of users’ lifestyle. Super apps rely on a huge user base to generate data and insights it needs to seamlessly integrate other services. WeChat’s super app ambition took off once it hit 200 million users on its social app.
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Super apps in emerging markets
In the past decade, super apps have become increasingly popular in Africa, with platforms seeking to capture new internet users—people who haven’t used PCs prior or are used to downloading multiple apps for various needs—into their super app ecosystem. This is the catch-them-young strategy super apps are known for.
Super apps are popular among the poorest in the continent because they are a perfect fit for the continent’s digital economy, where low-spending users buy low-end phones and data at relatively high rates. Thus operators of many apps now push for the super app model in pursuit of growth and business sustainability.
But super apps on the continent—like Gozem, M-Pesa, Opay, Gokada and Ayoba—struggle with scale. Even though they are big in the region or country in which they operate, only a few of them get to scale past their region. The reason is that they find harmonising national policies of the 54 countries on the continent difficult—facing legal, operational, and financial constraints along the way.
This might not look like an issue from afar, but the thing is, a vast data pool that provides insights into customers’ preferences is crucial to the success of super apps. And getting this much-needed information in a single country or few countries can be difficult. For instance, despite an ever-increasing population, there are few countries with over 100 million population on the continent.
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Big Tech’s super app ambitions
Social media apps, including Facebook, Whatsapp, Snapchat, and TikTok, are increasingly looking like more than social apps and entering the domain of super apps. Beyond being a communication tool, they are helping people shop, pay for goods, find places, access the news, and entertain them as well.
In South America, WhatsApp added a directory that allows users to find local businesses. In India, WhatsApp is entering a market already dominated by payment companies like PhonePe and Paytm, which have some 350 million and 333 million registered users respectively. Its peer-to-peer payment feature, built in partnership with banks, will allow WhatsApp users to send money to one another right there on the app. Although WhatsApp is making the feature available to only 20 million users—which is expected to grow as it resolves regulatory constraints—its over 459 million active users make it a solid competitor in India’s payment industry, which is estimated to grow to $1 trillion by 2023. WhatsApp is also looking to provide loans to users too.
Large social media companies are also jumping on the super app train. TikTok launched an in-app shopping experience in the US, UK, and Canada, and allowed third-party app developers to build out experiences that enable apps to integrate TikTok content into their own experience. Snapchat took things a step further when it introduced “Minis”, a collection of mini-apps created by companies other than itself, that allow its users to play games together, learn financial tips, and book movie tickets.
Big Tech are among the most used apps on the continent. Data from App Annie, a US apps analytics firm, shows that in 5 of the African countries surveyed, WhatsApp and Facebook are the most downloaded apps.
Africa has a population of 1.3 billion people, and 594 million of them have access to the internet—representing a 43.2% internet penetration rate. Even though it is evident Africa has some catching up to do, its internet adoption rate between 2000-2021 is a massive 13,058% increase—despite a 3,500% regional average.
The real reason why Big Tech seem to have an advantage over the super apps on the continent is that they can move across regions of the continent seamlessly; harmonising for scale is not a hassle as they have that vast reach already on the continent and extensive data on users.
Bolt raised $709 million to boost its “super app” ambitions, which could see it expanding into more countries. Bolt’s 75 million users is impressive, by the way. Russian Yandex’s Yango is set to launch in multiple countries across different regions and promises to be a cross-regional super app.
While Africa might not be economically attractive to Big Tech—in the fourth quarter of 2020, Facebook earned almost 20x more revenue from users in the US and Canada alone than from users in the whole of Africa—its population is its greatest asset.
By 2050, a quarter of humans on the planet will live in Africa, which will stimulate economic prosperity and growth, especially with a youthful population that is hungry for success, innovation and new technologies.
Super apps are important to financial inclusion and digital adoption as it makes it easier for people with low to medium digital literacy to navigate the complex digital ecosystem. It also holds many promises for the growth of millions of small and medium businesses on the continent.
From the Cabal
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Sultan Quadri, Staff Writer, TechCabal.