istory has proven to be a surprisingly reliable predictor of wealth distribution trends. Over time, money has always been concentrated among industry’s facilitators. As the steam engine propelled the industrial revolution, the globe witnessed the rise of industrialists and oil barons, whose legacies altered the energy industry as we know it today. The internet, like the steam engine before it, has aided the fourth industrial revolution, facilitating the production and redistribution of wealth across countries and demographics.
Africa, albeit later, has essentially followed a similar trajectory. As the continent broke from colonial authority, the extractive industry largely led the way. According to a 2021 projection by Annor, Africa’s manufacturing industry has made significant progress over the last few decades and is on track to reach a value of $666.4 billion by 2030. As smartphones and cheaper internet connection become more common, the emerging technology and telecommunications sectors are also witnessing exponential growth.
It is critical to recognize the global technology and socio-economic elements that continue to make this evolution feasible as we try to grasp the shifting landscape and tides that are driving the newest wave of wealth creators. We might be better positioned to reap the benefits of the growing trend if we all share an understanding of it.
The change in global wealth landscape
The Fourth Industrial Revolution (4IR), characterized by the increased use of new technologies such as robots, 3D printing, cloud computing, artificial intelligence, advanced wireless technologies, the Internet of Things, etc., has unquestionably ushered in a new era of economic disruption. The internet has revolutionized how we interact with the world and has become indispensable to business and everyday life. The emerging trend of decentralisation has the potential to be the internet’s next major upheaval. It has the potential to transform how we communicate and effectively democratize the power and influence that the world’s largest digital companies wield due to their worldwide reach. Alexis De Tocqueville, a French political scientist, coined the term “decentralization” to describe the political power structure in the United States of America’s Federation of States. Decentralisation in technology refers to a transition in production and consumption of goods and services from centralized to distributed systems. This refers to the move away from a central point of access or gateway and toward peer-to-peer communication.
From the dissemination of the moveable printing press to the growth of the internet, from a specific government tool to the worldwide platform we all rely on, technology has decentralized throughout time. The internet was born out of a desire to build a decentralized network for communication that was not reliant on a single source of data or power, and, as a result, was immune to attacks. Each time, decentralisation has ushered in new wealth leaders and triggered a crucial shift in economic activities. The decentralization of the internet is being driven by distributed ledger technology, which is expanding the speed, reach, flexibility, and automation capabilities of our existing internet beyond communication and into the most important areas of human concern.
This technology has broad implications in trade, economics, identity management, entertainment, the energy industry, and, as it develops, into the very fabric of our lives. Africa is well positioned to make use of this technology to leapfrog existing infrastructure and develop “trustless” digital solutions that will power whole new and inventive business models that are as secure as any in the world. Because availability to smartphones and other devices improves consumer information, networking, job-creating resources, and financial inclusion, the continent promises to be a major consumption market over the next three decades. This transparency eliminates traditional hurdles to international investment such as obfuscation and ambiguity. This tidal wave has the ability to usher in the next generation of wealth creators while also democratizing financial access.
Increased access to early-stage venture capital and angel investor financing is another major trend that will emerge in the coming years. The impact of the COVID-19 outbreak has made investors wary of taking risks. However, when the pandemic’s impacts fade, low-end start-up investment is predicted to rise to two billion dollars, matching pre-pandemic levels, and then surpassing that level in the coming years. Better access to early-stage capital for start-ups has the ability to rapidly bootstrap them from their business potential to launching meaningful items on the market. Rolling funds have shown to be an effective way to provide early-stage capital to more start-ups.
Rolling venture funds are having a big moment right now, and they are about to revolutionize the venture capital market by making it more flexible and robust. Rolling venture funds are a novel type of investment instrument that enables fund managers to accept new capital in the form of auto-renewing quarterly subscriptions while netting carried interest over several years. Rolling funds are designed to alleviate the pressure on fund managers to raise all of their fund’s money in a short period of time in order to avoid missing out on important opportunities. They can also assist fund managers in raising extra cash at any time.
Rolling venture funds are structured such that fund managers can raise a portion of a traditional fund and immediately begin investing in start-ups. They are also marketable in the sense that they can take advantage of portfolio gains to accept fresh money at any time rather than waiting until the end of a cycle. Funds would always be accessible as the rolling endeavor grew over time, to the point where there would be no need to go on another round of fundraising.
Investors will transfer their focus to other emerging economies as Asia’s markets mature and development slows. As a result, Africa’s economy are among the world’s most rapidly rising. Egypt has the highest real return on investment (the difference between the key monetary policy rate and the inflation rate). Africa’s middle class is expanding faster than anywhere else in the planet. According to a 2010 African Development Bank estimate, 34% of Africa’s population spent $2.20 per day, up from 27% in 1990. As the middle class grows in sophistication and purchasing power, consumption patterns and preferences will shift to include more non-essential items. Increases in economic success (e.g., increased income) boost the consumption of non-basic products and/or services, according to historical evidence. Many individuals are predicted to profit from greater income levels over the next decade, which will drive businesses including education, healthcare, cosmetic products, services, and tourism, as well as create new markets for products previously assumed to be unique to a limited population segment.
Africa’s rise to growth will begin as firms and individuals cope with the stormy winds of doing business in a post-pandemic environment. In the altering landscape, opportunities abound; organizations and individuals who connect, embrace, and adapt to the shifting winds will emerge as the next emergent wealth leaders.
Business leaders’ demands for speed and flexibility have risen considerably, whether they are considering present circumstances or future goals. As wealth develops, especially in emerging nations, a paradigm shift in business structures is urgently required. Pandemic-related changes in strategy, management, operations, and budgetary priorities must be accepted by executives. Digital technology, change, and cloud usage will all see increased funding.