Investors Grapple With Remedying Africa’s Crippling Non-Consumption Headache

With Africa’s population projected to double by 2050, the continent is poised to birth a billion new lives. Yet, economic constraints mean the majority of this booming demographic risks becoming non-consumers—people unable to access or afford goods and services they need, let alone want.

At the recent Africa Prosperity Summit, hosted by early-stage VC fund Ventures Platform in Lagos, this challenge took centre stage, prompting investors and thought leaders to discuss how to transform Africa’s untapped potential into tangible economic growth.

Kola Aina, Founding Partner of Ventures Platform, set the tone with a concerning warning. “Africa’s massive population boom is happening at the same time global venture capital is on a decline. Since the post-COVID peak of venture capital investments in 2021— influenced by the ZIRP (Zero Interest Rate Policy) era—global venture capital flows have declined by 70%. Africa has experienced a 67% decline, despite requiring 10x more capital to address infrastructure gaps and non-consumption.”

Africa’s current infrastructure and investment levels are ill-equipped to meet the needs of its growing population. Non-consumption—the inability to access goods and services—is the key issue. Without intervention, the one billion Africans expected by 2050 could remain outside the economic fold, posing risks to regional stability and global progress.

In a subsequent Q&A session, Aina, the Convener of the Africa Prosperity Summit, hosted Haresh Aswani, Managing Director – Africa of Tolaram Group, notable for its dominant position in the Nigerian FMCG market. Aswani shared insights into how Tolaram has successfully transformed Africa’s non-consuming population into active consumers, detailing the group’s strategic approach to market dominance, noting the opportunity and challenge are immense.

This sentiment echoed throughout the Summit, which convened over 150 global investors, development finance institutions, family offices, and venture capitalists.

Is VC the Ultimate Catalyst?

Venture capital (VC) holds a unique position in addressing non-consumption. Unlike private equity or bonds, VC is designed to shoulder high risks, making it ideal for emerging markets. Efosa Ojomo, Director of Global Prosperity at the Clayton Christensen Institute, highlighted this during his keynote.

“Venture capital is designed to de-risk an economy—or at least, a sector. In Africa, where raising funds for critical infrastructure is particularly challenging, venture capital must go beyond funding to actively build entrepreneurial ecosystems,” Ojomo emphasised. He painted a picture of VC not just as a financial instrument, but as a force capable of jumpstarting entire markets, creating jobs, and empowering millions.

The Summit’s theme, “Funding the Next Billion: Africa’s VC Investment Landscape in a Post-ZIRP Era,” reflects the shifting global economic landscape. The era of near-zero interest rates, which fueled record VC investments worldwide, has ended. Rising rates have tightened global capital flows, leaving Africa in a precarious position.

“Africa needs 10 times more capital just to match Asia’s levels of VC investment,” Aina remarked. Yet, global interest in African markets is growing, driven by its young, entrepreneurial population and untapped potential. For investors, the challenge is aligning expectations with the unique realities of the continent.

Charlie Robertson, Head of Macro-strategy at FIM Partners, brought a macroeconomic lens to the discussion. Comparing Africa’s trajectory to other regions, he outlined how education, industrialisation, and investment can unlock prosperity. However, he cautioned against underestimating the complexities. “As Africa charts its path to prosperity, the critical levers of education, investment, and industrialisation must be synchronised to deliver sustainable growth,” Robertson said.

Speakers repeatedly stressed the need for tailored solutions that address local contexts. Standardised global strategies often fail in Africa, where infrastructure gaps and regulatory hurdles are significant. Stakeholders pointed out that successful ventures must prioritise affordability and accessibility.

Turning Insights into Action

As the Summit concluded, Aina challenged attendees to translate dialogue into action. “At Ventures Platform, we believe that by investing in the right kinds of entrepreneurship and innovation, we can produce two powerful outcomes—high-quality jobs that will drive up incomes across Africa, and scaling up affordability and accessibility to products/services for millions of people across the continent.”

This dual approach, focusing on job creation and market accessibility, offers a pathway to solving non-consumption. It requires collaboration between local entrepreneurs, global investors, and policymakers.

The Africa Prosperity Summit highlighted both the enormity of the task and the opportunities within reach. For investors, the post-ZIRP reality may demand a recalibration of expectations, but it also opens the door to new strategies. For Africa, the stakes could not be higher. Bridging the gap between non-consumption and active participation in the economy is imperative.

In any case, stakeholders at the Summit reckon that the real question is not whether Africa has potential, but whether we are willing to commit to unlocking it.