Africa Needs Bread

Hey, it’s Sheriff again 👋 

I’ve noticed a pattern in Africa, particularly with regard to technology.

Offline economic realities often matter online.

A rich country in real life is more likely to do rich things online.

Don’t believe me? Well, read today’s edition.

There’s a startup in Egypt that raised $10 million delivering bread.

It’s called Breadfast, and it’s valued at $400 million today.

In Lagos, Nigeria, any startup pitching that same idea would be seen as a joke. 

Both Egypt and Nigeria are continental heavyweights. 

But here’s the difference: the average Nigerian simply has less to spend.

Nigeria’s economy, per person, is worth $807 a year, after a currency crash cut its value in half. 

In Egypt, it’s $3,339 per person, even with its own problems.

The average Egyptian has about 4x more money to spend than the average Nigerian.

So while a bread delivery startup makes economic sense in Cairo, it’s a luxury in Lagos.

This gap between users and spending power explains why so many African startups fail.

The Internet’s hidden GDP problem

It’s easy to think that tech scales with eyeballs. Get a lot of users, and you win.

But that’s only true in markets where capital is cheap, and people have enough to pay for an app that’s just nice-to-have.

In many parts of Africa, that’s not the case at all. Here, the internet doesn’t scale with eyeballs. It scales with income. 

But incomes are often so low, even necessities like food and healthcare struggle for pocket share.

Take Nigeria. Households spend 59% of their income on food, the highest in the world.

In Kenya, it’s 56%. 

Across the world, Nigeria and Kenya spend the biggest slice of their income on food

By the time families pay for food, transport, and school fees, there’s little left for mobile data, streaming subscriptions, or fintech apps.

So when people come online, their wallets don’t expand with their screen time. They count every megabyte, every cedi, every naira.

Yes, Africa’s internet economy has big projections. 

Google and IFC estimate the digital economy could add $180 billion to GDP by 2025 and $712 billion by 2050. 

But those numbers assume the rise of a middle class that can actually spend online. 

Without that rise happening, the internet’s GDP will crawl, not sprint.

Some sectors are on pause

Across Africa, whole industries are stuck in neutral. 

Not because they lack demand, but because too few people have the income to unlock them.

Like Insurance. 

Only 0.5% of Nigerians have insurance. 

In South Africa, a wealthier country, it’s 11%. 

Millions of Nigerians go uninsured not because they don’t want it, but because their money has more pressing needs to meet.

Next up is housing finance.

Nigeria’s mortgage market is microscopic, making up 0.07% of GDP. In Ghana, it’s 2% of GDP. But in South Africa, it’s 30%.

It’s no surprise then that Nigerians build and buy homes in cash, because long-term loans are just inaccessible.

Then there’s credit.

Only one in five Nigerian adults borrows formally. The rest scrape by without credit access or borrow from friends and family—or worse, loan sharks.

And lastly, education.

Nigeria has the highest number of out-of-school kids in the world at 20 million. Uganda has 2 million. The drivers are both the same: high cost.

Many families have to choose who goes to school and who works to earn for the family.

These aren’t all comfort industries; they’re essential ones. And sometimes, even tools for building wealth.

Credit fuels business growth, and education fuels personal growth. 

But without incomes to borrow right and pay back, or access the best education, only one thing gets to scale: poverty.

Yet, Africa’s internet usage is growing massively. But it’s not translating into sustainable business models for companies.

Jumia, one of Africa’s most-funded tech companies ever, still struggles to make selling to customers online a profitable business.

So, for startups looking to cash in on Africa’s internet growth, the question becomes: to extract or to unlock?

Most traditional playbooks extract value: subscriptions, fees, ads. 

You can’t extract from poverty.

But there’s another strategy: unlocking income first.

Startups that do this don’t just provide services. They create earners. And in Africa, they’re killing it.

Meet the middle-class makers

Across the continent, some startups have cracked the code: grow your customers’ income, and you grow your own market.

• Paystack (Nigeria): More than a payments gateway, it’s a get-paid engine for 200,000+ small businesses. Stripe acquired it because it turned every new seller into an online earner.
  

• Moniepoint (Nigeria): Equipped shopkeepers with POS devices, turning them into mini bankers. Today it processes $20 billion every month, while thousands of agents make money serving their communities.
  

• Andela (Pan-African): Trained and placed 6,000 developers with global tech firms. Those salaries didn’t just change lives, they seeded new startups and angel investors.
  

• Moove (Nigeria/Global): Financed cars for 45,000 drivers, tying repayments to their earnings. Each car became a revenue factory, not a liability.
  

• Yoco (South Africa): Put card machines in the hands of 150,000+ small merchants, unlocking $1 billion+ in annual sales. By digitizing payments, it turned tiny businesses into growth machines.
  

The common thread is not “How will people pay me?”, but “How will people earn (or save) more money by using me?”

And by doing that, they’re creating a new class of online consumers.

Earners over yearners

When people cross the line from survival to stability, their internet behaviour transforms.

It’s Maslow’s Hierarchy of Needs all over again. At the base of the pyramid, customers can’t afford more than basic necessities.

But as they earn more, they spend more, and consume more services. For startups unlocking earners, this creates a nice loop for the ecosystem:

• New earners become new spenders. A farmer who earns more with ThriveAgric can buy health insurance.
  

• Better spenders make better users. Companies get to earn more from their customers, helping them grow faster.
  

• And it all leads to GDP growth. Multiply this across millions, and you get a flywheel. More income fuels more spending, which powers more startups, which creates more income.
  

Patrick Collison, co-founder of Stripe, once talked about products that grow the size of a market.

One of the best ways to do that is by unlocking income for users. And in Africa, that’s a proven growth hack.

To boil it all down to one sentence: Africa needs more bread.

The ROI: Return on Incomes

Nearly every African startup success so far has been a jobs company in disguise. Paystack, Moniepoint, Andela, and Moove.

That’s the real ROI here: Return on Incomes.

So don’t just ask: “How will they pay?” Ask: “How will they earn?”

Because the future of Africa’s internet economy won’t be written by apps that extract from the poor. 

It’ll be written by startups that build the middle class one customer at a time. 

The pattern seems clear: unlock income, and the users and revenues will follow.

And one day, bread-delivery apps will make sense across Africa, not just in Egypt.

Do you know any other African startups that unlock income for users instead of extracting it?

Tell us here.

That’s it for this week. See you on Sunday for a breakdown on This Week in African Tech.

Cheers,

The Tech Safari Team

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