Everyone is now all about tech, and that’s a good thing. After all, tech has done a whole lot of good to humanity over the past couple of decades. The advantages are just numerous; from saving us time to ensuring better communication, better learning techniques, financial inclusion and most importantly cost efficiency. It’s really not surprising that a lot of entrepreneurs are rushing to innovate something techie.
Entrepreneurs’ and Investors’ Interest in Tech: How Sustainable?
Even investors are now mostly interested in tech startups. The African Tech Startups Funding Report of 2020 detailed how 397 tech startups on the continent raised a collective $701.5 million last year alone. As you can see, that’s a lot of money, more than any sector was able to attract in a year that was crippled by a global pandemic.
Meanwhile, some people have been wondering just how sustainable this growing interest in tech can be. This has long been a global question. However, for the sake of context, we are bringing it home and asking — will the African tech bubble burst soon?
Before we continue, it’s necessary to quickly clarify that the “tech bubble” herein referred to is not the one about tech stocks’ price movement. That topic has already been exhaustively discussed by The New York Times, Financial Times, and even Investopedia. That said, we shall be looking at “tech bubble’ from a more literal perspective. Basically, will the growing interest in African tech implode anytime soon?
We Spoke to the Experts for Answers
To answer this question, Business Elites Africa spoke to Fehintolu Olaogun and Olorunfemi Jedede, the Co-founders of CredPal, a Lagos-based fintech company that makes it easier for people to buy anything and pay later with credit cards. The company recently raised $1.5 million and has been expanding rapidly, with hopes of future capital raise. Apparently, the two techpreneurs saw an opportunity in tech and made strategic moves to take advantage of it. But do they worry about everything coming to an end someday? CredPal’s CEO, Olaogun, told us no.
“I don’t think so. And I will tell you why,” he said. “The important question is — are we offering value? The answer is yes. Tech is offering significant value. Let’s use the example of cab hailing companies like Uber and Bolt; they came in and gave us a better solution that is offering better value. Trust me, that is not going anywhere anytime soon. In most cases, technology offers superior values to traditional means of doing things. What you should be worried about, therefore, is about the effect of tech on traditional businesses. The effect might be negative as has been demonstrated the case of the taxi industry. But technology itself will always drive the future of any economy. So, in my opinion, the tech bubble will not burst. As a matter of fact, there is no “tech bubble”.
“However, we may consider the likelihood of ‘market correction’ in the future. And this can only happen if in the future everything goes entirely out of hands and prices of these tech products become too expensive. Only then will the market forcefully corrects itself. But in itself, the essential service that technology provides will never change. We will continue to provide value to our customers and our customers will continue to enjoy our value.”
The Year 2020 Was Testament to the Immense Value and Indispensability of Tech
Olorufemi Jedede, who currently serves as CredPal’s Chief Operating Officer, also assured us that the tech bubble will not be bursting anytime soon. He buttressed his business partner’s points by using the events of 2020 as foil.
“In 2020, the COVID pandemic struck and a lot of businesses were crippled. It was evident on the stock market just how bad it was. The global stock market basically crashed. Now, here’s what is interesting – the fact that the businesses/stocks that recovered quickly from the crash were mostly tech stocks. Just few weeks after the crash, they all came rallying back. The question is why? Obviously at that point, there was only one place to put your money and that was tech. The tech companies were the only ones that could still operate even in the midst of the pandemic. I mean, the pandemic didn’t stop you from watching Netflix neither did it stop you from using Google. This was unlike the typical brick and mortar companies (even the really huge ones like say Toyota) which were really affected.
So ultimately, technology has some in-built mechanism that makes it naturally very valuable and very resilient. And it’s important to emphasise that the value that tech businesses offer are very apparent which is why a lot of money is flowing into tech. I don’t think it’s a bubble. But like Fehintolu rightly said, eventually things might get a little over-priced and the market will be forced to correct itself,” Jegede said.
EDITOR’S NOTE: Look out for our full interview with the Co-founders of CredPal coming soon in both text and video formats.