Technology giant Naspers is looking at opportunities to invest in startups across Africa and leverage its scale to grow small businesses into major players on the continent.
Naspers South Africa CEO Phuthi Mahanyele-Dabengwa told CNBC Africa on the sidelines of the World Economic Forum in Davos that the company has many opportunities on the continent.
“I think there are a number of opportunities in the digital sector, and we are continuously looking at them,” Mahanyele-Dabengwa said.
She listed examples of businesses Naspers had recently invested in on the continent, including startups in Egypt, while there are some attractive small businesses they are looking to acquire.
“As a business, we do a lot of mergers and acquisitions, and so we are continuously looking for opportunities in South Africa and beyond.”
She explained that Naspers is looking to invest in very particular businesses and will follow the principles that have made its past investments successful.
“We tend to invest at an early stage and scale up with the business. When you look at most of our businesses, they are all small businesses or startups that have grown into significant companies.”
Key to this strategy is identifying founders with whom Naspers can work to scale up the business.
The other side of that equation is also important. Naspers must have the right people involved to help founders start and grow their businesses.
The company is looking to do the same in South Africa by investing early and helping startups grow in a difficult operating environment.
Mahanyele-Dabengwa explained that by investing in such businesses and helping them grow, Naspers could greatly impact the continent by employing people and stimulating entrepreneurship.
She gave the example of Takealot, which was once a small business and is still fairly young at only 12 years old. It now provides over 9,000 small, medium, and micro enterprises a platform to sell their products.
Many of these businesses simply would not exist if Naspers had not invested in Takealot and helped it grow.
However, Takealot has a difficult future ahead of it as the company is yet to be profitable and is set to face stiff competition from the arrival of Amazon in its home market.
In response, Mahanyele-Dabengwa said Naspers is boosting investment into Takealot to help it compete with Amazon.
“We are investing a lot more into our businesses,” she told Bloomberg TV. “We are well positioned toward being able to deal with whatever could be coming from Amazon.”
In anticipation of Amazon’s arrival, Takealot has been expanding its services to include one-hour delivery for products ranging from phone chargers to toys.
eCommerce only makes up about 4% of South African retail, presenting the opportunity to grow the market three to five times faster than in peer countries.
According to a study by market research firm World Wide Worx, online retail sales in South Africa grew 30% to R55 billion in 2022.
“It’s good for South Africa that Amazon is attracted to coming into the market,” Mahanyele-Dabengwa said. “At Takealot, I think we’re very well positioned. We know our market very, very well.”