Africa’s growing technology ecosystem is creating new opportunities for businesses, entrepreneurs and consumers. However, the continent’s infrastructure challenges continue to limit how much digital innovation can contribute to economic growth, particularly within the informal sector.
Samaila Zubairu, President and Chief Executive Officer of the Africa Finance Corporation (AFC), has warned that technology alone cannot transform Africa’s informal economy without significant investment in essential infrastructure, particularly electricity and railway networks.
His position highlights a fundamental challenge facing African economies: digital solutions can improve how businesses operate, but they cannot completely overcome the physical limitations that prevent enterprises from expanding.
Across the continent, millions of small businesses operate informally, including market traders, transport operators, artisans, agricultural producers and independent service providers. Many depend on cash transactions, operate without formal financial records and struggle to access affordable financing.
Although fintech platforms, mobile payments and digital business tools are helping some of these enterprises improve their operations, inadequate infrastructure continues to restrict their growth.
Reliable electricity remains particularly important. Businesses require consistent power to operate equipment, preserve goods, process agricultural products and provide digital services. Where electricity is unreliable or expensive, entrepreneurs face higher operating costs, reduced productivity and limited opportunities to scale.
Rail infrastructure is equally critical to economic transformation. Efficient railway systems can connect rural producers to urban markets, reduce transportation expenses and improve the movement of agricultural products and manufactured goods. Without dependable transport networks, small businesses struggle to reach larger markets, while supply chains remain fragmented and expensive.
The AFC’s State of Africa’s Infrastructure Report 2025 reinforces this argument. It identifies energy, transport, logistics and digital infrastructure as essential foundations for industrialisation and economic integration. The report also highlights the importance of connecting railway networks with regional trade corridors to support businesses and cross-border commerce.
The financing challenge is another important part of the discussion. AFC estimates that Africa holds more than $4 trillion in domestic financial resources, including pension funds, insurance assets, commercial bank deposits and sovereign wealth. However, much of this capital remains invested in short-term financial instruments rather than long-term infrastructure projects.
Zubairu’s argument therefore extends beyond building more roads, railways and power stations. It also raises questions about how African governments and financial institutions can mobilise local capital, attract private investment and create conditions that make infrastructure projects commercially viable.
For technology companies and startups, this presents an important lesson. Digital innovation must be supported by physical infrastructure if it is to reach underserved communities and generate sustainable economic opportunities. Mobile payment platforms may simplify transactions, but businesses also need electricity, accessible markets, affordable transportation and reliable logistics to grow.
Africa’s informal economy cannot be transformed through technology alone. The continent must combine digital innovation with investment in electricity, railways and other essential infrastructure. Without these foundations, many businesses will continue operating below their potential, regardless of how advanced digital solutions become.
The next phase of Africa’s economic transformation will depend on connecting technological progress with the infrastructure required to turn innovation into productivity, employment and inclusive growth.
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