TECHNOLOGY has played, and continues to play, a vital role in the development and advancement of African economies at large. Technology is constantly reinforcing regional trends in business, investment, opportunities and modernisation, which accelerates globalisation in developing countries.
We have witnessed stupendous growth of technology entrepreneurs — from start-ups and innovation centres/hubs from South to East, North to West Africa.
Africa has at least 200 separate tech hubs that have sprung up in the past few years. The number of new tech ventures has also risen to 3,500, with $1bn in venture capital available to accelerate these (2016-19). These hubs have consistently made headlines in their effort to bring or rather accelerate technology businesses to the grassroots level. They have brought many new ideas/innovations and have provided a rich source of employment and new business formations. The origin of Africa’s tech movement can be traced back to Kenya, which was home to several major technological innovations between 2007 and 2010. These innovations birthed Kenya as the Silicon Valley of innovation in Africa. Now, Kenya is known to all as the Silicon Savannah.
Nairobi, the capital city of Kenya, has transformed into a technology epicentre. An agile mobile banking system has created new market opportunities for digital entrepreneurs. 3G internet connections became more and more affordable and still are, mobile payment services are booming and the promising start-up scene and ecosystem are constantly reinventing their offerings. Silicon Savannah has positioned itself as an epicentre of start-up weekends, innovation meet-ups, accelerators and incubator events, and investors get together. True to that form, Nairobi has one of East Africa’s highest concentrations of US dollar millionaires accounting for 8,400 as of 2016.
We should give credit to the following three intertwined factors that have positioned and transformed Nairobi as the Silicon Savannah, mimicking Silicon Valley in California, in the US:
- The Kenyan government has been at the forefront of technology development — investors are being lured to invest in Nairobi, and are heeding the call positively. The city has positioned itself as an investor-friendly city by being open to aid agencies, development funds and foreign nongovernmental organisations (NGOs).
- The birth of the M-Pesa revolution by Vodafone in 2003 and subsequent launch by Safaricom in 2007 has inspired many to be tech entrepreneurs and to launch start-ups.
- The launch of iHub in 2010 — as an open space for start-ups — positioned Kenya’s capital, Nairobi, as the future of start-ups, technology and innovation.
Silicon Savannah success is highlighted by the following figures from research conducted by Legato Consultancy in SA:
- 54 start-ups in Nairobi are on AngelList (a US website for start-ups, angel investors and job-seekers looking to work at start-ups);
- iGDP (the internet’s contribution to a country’s gross domestic product) accounts for 2.3%;
- Kenya was ranked 96th in the Global Competitiveness Index (World Economic Forum) in 2013;
- There are 8,400 dollar millionaires, that is the fifth highest in Africa;
- 62% of the population is under 24 years;
- 31% of GDP in Kenya is processed through M-Pesa;
- 99% of total internet subscriptions derive from mobile data contributions,
- There are 2-million smartphone users;
- There are 8-million Facebook users in Kenya;
- $140.3m was invested with public funds into start-ups in 2012;
- There are four accelerators active in Kenya — 88Mph, Savannah Fund, Sinopsis Group and The Growth Hub;
- There are two major incubators — iLab Africa and mLab;
- Three major co-working spaces exist — Business Lounge, Genius Executives and iHub.
- Nairobi’s tech scene could be worth as much as $1bn to Kenya in the next three years (by 2019) according to Bloomberg reports.
- M-Pesa, a mobile money transfer service, was first conceived in London in 2003, by Nick Hughes, the head of social enterprises at Vodafone, one of whose group partners was Kenya’s mobile phone carrier, Safaricom;
- In 2007 Safaricom rolled out on a mass scale in Kenya — where M-Pesa tapped into a huge demand for mobile money services among the unbanked. M-Pesa has a stronger and more trusted brand as well as better distribution channels than any local bank. "The success of M-Pesa strongly suggests that banking for the masses in Africa is likely to be driven more strongly by mobile operators than by legacy banks" according to the Gordon Institute of Business Sciences — Digital Disruption: Changing The Rules of Business for a Hyper-Connected World Report.
- In 2007 Ushahidi was also conceptualised. In 2008 it was developed as geo-mapping software to pinpoint violence during Kenya’s disputed 2007-08 presidential elections. Ushahidi has evolved into a highly advanced open software provider and to date the organisation has made possible the creation of more than 60,000 maps detailing environmental issues, elections and human rights abuses in 159 countries and more than 31 languages.
- Ushahidi also launched BRCK — a robust portable internet connectivity device designed to keep people connected in rural and urban areas where electricity and internet connectivity are problematic. This service has been well received even in the US.
- iHub was formed in 2010 and 152 companies have formed out of the iHub since its launch. iHub has about 15,000 members; young Kenyans work in its labs and interact with global technologists such as Yahoo CEO, Marissa Mayer (a past speaker).
- In 2010 the TEAMs (The East Africa Marine Systems) undersea fibre optic cable was completed. It significantly increased broadband in East Africa. TEAMs was a project by Kenya’s then permanent secretary in the ministry of information and communications, Bitange Ndemo, who saw Kenya’s vision as becoming a regional information and communications technology (ICT) hub.
- M-Farm was launched in 2010. It was founded by a trio of women and provides farmers with access to real time information about market prices and where they can sell produce and buy supplies. M-Farm was recognised by President Barack Obama as an inspiring "hope" for the country during his July 2015 trip to Nairobi for the Global Entrepreneurs Summit.
- Kenya formed its own fully fledged ICT authority in 2013.
There have also been innovative solutions launched into the Kenyan market by tech start-ups, such as M-Kesho (by Safaricom and Equity Bank) a mobile phone savings account. M-Kesho is an extension of the already successful M-Pesa. It offers M-Pesa users the opportunity to open and operate a bank account, save, withdraw, access loans and micro-financing and other services. It responds well to Vision 2030, Kenya’s economic blueprint that aims to propel the country into a middle-level-income nation by 2030, according to Equity Bank Report.
Nairobi has also seen the advent of serious start-ups such as iCow, Ma3Route, Eneza, Mawingu and, most recently, the Konza Technology City, a partnership between America’s National Business League — a planned urban development in Machakos and Makueni counties, a £5bn 2,000ha technology city 60km from Nairobi that will house 200,000 people and become the new African headquarters for Google, Microsoft and Facebook.
Silicon Savannah is but one corner of Africa’s tech movement, development and advancement. Africa is continually producing regional ICT hubs and countries in the sub-Saharan Africa region are jumping on to the tech bandwagon. The notable innovation spaces across sub-Saharan Africa are CCHub in Nigeria, Hivecolab in Uganda, Meltwater in Ghana, Silicon Cape Initiative, JoziHub, Innovation Hub and MLab Southern Africa in SA.
Also the continent has succeeded in inspiring individuals in becoming global spokespeople for Africa tech and serve as mentors to its youngest aspirants.
Investors have also been keeping tabs in the tech development of the continent, to an extent of attracting the US foundation — Omidyar Network; USAID to mLabs; African governments (Nigeria funding of iDEA Hub); Facebook opening its first Africa head and sub-Saharan Africa office in Johannesburg; SAP investment of $300m through 2020; IBM opening its first African research centre in Kenya — a $100m facility creating an African version of its Western supercomputer, dubbed Project Lucy.
The value of venture capital investment fuelling Africa’s start-ups has moved from the millions to the billions. In 2014 more than $400m was in venture capital funding for Africa start-ups and projected to be at least $1bn in venture capital investment in Africa tech start-ups in the next three years, according to Crunchbase Report.
The Kenyan government recognises that start-ups create jobs, and to that end is making several investments to support the entrepreneurial ecosystem.
During 2013 the government partnered with Nailab incubator to launch a $1.6m technology programme to provide entrepreneurs with access to capital and education.
The IPO48 start-up competition — another initiative that proved useful to M-Farm’s founders, which have received a total of $10,000 in investment prize money and additional funding from other investors.
The Kenyan government has been instrumental in supporting women in business. The president of Kenya is at the forefront of ensuring that women entrepreneurs are recognised and heard.
In closing, what to expect from Africa’s technology future? Four factors are certain in this case:
- Silicon Savannah used as a template by other developing countries on the continent to advance ITC plans and infrastructure and to actively tap technology as an economic drive of GDP growth, advancement, value addition and, most importantly, job creation.
- Africa will continue to utilise technology as a panacea to solve long-standing socioeconomic problems. Technology will continue to disrupt even the most stable environments, thus increasing the likelihood that the continent will become a commercial tech opportunity.
- Utilising Africa’s technology solutions with global application — positioning Sub-Saharan Africa tech apps as solutions to local problems and also positioning the solutions on a global competitive scale.
- Positioning the continent’s tech start-ups for commercial large-scale rewards through first exists, initial public offerings (IPOs) and tech mogul type sensation.
Africa is on the right path; Kenya has proved that with the Silicon Savannah, M-Pesa, the Konza Technology City and the iHub and subsequent emerging start-ups, producing multinational tech start-ups capable of listing on global stock exchanges and generating amazing revenues and returns.
Today Kenya is recognised as the pride of the global technological innovation sphere through the revolutionary M-Pesa, a mobile transfer service, which can pass as the innovation of the decade. It has transformed lives and given most Kenyans, who for years had been shunned by conventional banks, a reason to walk tall. E-commerce, digital finance, fintech, video on demand, app development and the sharing economy will create Africa’s tech first billion dollar home run, and Africans are vying for that to happen.
This article is republished with the permission of the author. It was first published in the Business Day, 25 April 2016.