How Technology Is Driving Entrepreneurship In Africa
For decades, as the rest of the world utilised technology as a tool for substantial advancements in the world of business and life in general, there was a danger that Africa was being left behind. Today, the story has changed drastically as Africa has woken up to the digital revolution and a wave is sweeping through the continent, driving African investment in technology generation and application.
On Monday, the 4th of February, 2019, the annual Social Media Week (SMW) commenced in Lagos, Nigeria. This week-long event that comprises of masterclasses, networking parties, workshops, meetups and round table discussions, focuses on numerous themes touch on the constant evolution of work due to technology and how young Nigerians can position themselves to reap the benefits of this evolution.
The 2019 SMW conference theme tagged, STORIES: With Great Influence Comes Great Responsibility, takes a deep dive into the power of stories and the role content creators, policymakers, brands, journalists, and citizens have in creating a positive impact in the community. It is must attend event for all who leverage technology for business and professional growth.
The Domino Effect
Although there are sectors—agriculture, healthcare, education and infrastructure—competing for attention around the continent, major players in the world of business and the African entrepreneurial landscape have realised that proper application of technology in these sectors will contribute to the overall growth of the African economy.
In April 2018, the World Bank Group launched Digital Economy for Africa (DE4A) Initiative in Washington DC. Phillipe Houerou, CEO International Finance Corporation (IFC), in his closing remarks said the path to economic development is changing fast, and that “building the digital economy in Africa is a big test for IFC’s new strategy of proactively creating markets, developing new tools, and investing in Entrepreneurs”. World Bank Group, through the DE4A Initiative is hoping it can accelerate the development of digital economies in Africa through combination of public and private sector interventions.
The World Bank Group Digital Economy for Africa (DE4A) Initiative was building on another initiative called XL Africa launched in 2017. XL Africa is a yearly acceleration programme designed to support 20 of digital start-ups from Sub-Saharan Africa. These start-ups are positioned to receive mentoring from global and local experts; and access to potential corporate investors and partners which would give them an early stage capital ranging $250,000 to $1.5 million.
Speaking at the launch, Makhtar Diop, the Vice President for the Africa Region at the World Bank said,
“Digital start-ups are important drivers of innovation in Africa. To scale and spread new technologies and services beyond borders, they need an integrated ecosystem that provides access to regional markets and global finance; Pan-African initiatives like XL Africa play a critical role by linking local start-ups with corporations and investors across the continent.”
Additionally, the city of Cape Town in South Africa is set to host the inaugural Africa Tech Week from March 4th- 5th in 2019. Themed, “How to create a world-class culture of innovation to dominate your industry”, it is being organised with the department of science and technology (DST) and is set to introduce African small businesses to digital solutions and future business strategies and development.
Also, Jeremy Johnson, the Co-Founder and CEO of Andela—a company that connects Africa’s top software developers with technology companies from the U.S. and around the world—announced in January 2019 that the company has raised a $100M, led by Generation Investment Management, to continue building the infrastructure for the future of distributed work.
It is clear to see that the steps taken by a global organisation such as the World Bank Group has created a domino effect that is spreading throughout the continent. These changes are also buttressed by a report by Disrupt Africa which stated that in 2016, the number of tech start-ups that secured funding increased by 16.8% compared to 2015. Furthermore, African tech start-ups created new records in 2018 as 210 start-ups secured US$334.5 million worth of investment.
Challenges
These noteworthy and applaudable feats stated above do not erase the existence of some challenges that still exist which are inhibiting the true potential of technology entrepreneurship in Africa. They include:
– Capital for Early-Stage Businesses: The reality is that a majority of IT start-ups still lack the early-stage capital required to get them on their feet. Due to the nature of technology, start-ups in this sector are usually capital intensive and require significant resources especially when compared to other sectors. Ultimately, this challenge prevents African entrepreneurs with ideas in areas like artificial intelligence and blockchain (to name a few) from reaching their full potential. To fix this, more organisations (like the examples stated earlier) need to engage directly with the start-ups to support their needs.
– Power Deficiency: Despite the efforts that some African countries have made in finding ways to combat electricity problems, Africa is still in need of urgent creative solutions in the power sector. To provide adequate support to entrepreneurs, particularly those in the IT sector, Africa needs to invest in renewable and decentralised power solutions that are both flexible and effective.
– Globalization: According to the World Bank’s Doing Business Report of 2018, Nigeria, Malawi, Zambia and Djibouti were among the top 10 improved nations across the globe. This is a clear indication of the continent’s potential got growth through global partnerships as most of the advanced economies of the world view Africa as a green landscape with yet untapped potential. However, even with these potential global partnerships, African governments and leaders need to balance relationships with these companies and supporting their indigenous technological industries. If this isn’t taken into account, many solutions that could have been developed internally will be outsourced to multinationals leaving the potential of these indigenous technological businesses untapped.
Conclusively, it is clear to see that African IT entrepreneurs have the capacity to contribute substantially to the economy and they have already begun to do so. However, strategic partnerships, support and overall coordination among key stakeholders (government agencies, NGOs, multinational companies, investors) need to be properly effected to ensure the growth of a well-rounded technological ecosystem.
