The Long Road to Stimulating Tech Innovation in Africa

02/09/2015 10:23 | Updated 01 September 2016

In recent years, innovation, entrepreneurship and private sector involvement has emerged as a favoured route out of poverty for many development organisations and funders. Its potential to reduce unemployment, tackle societal challenges and stimulate economic growth has sparked significant interest and investment.

The tech sector is amenable to this approach. Start-ups can be born anywhere, requiring less infrastructure and expenditure than most industries to get off the ground.

Across Africa, a plethora of technology innovation hubs has arisen to support home-grown innovation. Imagine spaces with brightly coloured walls, techies and developers sprawled out on beanbags and post-it notes on the walls. These spaces provide aspiring entrepreneurs with access to state-of-the-art facilities, high-speed internet, events, mentorship and training. But the secret of their success lies in the collaborative environment and close-knit communities that they create. These nurturing conditions promote a rapid exchange of ideas, skills sharing and problem solving which allows serendipity to happen.

Unsurprisingly, these spaces have attracted significant attention. Funders such as the World Bank and the Omidyar Network are supporting them, while tech companies and investors have flocked to the spaces in the hope of finding the next Facebook or Amazon.

But much of the hype has been tempered. Few are willing to invest at the risky but crucial early stages and many seem surprised when hubs fail to deliver on their initial promise to achieve financial sustainability in their first few years. Investors have become disillusioned that the entrepreneurs they are supporting have not yet created vastly profitable businesses or impactful social change solutions.

But could it be that our expectations are unrealistic? Globally, 95% of small businesses fail in their first five years, many operating in much more favourable environments.

It is easy to forget that in most African countries the technology ecosystem is still in its infancy. While Kenya's 'Silicon Savannah' is ahead of the pack, countries like Liberia lack any formalised ICT training, let alone a thriving tech community.

For these ecosystems to flourish there is a need to build both hard tech skills and softer business skills. But that's not all. Regulatory frameworks are often inhibitive, while high data costs, language and literacy problems and a lack of simple payment mechanisms create barriers to market penetration. Meanwhile, unreliable and costly electricity and transport, slow internet and cumbersome bureaucracy all increase the cost of doing business. Under such conditions, it is hard to keep budding entrepreneurs motivated. With no immediate income and a lack of awareness about technology's far-reaching benefits, getting a tech start-up off the ground can be an uphill struggle.

There's also a need to bridge the gap between the tech community and other experts such as designers, development professionals, government officials and those working in the private sector to ensure that devised solutions really meet society's greatest needs.

One could be forgiven for thinking the situation is hopeless. But the ICT sector in Africa shows dizzying potential. In Nigeria, for instance, tech and telecommunications reportedly contribute almost 10% of the country's GDP. Across Sub-Saharan Africa, more than two thirds of people have access to a mobile phone and the market continues to grow. This provides an opportunity for people to access, share and create information at a lower cost, faster speed and greater scale than ever before.


But realising the potential of Africa's tech revolution requires a new approach. Crucially, all involved must recognise that establishing a sustainable and thriving technology innovation ecosystem takes time. Rather than a narrow focus on the number of start-ups created, stakeholders would do well to look at the strength of a hub and whether the tech community around it is growing and feels adequately supported and nurtured. Helping to grow a strong and resilient tech community is critical.

Achieving financial sustainability also remains a key challenge for hubs. In the early years, they will inevitably require core funding from sympathetic and patient donors.

A joint hub fund established by the DOEN Foundation, Hivos and Indigo Trust is providing seed funding of €15, 000 to do this in places where the tech community is still in its infancy. The fund is enabling groups like SwahiliBox in Mombasa, Kenya, mHub in Malawi and Sensi in Sierra Leone to scope the sector and host start-up weekends, training sessions and gatherings to support this process. The fund also contributes to core overheads, giving teams the breathing space to establish strong partnerships, structure their teams and refine their operations.

For more developed tech communities, the joint hub fund provides funding to help hubs cover salaries and overheads, while also experimenting with more formalised mentorship and programmes which support entrepreneurs to build businesses or social organisations.

The fund is currently providing €75,000 to iSpace in Ghana, ActivSpaces in Cameroon, KINU in Tanzania and Hive Colab in Uganda. It seeks to help hubs generate more income, attract investment and refine their programming so that it best supports their members. At this stage of a hub's evolution, we can start to assess the number and quality of start-ups and social projects coming out of a space.

Yet if hubs are to succeed, they will eventually need to stand on their own two feet. Already, many are generating income in creative ways, but it remains a difficult task.

The Co-Creation Hub in Nigeria provides a window into the future. In its first two years, it achieved financial sustainability through consultancy work and corporate services like training, community relations, business advice and corporate memberships. It has developed a strong pre-incubation and incubation programme involving ongoing mentorship and it is starting to pay dividends.

Wecyclers-a recycling business it's incubating, generated $140,000 in the first five months of 2015 alone! BudgIT - a project which uses infographics, social media and community monitoring to allow Nigerians to scrutinise the government budget - is their first graduate and has secured over $500,000 in grant funding. Donors are now able to start monitoring the social impact of its work.

Beyond the hype, burgeoning tech communities across the continent could shape their societies in transformative ways. For their true potential to be realised, it will require patience, long-term investment and tailored support but it's well worth the effort as the potential pay-off is huge.