The rise of innovation hubs supporting start-ups in Africa
The proliferation of innovation centres to support start-ups on the continent is driven by rising mobile and internet penetration, and Kenya is leading the way
A decade’s growth that radiated from Kenya’s "Silicon Savannah" has culminated in the establishment of hundreds of innovation hubs across the continent. Nascent technologies are helping to produce unique apps and solutions.
Tech watchers usually point to 2007 as the year when Africa’s fourth industrial revolution started. That was when Kenya’s Safaricom launched its M-Pesa mobile cash-transfer service in a market that was short on conventional banking services but flush with basic cellphones. It was followed in the same year by the Ushahidi app, designed to track violence in Kenya’s contested presidential election.
Within three years M-Pesa was moving millions of dollars internationally, Ushahidi had become a multinational tech company and iHub had been founded in Nairobi as a tech incubator by Ushahidi’s co-founder, Kenyan-raised American Erik Hersman.
All this was enabled by a new undersea fibreoptic cable that dramatically increased East African bandwidth.
The proliferation of innovation centres on the iHub model was driven by mobile and internet penetration: between 2000 and 2017 internet growth on the continent rose from 4.5m to 4.5bn users. The latter figure represented 35.2% of the total population. Close on half the people in countries such as Algeria, Cape Verde, Egypt, Nigeria and SA are online, with Kenya far ahead at 85%.
Internet usage is linked to smartphone penetration as users go mobile, overwhelmingly via 3G, according to the "Mobile Economy 2018" report by the GSM Association (GSMA). The organisation represents the interests of mobile network operators worldwide.
The digital divide is greatest in sub-Saharan Africa, the report says. By last year, mobile internet penetration in the region had reached 21%. It is projected to hit 40%, or 280m users, by 2025. This is the world’s largest increase.
By 2016, Nairobi’s Silicon Savannah — the term refers to Kenya’s tech ecosystem — was solidly established. IBM had poured $100m into forming an African research centre with its own supercomputer.
Today, US-based Fab Foundation, in collaboration with Zambia’s BongoHive, maintains a register of 226 innovation hubs, tech collaboration zones, "makerspaces", and "hackerspaces" across Africa — up from 170 in 2015, when the register was set up.
GSMA has its own list of 314 hubs operating in 93 cities across 42 countries — though half are concentrated in SA, Kenya, Egypt, Morocco and Nigeria. Some of these are mere online collaborations, others are fully serviced suburbs. Together they have 1.5m Facebook followers.
And Silicon Valley venture capital is flowing swiftly to these initiatives: Aubrey Hruby and Jake Bright, authors of The Next Africa, say they "project at least $1bn in venture capital investment in Africa’s tech start-ups for the period 2012-2018".
The GSMA report says: "Mobile operators such as Vodacom, MTN and Orange have formed a number of successful collaborations with start-ups in Africa." It gives the example of Orange Digital, which launched a €50m investment fund for African start-ups last June.
Other recently launched tech hubs include MTN Y’ello Startup in Ivory Coast, MTN Solution Space in SA, and Orange Fab in Ivory Coast, Senegal and Cameroon.
In addition, the British and Australian governments have partnered in an "Ecosystem Accelerator" programme to provide equity-free funding, technical assistance and mobile operator connections to tech start-ups in Egypt, Senegal, Nigeria, Rwanda, Uganda, Kenya, Tanzania, Zambia and Mozambique.
The Ecosystem Accelerator’s Victor du Boucher writes: "Incubators and accelerators — which provide start-ups with business support resources and services to help them scale — account for almost 60% of these tech hubs." They facilitate access to skills, funding and networks — three critical resources for start-ups, Du Boucher says.
Other types of tech hubs also play a role in the innovation ecosystem by facilitating access to technology and digital tools. A tech hub like Black Girls Code, for instance, which enables young girls to have access to computer science technology in Johannesburg, illustrates how tech hub support goes beyond traditional incubation or acceleration programmes, Du Boucher says.
Though most hubs are hyperlocal initiatives, some, like Jokkolabs, which started in Dakar in 2010 and now has active hubs in Cotonou, Ouagadougou, Abidjan, Banjul and Casablanca, are becoming transnational.
Yet in reality, only SA, Egypt, Morocco, Kenya, Ghana and Mauritius have so far managed to build viable business-process outsourcing and IT-enabled service industries.
And even state-supported projects have not been without problems: the $744.,5m Ebène Cybercity in Mauritius, initiated in 2001, is buzzing with about 25,000 techies. But it was badly planned. A report by Christopher Schuetze in The Guardian cites "a shocking lack of cohesiveness, poor public transport, limited parking or even difficult access by foot".
Some of the best Africa-derived apps have been short-lived because of the speed at which the tech industry mutates: the HopStop mobile app’s detailed guide to 600 cities globally, designed by Harvard-trained Chinedu Echeruo, was one of the US’s top 100 fastest-growing software companies in 2011.
But it was dead in the water by 2015 because it was heavily reliant on Google Maps, which Apple replaced with its own transit app. Then Apple bought HopStop and stopped supporting it.
Also, bubbles have been created by overeager investors: Cape Town-based media giant Naspers invested a total of $91.2m over five years in 50.9% equity in Nigeria’s Konga mobile shopping app. Its value was estimated at over $300m in 2014.
But Nigerian computer producer Zinox’s purchase of the firm earlier this year — allegedly for a meagre $10m — meant that Naspers took only $3.4m on the deal, according to Muyiwa Matuluko of Nigerian innovation journal Techpoint.
Still, Hruby and Bright say the rise of innovation hubs has already disrupted donor funding patterns as the continent’s grand socioeconomic problems are tackled in novel ways — "grants previously going to NGOs are already being diverted to social-venture-focused African tech organisations" — while some African-birthed technologies have found global application: Kenya’s SupaBRCK solar-powered portable Wi-Fi router is now being used to cover internet dead spots as far away as rural Wisconsin.
Vishal Barapatre predicts in the IT News Africa journal that this year artificial intelligence-driven Internet of Things will emerge in SA "as people seek to bring collaborative intelligence into the workplace".
We can expect much of that convergence to be driven by the 13% of African innovation hubs that collaborate with the large mobile operators.
But in a rapidly evolving ecosystem, it’s anybody’s guess where the next big thing will originate.