Africa’s internet economy racing ahead at topsy-turvy speed
Funding for new tech ventures in Africa hit a record last year as investors look to access its tech-savvy consumer base
Google has opened applications for the sixth cohort of its African start-up accelerator programme and launched two new developer scholarships in partnership with two other US firms — Pluralsight, an online educator, and Andela, which trains software developers.
Nitin Gajria, MD of Google Sub-Saharan Africa, said during a livestream that no-one is better placed to solve Africa’s challenges than tech entrepreneurs, start-ups and developers on the continent.
"African developers and start-ups play a critical role in the transformation of Africa’s economies, creating new opportunities and paving the way for the economic and social development on the continent that we want to see."
He believes governments and the private sector need to focus on four key areas to trigger the fourth industrial revolution: physical capital; human capital; technology; and competitiveness.
Since its inception in 2018, the Google programme has backed 67 start-ups on the continent. It is designed to "bring … Google’s programmes, products, people and technology to start-ups that leverage machine learning and AI [artificial intelligence]."
The programme has created nearly 3,000 jobs and attracted more than $72m in investment in such sectors as fintech, health care and education, among others.
"We’ve designed this training programme to create room for developers to acquire skills, resources and networks that are going to be critical for them … on their journey," said Gajria.
He said the programme is being extended beyond its initial three-year commitment and will continue to provide Google’s support to start-ups across the continent.
The three-month start-up programme includes three intensive virtual training bootcamps, mentorship and Google product support. And its new developer scholarships for Android, the web and Google Cloud will be offered to 40,000 beginner and intermediate developers in Africa, with the top 1,000 students being awarded full scholarships.
According to Disrupt Africa’s "Funding Report 2020", last year was a record one for the African tech start-up ecosystem: 397 start-ups raised $702m. The bulk of the funding activity focuses on Africa’s "big four" markets of Nigeria, Kenya, SA and Egypt.
The report touches on the remarkable fact that African start-ups accumulated more funding during the pandemic than ever before, despite the disruption of economies, travel and due diligence processes.
SA was ranked third-most attractive investment destination in Africa last year, raising $142.5m — 95% more than the previous year.
Ian Lessem, managing partner at early-stage investment firm Havaíc, says: "With global interest rates at an all-time low and several African countries set to have some the highest economic growth rates in the years to come, investors looking for yield are increasingly turning their attention to Africa."
This, coupled with the continent’s young and growing population and high mobile penetration rates, "makes it an ideal destination for investors looking to access this fast-growing, tech-savvy consumer base. This all bodes well for Africa, and particularly the tech start-up ecosystem."
Though the emerging-market context of Africa is vastly different to that of more developed markets such as the US, he says, basic needs such as food, safety, financial inclusion, heath services and shelter are universal.
"What we are seeing is that because these basic needs may not have been adequately met in the past across the continent, its … population is innovating in ways that allow them to leapfrog conventional solutions," he says.
This is apparent in the fintech space and is spreading to other sectors such as healthtech, safetytech and agritech.
Lessem says it is through these innovative efficiencies that scalability and general improvements tend to occur, "which is how Africa’s innovative solutions to local challenges often service more developed markets with their ‘improved’ approach to serving people’s basic needs and challenges".
Lessem says healthtech was a key sector for Havaíc before the pandemic and represents the biggest slice of its portfolio.
"What we are seeing now is that interest in this space has certainly picked up and it is filtering down to our portfolio companies."
The company is most excited about its hearX investment, a healthtech business that started in Pretoria.
Through a partnership with the World Health Organisation it has conducted more than 1-million hearing tests.
"It has clients in over 60 countries, not to mention a strategic distribution agreement with one of the US’s leading pharmacy chains to be sold in over 10,000 stores across America, and an investment from a global sound giant, Bose."
hearX exemplifies what Havaíc stands for — "local innovation that can achieve global elevation", says Lessem, who compares the African venture capital space with "living in a book by Dr Seuss, where everything is topsy-turvy and upside down".
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