Building a tech ecosystem in Africa: creating value chains
This post was written by Ashwin Ravichandran, General Manager of the MEST Incubator Accra.
Now in our 10th year of operations, MEST has invested in more than 50 businesses founded by alumni from our entrepreneurial training program. In that time we’ve learned a lot about how to build a community and ecosystem around tech startups in Africa.
Today, we’re looking at our portfolio as a whole to determine how and where we can create value chains. Our goal is to create a Pan-African community of tech innovators that can continue to build off of one another and work together to solve some of the most pressing issues facing the continent. By working on value chains, the aim is to make scale independent of individual solutions, and more about the problem to be solved as a whole.
What is a value chain?
The concept of value chains was first illustrated by Michael Porter through his work at Cambridge University’s Institute for Manufacturing in the late 1980’s. “The idea of the value chain is based on the process view of organizations: the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems, each with inputs, transformation processes and outputs. Inputs, transformation processes and outputs involve the acquisition and consumption of resources — money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.”
Over the years, the definition of value chains has extended into the tech sector and is now connected with tech-enabled startups, such as an uber for tractors application or a contractor management service; as well as tech disruptive startups, such as a churn prediction engine for SMEs or a solution that uses AI for livestock management.
Why value chains?
The reason we’re adopting the value chain approach is twofold:
Problem side: By diving deep into a value chain, each entrepreneur or startup is able to go farther into problem diligence and better understand the core of the issue they’re solving. As well, they can gain better insight into user behavior. By collaborating with other companies working in a similar environment, they can share learnings and better understand the full customer journey, as well as how problems faced at each point in the value chain might be related. As a result they are able to think in terms of a more human-centered design approach.
Solution side: Entrepreneurs often attempt to tackle massive, complicated problems that prove to be too large for a single startup to effectively solve alone. By thinking of collaboration as a win-win, several startups can focus on solving multiple angles of the same problem, which exists in the value chain. The aim is then to see one market leader rise, or multiple successful companies solving niche problems.
MEST value chains
Music and radio
VendyAds is an ad management tool that allows media companies to sell ad space to SMEs, offline and online. AFRadio is a B2C social radio app that allows consumers to listen live and playback radio shows, while Qisimah provides real time audio monitoring for African radio stations — offering analytics around songs and ads played on the radio. Each of these operate in a similar space but look to tackle different angles of the same problem: lack of digitization and automation in the radio industry.
By working along the same value chain, each of these companies can feed into one another when it comes to radio streams, ads and insights.
Construction and property management
This is currently one of the most exciting value chains in Africa. MEST has four investments in this space, out of which two are location agnostic, one has a B2B focus and one is already a market leader.
Buildpals is a tender management website which is making the bidding and approval process for tenders faster in the Ghanaian market. Whether a government representative or a property developer, with Buildpals multiple parties can contribute to the process much more easily through a digital interface, as opposed to the previously cumbersome paper process. As a result they’ve reduced average process time from six weeks to one.
Further down the value chain, BidiiBuild is a construction management tool which helps real estate developers manage contractors and sub-contractors on a project-by-project basis. It’s highly location agnostic and can be used anywhere as long as the relationships are driven by the developers.
meQasa is the current market leader in Ghana for online real estate classifieds, and has the most active conversions when it comes to scouting properties for sale or rent.
Joluud is an exciting startup focused on facility management and lead generation from other vendors. They manage the far end of the value chain by enabling owners to maintain multiple properties.
If you look closely, you can see how the jigsaw puzzle begins to fit, with each company empowering the next to solve a problem faced further along the real estate value chain, ensuring multiple problems faced within the process can be addressed by individual startups.
MEST currently has six different yet powerful agtech startups!
Qualitrace provides quality assurance for all imported produce coming into Ghana, enabling farmers to verify using a simple USSD check.
AniTrack is a livestock management tool which helps farmers monitor their livestock. Be it their location or temperature, the single hardware piece holds legacy data for each individual animal.
Ghalani is an enterprise farmer database management tool which supports farmers in their holistic production processes and also supplies market information.
AgroInnova is a niche product looking at livestock production and is currently piloting a project in the poultry value chain.
Complete Farmer operates in the urban farming landscape. The company enables customers to invest in land through Complete Farmer, whilst they then invest in farmers, increasing production capacities.
And finally, TroTroTractor is an tractor-on-demand service which operates via USSD — without voice or an app. It leverages an existing user behavior and has about 10,000 farmers and 300 tractors on the platform right now.
Though each startup has a distinct focus, the overall propositions very much feed off one another, as they collectively work to solve issues around farm and livestock management in the agriculture industry.
Here’s how multiple MEST ecommerce solutions can work together to provide value for online merchants.
Customers of SynCommerce, which enables single-point online inventory control across multiple shopping platforms, can also use RetailTower to list their stores on multiple engines. To improve their sales flow, those same merchants can benefit from Kudobuzz, which enables them to build out their social review engine and optimize SEO, as well as NestMetric’s machine learning algorithms which will help them to predict and reduce churn!
Further down the sales funnel, Aidahbot gives SMEs greater visibility and enables fast and seamless customer support through their Facebook Messenger chatbot, while Loystar can help them build out loyalty programs for their businesses.
Finally, OnceNOut is a premium fashion resale startup which can work with the first value chain in the eCommerce space or in the second value chain in the local eCommerce space.
Beyond the music and radio, ecommerce, agriculture and real estate industries, MEST has also invested in companies working in the social, productivity and entertainment value chains.
Where we are today is just the beginning. Over the next 10 years, MEST doesn’t want to simply invest in horizontal value chains but also in vertical value chains so we can see intersections between them on multiple levels and problems that can be solved more organically and more diligently.
As soon as there are both vertical and horizontal intersections, and problems become more clear, solutions will become easier to make or break. At this point, the need for money will become clear, and investments start increasing as the ecosystem becomes enriched.