Africa Rising : Private Equity Investing in Information Technology for Sustainable Development.
Despite Africa’s socioeconomic challenges, Africa as a continent is rising and fast. Africa’s vast natural resources such as gold, platinum, diamonds, chromites, copper, cobalt, coal, iron ore and uranium — 12% of the world’s oil reserves and arable land and forests — will continue to be magnets for investors. The rate of return on investment in Africa today, even adjusting for real and perceived risks, is higher than any other developing region, according to a report by the Economic Commission for Africa (ECA), a UN organisation.
The world has got to come to the realisation that Africa cannot rely on development aid for its transformation and industrial development, the more practical solution would be private investment and domestic resource mobilization. Private equity funding, which is when rich individuals and institutions inject capital into a company and acquire equity ownership, can be lifelines for African start-ups gasping for cash. Private equity capital investment into African companies lags behind in comparison to Asian and South American companies.
A young woman in Kenya developed an app to help farmers maximise their potential. It is a wonderful example of the entrepreneurial spirit and innovation that is abundant in Nigeria and across the continent but scarcely exploited due to lack of private equity capital. There’s too much focus on aid and relief distribution to the people of the continent and not enough focus on venture capital and introducing creativity and innovation in the development of technologies to help achieve poverty alleviation and provide sustainable solutions to our developmental problems. We need long-term technology thinkers, planners, entrepreneurs and investors in order to bring about sustainable development to our continent. Innovative entrepreneurs who are willing to create wealth and prosperity by introducing useful and long-lasting technologies, as opposed to aid programmes and relief materials from donor governments and non-governmental organisations (NGOs), which adds no real value to the economy more or less. Don’t get me wrong, aid and humanitarian relief assistance is necessary in dire situations such as war, famine or natural disasters, but in the long run, a self sufficient, sustainable solution such as the introduction of private equity capital and creative entrepreneurship would make a more lasting impact for the development of the region.
There’s still a long way to go before we can be mentioned in the same breath as China, India and Indonesia which are building their own versions of Silicon Valley — an embarrassment on our continent given our talent and resources which can be comparable to those countries. We need to plan and properly execute our initiatives and see them evolve into something positive and far reaching for all Africans.
In 2003 Nigeria announced its space programme and within a few years it had even launched its first satellite. After careful planning and preparation, Nigeria now has three satellites in orbit including NigComSat-1R, built in China. Launched in 2011 the satellite has boosted internet and telecommunications services across the country. That’s a great start but the reality is that the project was entirely funded by the government. What we need is more private sector engagement by encouraging individuals in setting up start-ups and providing the necessary support via private equity funding and venture capital investments.
In September 2014, UNICEF launched RapidPro, which is a free open source mobile platform hosting multiple apps developed jointly by UNICEF Innovation Labs and Nyuruka, a Rwandan software firm. RapidPro was used in Liberia to combat the Ebola virus. The app was used to report new cases, broadcast messages on care and prevention and allowed for real-time coordination between the health authorities and frontline health workers. In Nigeria, the continent’s most populous country, the Ebola virus was able to be managed and contained in October 2014 due to the application of mHealth. The mHealth app initiative ws introduced by an association of mobile phone operators (GSMA) and other private sector companies including Mobilium, Mobenzi and Omega Diagnostics.
Africa is ready and mature to embrace the information technology revolution. According to Devex, a social enterprise for the global community, there will be an estimated one billion mobile phone accounts in Africa by end of 2016, one for every person on the continent. What the continents requires at this moment, are venture capitalist and entrepreneurs who will take advantage of the opportunities present and launch start-ups and ventures that will provide long-term solutions to the problems that plague the continent and in the process create employment, wealth and prosperity thereby reducing poverty while contributing to the industrial development of the continent.
Digital World is a magazine project initiated by 3 African tech professional that intends to create a platform for collaboration amongst various tech professionals across the continent and requires private equity funding. The trio’s attempt to raise equity financing through the equity crowd sourcing site crowdfunder.com was unsuccessful a few months back, which goes to re-enforce the fact that African start-ups are at a disadvantaged position compared to Asian start-up ventures. The African start-up has launched a fundraiser campaign which is currently running on indiegogo — https://www.indiegogo.com/projects/digital-world-a-magazine-for-africa-s-it-sector-innovation/x/13516036#/ — in order to achieve its goals. Time will tell if it would be able to raise the funding required for its project. We encourage individuals and organisations that share this same vision for Africa to support the Digital World campaign and other African-based ventures and start-ups. Doing this is a step towards combating the socioeconomic challenges present while improving the livelihoods and economic well-being of people all over Africa.