Moving Beyond Social Impact Ventures in Africa and the Challenges of Doing So
What comes to mind when you think of an African startup?
Perhaps a company focused on reducing poverty, expanding basic internet access, or increasing rudimentary financial literacy?
While these companies are undoubtedly important, I would like to suggest that these social impact-focused ventures do not need to be the entire focus of African entrepreneurs.
As highlighted by John Kamara in a recent podcast episode, there is a massive market gap in African startups at the bleeding-edge technology.
In the episode, Kamara points to a lack of investment in research and development across the continent and a preoccupation with the government’s short-term problems.
Rather than net importing of technology, Africa needs to become a net exporter.
There are also compelling economic reasons to finance such technological development in Africa. For one, it’s massively cheaper to fund research.
We’re also finding that engineers in Africa can now access the same educational resources as their North American and European counterparts. No longer is it the case that computer science is confined to wealthier nations but now easily accessed, for free, online anywhere in the world.
Perhaps one avenue to be explored is an international collaboration with domestic and international institutions. We have already begun to see this occur. In 2011, Carnegie Mellon University opened its African campus in Kigali, Rwanda. CMU said the purpose of this was to offer
locally-tailored but globally-competitive packages to solve distinct challenges
Stanford also entered the space in 2013 with the Stanford Seed (SS) initiative. Since launching, SS has grown from a six-month course to a year-long syllabus that trains chief executives and founders and their eastern and southern African teams.
Three years later, Harvard introduced an executive program targeting African business leaders.
Establishing the program in Africa was part of a strategy to help entrepreneurs who wanted to build businesses that impact quarterly revenues and profits. The business school, in general, understands that the next wave of innovation should and will come from outside Silicon Valley and that Stanford should be a part of that.
Unsurprisingly, these programs have faced issues, from acquiring high-end computers for CMU labs to stringent, restrictive, and somewhat confusing foreign exchange regulations facing business students.
Nevertheless, higher education focusing on these types of technology would be assisted by an education system that embraces STEM and highlights the power of technology not just to solve today’s problems but potentially catapult entire nations into new eras of industry.
Beyond universities, we’ve also seen the private sector make positive moves in the space. Some of the leading technology companies worldwide have set up research hubs on the continent, such as Google recently opening an AI Research Lab in Accra, Ghana, employing local engineers and data scientists.
Weakness and lack of oversight from governments have certainly opened the door for international technology companies to access fertile economic environments unburdened by regulation. African populations are also highly receptive to an improvement in their standard of living.
Encouragingly, we are also seeing a massive rise in technology hubs across Africa. A joint report by Briter Bridges and AfriLabs identified 643 tech hubs on the continent.
Fostering development and growth in Africa
AI and blockchain also present unique opportunities that, unlike technological revolutions in the past that exacerbated global inequality, can improve Africans’ lives.
For example, AI’s current and past healthcare applications on the continent showcase it as a viable tool for tackling health challenges, reducing costs, and improving health access and quality.
However, with these technologies, specifically AI, it is vitally important that more research is carried out in Africa. Presently, the vast majority of AI research takes place in North America, Europe, and Asia. This geographical and, to a large extent, ethnic exclusivity could entrench unintended algorithmic biases and build discrimination into AI products and services. Beyond this, without African AI researchers’ input, there will naturally be fewer opportunities to use AI to enhance African lives. The burgeoning technology may only be used in developing countries, and further grow global inequality.
Without more African AI research and development, the burgeoning technology may only be used in developing countries, and further grow global inequality.
But it’s not just about ploughing money into AI research.
Given that machine learning requires a training dataset, a fundamental challenge in applying AI in Africa is the lack of large, quality datasets for training AI models. Particularly in healthcare, low digitization and electronic medical record use mean a lack of locally generated, valuable data important for building AI systems. The need to establish better data infrastructure is crucial here.
Creating an enabling environment
Africa will change more in the next century than it has in the past ten.
David McDonald, The Global Millennial
The capacity to export tech is also aided by the fact that, generally, Africans are pretty good at early adoption. Unlike more developed economic regions with higher median ages that have been slower to adopt technology such as mobile money, Africa has embraced it. In this context, there is little room for incumbency or inefficient, deeply embedded legacy systems. In fact, unlike their Western counterparts, Africans have been quick to adopt P2P finances.
Africa has also been establishing trade agreements with BRICS members; thus, there is scope to streamline technology exporting to these rapidly growing economies.
In addition to this, the African Continental Free Trade area went into force in May 2019. It could, in theory, create a single market of over a billion consumers with a total GDP of over $3.4 trillion (the largest free trade area globally). Of course, this would create an optimal environment through which to collaborate and export technological innovation.
Moving forward
If Africa is to become a net exporter of technology instead of an importer, African governments and private companies must build better infrastructure. Low Internet penetration (39%) and sociocultural factors impairing adoption are evidence of the current inadequacy. Electricity is also largely inaccessible across the continent; about half of Africans have no access to electricity, and this is, of course, a major digital economy blocker.
As ever, it is likely the route ahead involves more collaboration between private and public actors. These should not be constrained to Africa as a mounting body of research suggests that foreign investment into the African tech sector would yield a net positive outcome for the global economy.
It is also vitally important that government governments, both collectively and independently, continue to ratify trade agreements with foreign governments and bodies to lay the framework for expanding international technological markets emanating from Africa.
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