Africa LEAPFROGS with the KINGS
Eric M.K Osiakwan, Managing Partner, Chanzo Capital
“I wanted to be here because Africa is on the move…young people are harnessing technology,” were the words of President Obama when he opened the 6th Global Entrepreneurship Summit (GES) in Nairobi, Kenya last year. The “Africa Rising” narrative is underpinned by an “Africa Tech Rising,” jumpstarted by pervasive connectivity as a result of Africans leapfrogging from almost non-existent fixed lines to exponential mobile growth at the dawn of the 21st century. Despite the current commodities crush, the digital economy is picking up pace in Africa. “Andela Raises $24 Million From Mark Zuckerberg And Priscilla Chan’s Fund To Train African Engineers” was the Forbes headline ahead of the 7th GES in Silicon Valley this week, which backs the fact that African ventures are attracting investment from the valley as they build the digital economy. In “Where the digital economy is moving the fastest,” published by the Harvard Business Review; Kenya, Nigeria, and South Africa made the global list of fastest-moving digital economies.
The digital economy started in Cape Town, South Africa, in 1995 when Mark Shuttleworth built Thawte, a leading certificate authority, and sold it to Verisign in 1999 for more than half a billion dollars — Vodacom championed prepaid airtime that same year. The wave moved to Ghana in 2001 when, together with Mark Davies and others, BusyInternet was built — a multipurpose tech hub through which I started the Ghana New Ventures Competition in partnership with the MIT $50K Competition, bringing about www.smsgh.com — the most successful tech startup with current revenue in the millions of dollars with operations in Kenya, Cameroon and Nigeria. The tech wave is leaving Kenya where it has produced some of the continent’s leading tech innovations — for example, Erik Hersman’s iHub and Safaricom’s m-PESA (made possible because of Vodacom’s prepaid airtime). Nigeria is next and then Ivory Coast — making the KINGS.
Just as “KINGS” (literally) represent leadership in the African society — they are the highest authority in the traditional economy, so do Africa’s tech KINGS lead the emerging digital economy — they are the countries on the forefront of the technological innovations spearheading Africa’s global leadership in the 21st century. It’s this digital economy of the KINGS that truly has the potential to fuel exponential growth. In a recent article published my Quartz Africa, Kuo, L. (2016) argued that “African startups are defying the global tech slowdown” and among the countries receiving the most tech investments were South Africa, Kenya, Nigeria, Ghana and Ivory Coast — the KINGS countries are therefore not only among the fastest growing economies on the continent, but are receiving the most tech investments — this is the second criteria used to identify them.
The third criterion that makes the KINGS standout is their vibrant telecom sector, which is underpinned by massive investments in their tech infrastructure. Each of the countries have multiple submarine cables and satellite infrastructure built over the last decade connecting to their mobile networks to produce mobile broadband. There is active competition among their mobile operators, which is enabling mobile broadband prices to drop whiles speed increases — this makes up the fourth criterion used to identity the KINGS. The BBC submitted that Africa’s mobile boom is powering the innovation economy.
The availability of mobile broadband is enabling their digital natives and millennials to unleash their creative juices and entrepreneurial prowess to address social challenges and market gabs and pain-points using innovative mobile web technology — disrupting existing markets. This is happening within an enabling policy environment that is pro-innovation; for example, the m-PESA innovation in Kenya happened because someone at the central bank turned a blind eye. The last criterion is they have multiple centers of innovation like the iHub and NaiLab in Kenya, Orange Fab and ADN factory in Ivory Coast, ccHUB and Leadpath in Nigeria, MEST and Servled in Ghana and 88MPH and Workshop 17 in South Africa just to mention a few.
These characteristics make the KINGS standout and they present examples that the rest of the continent can emulate, below is a table of the KINGS;
The KINGS economies would produce the biggest technology company in the 21st century in the same manner Asia produced AliBaba in the 20th. In the following paragraphs I outline some of the recent developments in each of the KINGS countries.
Kenya leads the KINGS with its innovation in mobile money, which has become a global phenomenon. Mobile money is redefining how global transactions are done in the 21st century. Kenya captioned itself a “startup nation” according to President Uhuru Kenyatta when he opened the last Global Entrepreneurship Summit alongside President Obama. The summit, which was a resounding success, is a feather in the cap of Kenya, which has also produced amazing innovations like Ushahidi a platform for managing disaster globally and BRCK a robust remote Internet connectivity device just to mention a few.
Ivory Coast is the second country in the KINGS and currently growing at 9.2%. Mobile penetration is currently at 90% and the creative economy is beginning to emerge in places like Plateau and Cocody. Stephen Cashin of Pan African Capital, an investor in the Ivorian economy recently said, “The government is doing a great job of separating business from politics so there is business continuity no matter the political situation in the country”. The government put together a huge investment forum last year as part of plans to showcase the country and attract investment, a well patronized event that also saw Entrepreneurial Solutions Partners (ESP) put together the first national business plan competition which rewarded ten startup businesses with cash investments.
Nigeria’s startup economy is dominated by ecommerce and is recognized as the ecommerce capital of Africa with startups like Sim Shagaya’s Konga, Jumia, which is part of the African Internet Group (AIG), Chris and Tope Folayan’s Mall for Africa which racked up in 17MUSD in sales last year, Raphael Afaedor’s Super Mart which is specializing in grocery deliveries, etc. Jason Njoku built a successful startup called iROKOtv — a platform for video on demand (VoD) content from Nigeria’s Nollywood — returning to his early investors 30 times their money. Attracting huge investments that have enabled him to start Spark — a company building other startups with his partner, Bastian Gotter. Spark is enabling the next generation of startups like Hotels.ng, which recently raised 1.2MUSD from Omidyar and EchoVC partners[10] after being seeded with 250KUSD by Spark three years ago. Interswitch, a leading Nigerian transaction processing provider, has just announced its potential listing on the London and Lagos stock exchange in 2016 with valuation in the north of a billion dollars making it the potential second unicorn in Africa after AIG recently raised 245MUSD from a consortium lead by Goldman Sachs at a billion dollar valuation.
Ghana is the fourth KINGS country and its ecosystem started with BusyInternet that led to the Ghana New Ventures Competition. Now the scene is championed by the Meltwater Entrepreneurial School of Technology (MEST), Impact Hub, Mobile Web Ghana, ServLed and iSpace — the hot spots for innovation. MEST has so far invested 15MUSD in over 20 early-stage companies, some of which are Retail Tower, Dropifi (the first Ghanaian startup to be accepted into the 500 startups accelerator in San Francisco), Namdimobile, Leti Arts, ClaimSync which exited to Genkey of Norway and Saya Mobile — acquired by Kirusa of the US. mPedigree and Sproxil are leading Ghanaian startups that have gone global with the technology that allows you to authenticate medication and other materials via sms.
South Africa leads the innovation space with the introduction of prepaid airtime by Vodacom but before that Mark Shuttleworth built Thawte and sold it to Verisign in 1999 for more than half a billion dollars, opening the floodgate of many exits to follow from his investment vehicle. Fundamo, a mobile money financial services platform which was partly owned by Here Be Dragon (HBD), Mark Shuttleworth’s investment vehicle exited to Visa for 110M USD in 2011 and in that same year Twangoo sold to Groupon for an undisclosed amount. In January 2015, Garmin, the satellite navigation multinational bought iKubu, a backtracker bicycle radar technology company and in May, Automattic, the parent company of WordPress acquired Woothemes, a Wordpress plugin for 30M USD. These exits are a proof that South Africa has long being building global technology companies making it the country with the most exits among the KINGS countries.
Steve Case, Co-Founder of AOL and now Chairman of Revolution and his wife Jean Case, CEO of the Case Foundation recently visited three of the KINGS countries, Kenya, Ghana and Nigeria. Steve observed that, “the most exciting thing I’ve seen {in Africa} is great entrepreneurs…they really have great ideas. Some of them are going to be great businesses that change the world and create a lot of value and create a lot of jobs. It has been encouraging.” Jean said, “you know I have also tried to underscore that the other area that is very impressive here, is the degree of participation by women in the entrepreneurial sector. Everywhere we’ve gone, we’ve seen amazingly talented strong women really bringing it on.”
Eghosa Omoigui, Managing Partner of EchoVC — a Silicon Valley and Nigeria VC Fund, said, “our ideal entrepreneur has a Nigeria hustle, a Ghanaian integrity, and a Kenyan smoothness.” Allow me to add the Ivorian persistence and South African diversity — additional ingredients to make any startup successful. The KINGS countries are an embodiment of smoothness, persistence, hustle, integrity and diversity — qualities essential for entrepreneurial success. Africa is really on the move — lead by the KINGS.
