Africa Tech: The Next Frontier Ecosystem
Last week we held a webinar discussing the overall state of tech development and startups in Africa and the current ecosystems in Nigeria, Kenya, Ethiopia, and Egypt. While Africa’s ecosystem is still relatively small in comparison to giants such as Silicon Valley and Shenzen when you look at volumes and year-over-year expansion in venture capital, startup formation, and tech hubs, it’s one of the fastest-growing tech markets in the world. The following is a summary of our discussion.
How is Kenya doing in the (post) COVID era?
Jessica: All sorts of companies have had to reinvent their business models. Some companies like art cafes have brought their experiences online. Transport and delivery startups have seen huge gains. Most companies have become cashless, it has been on the rise since the government mandated it.
Digitization has become more necessary post COVID. This is an incredible opportunity to leverage tech to digitize your business model.
Digital divide and talent: How do you think talent is developing? How do you think the crisis created a wider divide between the connected and unconnected?
Jessica: The iHub in Nairobi was developed to cater to the developing ecosystem. There is a rise in young computer engineering talent in the East African ecosystem as a response to the emergence of new tech startups. Many graduates are self-learning online since there are not enough jobs available locally.
There is a huge digital divide between urban/middle class and rural communities. It’s common for kids in the middle class to learn online, but for those in rural areas, they don’t even have access to the basic necessities of life, so the coronavirus situation has hit them the hardest.
What are some tips to access the African Tech Ecosystem?
Jessica: Do your research and make a social graph. VCs and other investors usually want to connect with an ecosystem leader/builder. Come with an open mind, learn about our unique ecosystem here. You can’t copy/paste what works elsewhere.
Nigeria is a big tech ecosystem in Africa. What is happening now post COVID?
Chinwe: COVID-19 hit the world and everything came to a halt. This was the time for the ecosystem to prove itself. 19million of our population is below 19 years old. They are willing and able to jump on new programs.
Since the outbreak, all the tech hubs closed down. Some of the hubs who had the infrastructure continued their programs online. But the majority are still shut down.
The ministry of education gave an ultimatum for schools to start classes online. Just a few schools are adapting, mainly the private top-tiered ones. But parents are complaining about the amount of data they need to consume.
This demand for online education spurred a big rise in edtech platforms.
Many young people are upskilling themselves, especially in the digital space so they can get out of unemployment. The local talent is growing and continues to improve — but collaboration with others is key.
What are the challenges and opportunities now in Ethiopia?
Markos: A lot of the technology existed before COVID but what has changed is the mindset of people. In my opinion, in Ethiopia, the main challenges come from the mindset of the government, not the people.
Because of COVID, we have moved on from the bank-centered approach and there has been a push to a cashless society.
In education, there are now groups teaching through Telegram. It is not great and not designed for that but it works.
What are the misconceptions about the African innovation tech community?
Markos: Many outside of Africa don’t see it as a source of innovation. Part of it is the media coverage. The world is missing what could be the potential of Africa AI, for example, is big in our ecosystem. Regional and global collaboration is the way to go forward. Africa is like a sleeping giant especially as a knowledge base.
Egypt is an important ecosystem. What are some of the key differences in sub-Saharan Africa?
Albert: Market challenges in Africa are also persistent in Egypt. One thing we have in common is the resilience of entrepreneurs here. This is not the first time we have gone through a crisis.
A lot of startups are thriving because of COVID. Some business can pivot slightly and some already have online platforms for their businesses.
How do you see the funding landscape now in MENA and Northern Africa?
Albert: One of the biggest challenges is access to funding in north Africa. There has been a lot more appetite to invest in the region. Funding is on the rise.
Direct investment in startups in Africa is on the rise as well.
The landscape is changing. Overseas, investors are initially reluctant but it has vanished now since startups target international solutions as well.
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