Redefining #TIA: Tech in Africa is On the Rise

By Patricia Chin-Sweeney, Senior Partner

The hashtag #TIA has long been used to refer to the day-to-day challenges faced when you’re living in Africa. You wake up and the power is out, but the handyman ‘repaired’ the generator wrong, or the water pump won’t stop pumping so it’s begun to leak, and there is rushing water pouring through your ceiling. All of these things have happened to me or and others while living in East Africa.

But East Africa is changing. Since 2012, when I moved to Nairobi to launch I-DEV’s regional office, I have seen significant changes and development- some questionable or just bad (like the massive roundabout closings that happened overnight with no warning, and mostly retracted since), but many good and telling of the future! While internet continues to cut out far too often, as does the power- even in central Nairobi- mobile connectivity and use of mobile payment is universal. Smartphone use is growing exponentially, and even if you venture to remote locations in Kenya, you can typically get some signal- usually from Safaricom over Airtel or Orange…It is no wonder that M-PESA has gained such a following for this and many other reasons! Safaricom continues to dominate the telecom and mobile payment space with competitors having succeeded in only minimal market penetration. Our research shows that over 85% of Kenyans use mobile phones today, and of those, an estimated 90% have used M-PESA for mobile money transfers! The popularity of and preference for M-PESA has even led tech giant Uber to modify its platform to allow M-PESA payment for Kenyan clients…

Cover of I-DEV’s #TIA:East report, designed by David Kuria of Skyline Designs

The New #TIA: The Future of Africa

We wrote the #TIA: East report to showcase the innovations and changes , largely arising from limited resources, poor infrastructure or formal solutions in East Africa. Entrepreneurs- from near and far- have seen the need, and have taken action where there is incredible, unlimited opportunity! Perhaps ironically to some, sitting in San Francisco as I write, where tech unicorns like Uber, Airbnb, and Google grew and have taken over- I see interesting parallels. Uber and Airbnb grew out of key needs in San Francisco. A need for better, faster public transportation and to address sky-high costs of living (and hotel rates) in the Bay Area. A pressing need, readily accessible technology and innovative young minds came together to fill critical gaps…that are attracting big valuations and investments to fund them.

In Africa, the gaps are sometimes more basic, yet often more complex to address well…and the valuations and big investments are still to come. But, the opportunity is also great, and the sector will continue to grow exponentially, especially as key bottlenecks are opened! Key bottlenecks we see preventing more rapid progress include a limited local talent pool with the technical and managerial skills needed to build cutting-edge, scalable solutions; regulatory and infrastructure issues (steep competition and poor unreliable infrastructure), and the lack of big capital to allow for rapid testing and upfront investment for scale . These challenges have and will continue to put a constraint on the full bloom of a historically dry, and undernourished Silicon Savannah.

The Opportunities We See: A Growing Silicon Savannah

Techcrunch recently released an article announcing that Interswitch, a Nigerian mobile payments company, may soon list on the London Stock Exchange, making it the first possible unicorn out of Sub-Saharan Africa. The company, founded in 2002, processes the bulk of the Nigeria’s growing volume of electronic bank, government, and corporate financial transactions. Meanwhile, Africa Internet Group (AIG)- parent to Jumia, HelloFood, EasyTaxi, Jovago and 5 others- just succeeded in raising $326 million from big backers including Goldman Sachs, MTN and more. Nigeria, with roughly 200 million people, poses an incredible opportunity for investors going forward, and given the large population and business savvy, Nigeria is and will continue to lead in Africa’s tech development. South Africa also continues to be a hub of activity with its more developed infrastructure compared to much of the continent, strong GDP and new incubators and co-working centers popping up left and right. Even with fears of a flat economy or recession on hand, South Africa continues to innovate.

However, we decided to focus our first report on tech in East Africa because it simply has not received the same attention as Nigeria or South Africa; yet we see its rapid evolvement and potential. A recent report by Disrupt Africa supports this, saying that Kenya raised the 3rd highest investment in tech in 2015 or a total of $47 million, coming in just after Nigeria and South Africa. East Africa — led by Kenya — is also the fastest growing region for consumer spending at 7% annual growth vs. a 5% average across Sub-Saharan Africa. We highlight some key East Africa risers in the full #TIA:East report, and will continue to do so in articles on our Medium blog.

mi-Fone profile from I-DEV’s #TIA:East report

mi-Fone is one tech player that recently relocated its headquarters to Nairobi from South Africa to take advantage of the growing opportunity in East Africa. mi-Fone is the only 100% African-owned and African-designed, affordable but aspirational smartphone provider, who knows that mobile penetration is high and smartphone adoption is growing exponentially. The growing middle class and high mobile penetration are incredible untapped opportunities that companies are rushing to unlock.

We are excited to watch and support these companies to grow! Twiga Foods, another company featured in our report, is a mobile logistics and B2B vendor of FMCG products, based in Nairobi. Twiga Foods was winner of the 1776 Challenge Cup last May, becoming the first Africa investment made by the DC-based tech incubator and fund! I-DEV’s Africa team has since helped Twiga Foods to close a larger seed round with Omidyar Network and DoB Equity joining in. Based on our research of the industry, we’re told this is the largest seed raise for a tech company in East Africa! And, with a pipeline of interesting tech businesses that have come our way, we know this is just the beginning…

Grant Brooke, CEO of Twiga Foods, pitching at the 1776 Challenge Cup Pitch last May- Twiga’s win signal’s traditional VC interest in East Africa tech

What to Look Out For

Where do we see other big opportunities? You can read the full #TIA: East report and decide for yourself! But, some of the hot opportunities we see and feature in our report, include:

  • B2B m-commerce and distribution platforms
  • Services to professionalize and simplify business and operations of SMEs
  • B2C apps and products to simplify life, save time and manage money
  • Affordable but aspirational hardware products that improve connectivity, and productivity at the touch of your hand
  • Big data platforms and aggregators
  • Remittances & platforms to make money transfers, cross-platform payments and transactions faster, easier and cheaper

What Do You See?

We invite others to share their observations and predictions on the emerging tech scene in East Africa,as well! All parties featured in our #TIA: East report should have received a personal invite to contribute already. If you are interested, please send us an email at TIA@idevinternational.com.

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