Tech Disruption & Innovation on the Frontier: Key Sectors in East Africa to Watch

Published in

I-DEV Insights

5 min readOct 10, 2018

By Mary La Rocque, Associate

About the ‘East African Tech Snapshot’ Series: In July 2018, I-DEV surveyed leading investors, entrepreneurs, and tech sector influencers to uncover key strengths, opportunities and companies to watch.

This article is the 2nd of 3 pieces highlighting our findings. See also:

Part 1. East Africa Top 10 Tech Startups to Watch

Part 3. Growing the East Africa Technology Ecosystem: Challenges & Opportunities

Driving Innovation in the East African Tech Sector

Across Eastern Africa, digital technologies are transforming the market, helping to solve market challenges, bridge gaps, and provide innovative solutions. The technology sector crosses multiple industries challenging and changing the traditional ways industries do business.

This article dives into the emerging trends impacting the tech sector in East Africa, including areas of opportunity and key disruptors impacting the sector. Below are key Areas of Innovation and Distruption cited by our industry thought leaders, investors and entrepreneurs.

Top 3 Areas of Innovation

1. Agriculture

2. Financial Services

3. Medicine and Health Care

Top 3 Areas of Disruption

1. Mobile Payments & E-Wallets

2. Big Data

3. Hardware Innovation

Creating Innovative Technological Solutions

East Africa is a region brimming with change. The opportunity for innovation through technology is clear: a growing number of tech “innovation” hubs, increased investment coupled with a burgeoning younger entrepreneurial class, and high mobile money penetration have opened a clear market opportunity. East African entrepreneurs are using technology to solve the region’s greatest challenges, whether from bridging the gap between local smallholder farmers and retailers to providing credit scoring solutions for the informal market, and technology is driving innovation for many traditional industries. The following industries show the greatest potential and opportunity for innovation through technology:

1. Agriculture: As one of the largest market opportunities within Africa, there are currently an estimated 475 million smallholder farms worldwide (according to a study by CGAP) each consistently challenged by water access, climate change and access to markets and financing. Agtech companies are looking to provide solutions to this sector through a wide variety of methods including: offering financial services and loan structures, assisting with logistics and coordination to access markets, and offering data analytics and IoT solutions to monitor acreage, optimize yields and offer agronomy advice. Some companies mentioned include SunCulture, Apollo Agriculture, Pula, WeFarm, iProcure and Tulaa.

2. Financial Services: Fintech is considered one of the most dominant areas of technological innovation in Africa. Disrupt Africa estimates that in 2017 fintech startups took nearly a third of all African venture funding as companies attempt to bridge the gap and provide financial services to a market that is still largely unbanked (roughly 17% of the population in the region has banking accounts). Some companies mentioned in our survey beyond just the top listed in the previous article include Zoa Tech, BambaPOS, NALA, Popote Payments and UbaPesa plus later stage players including PesaPal, Wave and BitPesa.

3. Medicine & Health Care: As cities in East Africa continue to grow and countries urbanize, the market is challenged by a lack of systems or infrastructure in place to provide the needed medicine and health care services in an efficient manner. Companies in this sector are looking to provide remote patient monitoring, book appointments, or provide education to patients on treatments. Among the companies mentioned in the survey include Micrive Infinite, which offers 3D printing for improved surgery results.

Also cited in companies mentioned by respondents were a number of edtech innovations for both schools and individuals.

Across the many industries, technology solutions find ways to bridge the gap between markets. Companies can build solutions to connect local consumers with local businesses in the informal market or drive sector growth through business-to-business support. Our research showed close to a 50–50 split in responses when asked which of the two business models (B2B and B2C) are considered to drive innovation in the technology sector. While B2C businesses are addressing larger markets and are believed to offer more opportunities to scale, B2B businesses were considered to be the “first step” in addressing the informal markets given the lower purchasing power of consumers in the East African region.

~50/50 split in responses when asked which of the two business models (B2B vs. B2C) drives the most innovation

Disrupting East Africa’s Traditional Sectors

In today’s market it is impossible to speak about the technology sector without mentioning the elephant in the room — tech disruption. Innovation in technology is rapidly adapting traditional industries and creating new markets and opportunities for growth. The three leading areas of disruption within the technology sector are:

1. Mobile Payments & E-Wallets: While mobile banking and payments is nothing new to the African market — through companies like Safaricom’s M-PESA — this continues to be an area of importance for the East African market. Companies offering payment processing solutions such as Cellulant are continuing to drive innovation in the sector.

2. Big Data: It is hard to go anywhere without hearing about the “Big Data Revolution” and this is not unique to the East African market. In May 2018, Kenya hosted the East African Big Data Analytics and Cloud Computing Summit as market stakeholders looked at ways big data can be unlocked within East Africa. However, the biggest challenge remains in determining how best to “monetize” this data. Many companies who are collecting large amounts of payments today such as PAYG providers are looking towards selling payment history data to insurance companies to assist with their credit scoring algorithms.

3. Hardware Innovation (e.g. IoT): A number of rising startups in East Africa are looking to leverage hardware solutions (such as internet-of-things IoT) to address challenges unique to the region. From offering soil analysis platforms that measure soil characteristics to improve farm yields to providing mobile WiFi hotspot backup generators, IoT is a rising interest for the startup ecosystem within East Africa.

In an ever-changing sector, technology continues to be a growing opportunity within the East African startup ecosystem. New entrepreneurs are continually changing the way the market looks at traditional industries offering new solutions for areas from agriculture to financial services. The opportunity for growth is clear showing the strong potential of the East African market.

Read the other articles in this series: