Innovative Africa: The new face of Africa

Innovative Africa: The new face of AfricaEssays on the rise of Africa’s Innovation Age By Will Mutua & Mbwana Alliy Edited by Nanjira Sambuli i

Innovative Africa: The New Face of Africa: Essays on the rise of Africa’s Innovation Age Copyright: Will Mutua & Mbwana Alliy Published: 3rd September 2012 Publisher: Afrinnovator.comAll rights reserved. This book may not be reproduced inany form, in whole or in part, without written permission from the author. Cover Image: an artist’s impression of what nighttime Africa may look like in 2040 from a satellite image All rights reserved Dr. Jasper Grosskurth ii

ContentsForeword.............................................................................................v)Preface..............................................................................................viii)Innovative)Africa:)The)New)Face)of)Africa) By#Will#Mutua .............................................................................2)The)Next)Frontier)in)Innovation)in)Africa) By#Mbwana#Alliy..................................................................... 20)Doing)Tech)Business)in)Africa:)A)Few)Lessons)from)Twitter’s)Rise)in)Africa) By#Will#Mutua .......................................................................... 34)Which)African)country)is)best)to)do)a)tech)startup?)A)Decision)Framework) By#Mbwana#Alliy..................................................................... 44)The)Road)Ahead:)Blueprint)for)Building)Africa’s)Tech)Ecosystem) By#Mbwana#Alliy..................................................................... 58)Disruptive)Innovation)in)the)African)Tech)Context) By#Will#Mutua .......................................................................... 68)7)steps)to)raising)Seed)Investment)for)Africa)focused)Tech)Startups) By#Mbwana#Alliy..................................................................... 75)Mending)Africa’s)Tech)Skills)Gap)&)Tapping)into)its)Youthful)Population)to)Power)Innovation)in)Tech) By#Will#Mutua .......................................................................... 95)Nurturing)the)Innovative)Nature)in)Africa)through)Education) By#Will#Mutua ........................................................................107)From)FactorPDriven)to)InnovationPDriven)Economies)in)Africa:)A)Framework)for)Development)of)Knowledge)Economies) By#Will#Mutua ........................................................................120) iii

By#Will#Mutua ........................................................................132!Africa’s!Technology!Parks!&!Cities!Arms!Race!9!Is!it!worth!it?! By#Mbwana#Alliy...................................................................148!Does!the!“Copy!to/Clone…”!Strategy!Work!in!Africa?! By#Mbwana#Alliy...................................................................155!Research!and!Development!in!Sub9Saharan!Africa:!The!Current!Situation! By#Will#Mutua ........................................................................162!Part!2:!In!Search!of!a!Model!for!Technology!Innovation!and!Entrepreneurship!Ecosystems!that!fits!the!African!Context ........................................................................................... 173!The!Making!of!Silicon!Valleys!in!Africa! By#Will#Mutua ........................................................................174!Looking!East:!Observations!and!Lessons!for!Africa!from!China’s!Startup!Ecosystem!and!Special!Economic!Zones! By#Will#Mutua ........................................................................194!From!Startup!Clusters!to!Startup!Nations! By#Will#Mutua ........................................................................217!About!the!Authors ..................................................................... 237! iv

Foreword‘Tech in Africa’ has come a long way in a very short time.It took less than five years for a small and fragmentedgroup of pioneers to evolve into a sizeable pan-Africancommunity. It includes IT start-up centres, experiencedcomputer literates, profitable start-ups, establishedbusinesses serving African and global clients and, mostrecently, a handful of African hardware companies.The spread of affordable bandwidth and low-pricedhardware have certainly helped this development. But thereare less tangible, yet more important, drivers. Thepossibility to work for and with a global community and atpar with that community is a great motivator. So is theprospect of independently earning a living and a reputationwhere high potential jobs are scarce.The potential of African IT-driven innovation is immense.The decreasing transaction costs for anything that can betransformed in the shape of bits and bytes, includingmoney, have opened a whole new world of feasiblebusiness models and worthwhile initiatives. Some of my v

own favourite examples are intercontinental co-creation,micro-insurance and new imaging technologies in thehealth sector. This e-book parades many of such initiativesas examples and case studies.Unfortunately, the potential for abuse is also immense. Thesame software that can map conflict hotspots during a crisiscan be used to map and target the opposition’s supportersor minority groups. The mining of mobile provider’s dataallows for detailed profiling of individuals, including theirpolitical preferences. A first glimpse of this was whenKenya’s 2007 - 2008 post-election violence wasorchestrated with hate-filled SMS messages. Technologydoes not change a society. It exacerbates and acceleratestrends prevailing in a society.To strengthen the positive potential and prevent the harm,we need keen observers of the technology space. We needobservers who are able to take one step back from the hypeof the month, who are able to set us thinking by posing theunderlying questions and provoking us with theirreflections. Right from the beginning, Will and Mbwanahave been close observers of this space. Afrinnovator.comhas been a valuable source of inspiration for those seeking vi

to develop and thrive with the positive potential of Africaninnovation.This book is a timely contribution to the emergingdiscourse on how Africa’s next generation wants to use andshape technology for society. It debates the merits ofdifferent strategies to further grow the industry from theindividual choice to become a tech entrepreneur, to themulti-million dollar IT campuses and cities. It goes furtherto question some of the current industry beliefs. Enjoy theread and join the debate.Dr. Jasper GrosskurthJasper is the Director of Research & Strategy at ResearchSolutions Africa and author of ‘Futures of Technology inAfrica’. vii

PrefaceAfrica is Rising!After decades of being considered the ‘dark continent’,Africa today enjoys a time of renewed hope andexcitement. In the past, the so-called four horsemen ofAfrica’s apocalypse – famine, disease, war and corruption –have dominated the global perception of Africa and perhapsrightfully so. However, a new age has dawned on thecontinent. This is no longer the hopeless continent but avery hopeful one indeed. The continent’s recent economicgrowth has been quite amazing with several countriesgrowing at record levels, and the continent as a wholeshowing consistent economic performance that is projectedto continue into the rest of the decade. Africa has alsoshown great resilience to global economic crises. Her bestperforming economies have been labeled the LionEconomies, and the pace of their growth has surpassed thatof the so-called Asian Tiger Economies in recent times.Technology and Innovation are playing a big part inshaping Africa’s future and will continue to do so. Thiscollection of essays on the ‘New face of Africa’ posits an viii

African continent where technology, innovation andentrepreneurship create new opportunities for even furthergrowth on the continent. The uptake and growth of mobiletelephony on the continent, for instance, has been indicativeof this. The continent has been a leader in innovations suchas mobile money with innovation hubs springing up acrossthe continent facilitating a generation of young techentrepreneurs. Governments are also making significantinvestments in ICT development, but much more can andshould be done.We look at a wide array of issues that affect the creation,growth and sustainability of startup and innovationecosystems around the continent. The book does not seek toaddress issues at the level of a specific country or locality,but instead looks at things from a broad and high level,with the intention of highlighting issues that are pertinentacross borders and cultures. Indeed, some aspects mayapply more within some country or culture than others(“Africa is not a country”).The book is divided into two parts: The first, “InvestigatingTechnology Innovation and Entrepreneurship in Africa”,takes a look at the current state of things and makesobservations of what progress has been made, existing ix

challenges and opportunities as well as providing specificrecommendations that startups, investors and governmentcan use to further technology innovation andentrepreneurship on the continent.The second part “In Search of a Model for TechnologyInnovation and Entrepreneurship Ecosystems that fits theAfrican Context” takes a close up view of three innovativeeconomies: Silicon Valley, China and Israel, from whichwe try to glean a few lessons about startup ecosystems thatcould be applied within the African context in order tocome up with a (perhaps hybrid) model that works best forthe continent and specific nations within the continent.Will Mutua, Founder Afrinnovator x

Innovative Africa: The New Face of AfricaPart 1: Investigating TechnologyInnovation and Entrepreneurship inAfrica 1

Innovative Africa: The New Face of AfricaInnovative Africa: The New Face ofAfricaBy Will MutuaWorld renowned artist Shakira proclaimed "Its time forAfrica!" and millions around the globe echoed her words asthey sang to the infectious tune of the official 2010 FIFAWorld Cup song, the world’s largest soccer event havingfound a venue in Africa for the first time. It is a new era forAfrica. The world is increasingly shifting its mentalityabout the continent, and the continent is becoming moreand more confident of her place in todays globalizedworld. Perhaps the poster child of this paradigm shift inhow the world perceives Africa is the case of two articlespublished on one of the most authoritative magazines in theworld, The Economist. At the turn of the millennium, TheEconomist sported a cover page image that depicted anAfrican soldier wielding a weapon cropped into the shapeof the map of Africa and proclaiming "The hopelesscontinent!" The article proceeded to cite the loomingdespair in many of the continents states as a result of the 2

Innovative Africa: The New Face of Africaso-called Four Horsemen of Africas Apocalypse -corruption, disease, war and poverty.A decade later, The Economist turned on its heel, nowlabeling Africa "The hopeful continent", this time sportinga more picturesque image, a child flying a rainbow coloredkite in the shape of Africa.A key contributor to this rise has been the uptake andgrowth of innovative technology. Today, "Africa","Technology" and "Innovation" are terms that you willoften find in the same sentence. Technology andparticularly mobile telephony has radically changed theface of the continent and the lives of her people.Mobile AfricaThe penetration of mobile technology in Africa has beenradical and unprecedented. Africa is the fastest growingmobile market in the world and is the second largest, afterAsia, although it has been predicted that Africa couldoutgrow Asia. According to the GSM Association, mobilesubscriptions have grown almost 20% each year for thepast five years. The GSMA, according to its November2011 Africa Mobile Observatory report, predicts that therewill be over 700 million subscribers by the end of 2012; 3

Innovative Africa: The New Face of Africathere were already close to 650 million subscribers in thefourth quarter of 2011, about 65% of the total potentialmarket. In terms of subscriptions, Nigeria leads the packwith over 90 million subscribers.According to the GSMA report, mobile operators make adirect contribution of 3.0% to Africas aggregate GDP, withactual contribution at the country level ranging from 0.7%in Sudan and Ethiopia to as high as 6.0% in Senegal.Mobile has also been a key asset to increasing Internetpenetration in Africa. In Kenya, for example, the mobilephone is the primary means by which people access theInternet. According to statistics from the CommunicationsCommission of Kenya, out of a total of 6.15 millionInternet subscriptions, mobile data/internet subscriptionsaccount for 6.07 million of those.It is no wonder that mobile is a key area of innovation inAfrica. If you want to reach the widest distribution withyour service, you have to have it on mobile. 4

Innovative Africa: The New Face of AfricaPart 2: In Search of a Model forTechnology Innovation andEntrepreneurship Ecosystems that fits theAfrican Context 173

Innovative Africa: The New Face of AfricaThe Making of Silicon Valleys in AfricaBy Will MutuaMany studies have been done on what it takes to create aninnovation ecosystem in a particular geographic area. Theconcept of National Innovation Systems has been with usfor some time now. Many nations seek to emulate thesuccess of vibrant innovation ecosystems, chief amongstthem being Silicon Valley. In Africa, terms such as SiliconSavannah (referring to the eastern part of Africa) orSilicon Cape (referring to South Africa and Cape Town inparticular) have been coined to capture the efforts beingmade to turn these regions into the same kind of startup andinnovation culture and ecosystem embodied in SiliconValley.However, it goes without saying that creating such anecosystem is easier said than done. Silicon Valley itself hasbeen in the making for decades (since the 1940s and the2nd World War actually - see references "The SecretHistory of Silicon Valley") and has evolved through many 174

Innovative Africa: The New Face of Africacycles to become what we see today, and indeed, it is stillevolving.In Africa, two broad approaches are being taken to try toachieve this result, coming from virtually oppositedirections. Time will tell what will work best and be themost efficient in the long run.What are these two approaches? 175

Innovative Africa: The New Face of AfricaLooking East: Observations and Lessonsfor Africa from China’s StartupEcosystem and Special Economic ZonesBy Will MutuaMany times when discussing the development ofinnovative technology ecosystems in Africa, we tend tolook to the West and what we can learn from the likes ofSilicon Valley (see the chapter “The Making of SiliconValleys in Africa”). But could it be that we can learn andbenefit from the East as well? It stands to reason that Africaand Africans indeed can, and in fact should study andengage both Eastern and Western models, to come up withhomegrown hybrid models to the development ofknowledge economies and innovative high tech sectors. Tobe sure, China is not the only Asian power that Africa candraw inspiration and “how-tos” from, not only in thetechnology sector but also in overall economicdevelopment models. Several countries are borrowinglessons from the likes of Singapore and Malaysia. China,however, is a practical heavyweight in Africa that has risento challenge traditional Western collaborators and evendonor organizations. 194

Innovative Africa: The New Face of AfricaChina has had a long history in Africa, though theirengagement in the continent has only stepped into highgear in the recent past. 195

Innovative Africa: The New Face of AfricaFrom Startup Clusters to Startup NationsBy Will MutuaIn the last chapter, we looked at China’s startup culture andecosystem, drawing a few broad lessons from it. One keynote that makes it difficult to draw straight lines betweenChina and Africa is that while ‘Africa’ is used as a blanketterm, the reality on the ground holds that it is not ahomogenous, singular, national entity, but actually morethan 50 different countries, thousands of languages anddialects, multiple cultures and sub-cultures, differentpolitical and governmental regimes, different economicprofiles, and even drastically different colonial experiences.Even at the regional level, there are significant differencesbetween regions; Francophone Africa is a world of adifference from Anglophone Africa. China, on the otherhand, presents a more unified picture that is easier to read.In addition, the populations of China and the Africancontinent as a whole may be fairly similar – roughly abillion strong each – but when you drill down to countrylevel you have on one extreme, Nigeria with a populationof over 160 million and on the other extreme you haveEquatorial Guinea with just over 700,000 people (not to 217

Innovative Africa: The New Face of Africamention islands that have numbers in the thousands)!Economically, Africa has been billed as a resource richcontinent as a whole, and while that may be true, the actualdistribution of natural resources is not uniform throughoutthe continent. 218

Innovative Africa: The New Face of AfricaAbout the AuthorsWill Mutua is the founder of Afrinnovator(http://afrinnovator.com), a knowledge organization thatcarries out research and consultancy on matters to do withtechnology, innovation and startups in Africa. Will is akeen observer of the African technology space and has apassion for technology and its transformative potential forAfrica. He has a strong background in softwareengineering.Mbwana Alliy is the founder and managing partner ofSavannah Fund (http://www.savannah.vc/), an Africafocused, technology Venture Capital fund. He is passionateabout product development and launching new ventures intechnology. He is an experienced Product Manager withinconsumer web, enterprise Software & Software as aService (SaaS) sectors. He is originally from Tanzania andhas lived and worked in 3 continents (USA, Europe andAfrica). He has a Bachelors degree in engineering fromBristol University and an MBA from Stanford Graduateschool of Business. Find out more about Mbwana athttp://www.mbwana.com/bio.html 237

Innovative Africa: The New Face of AfricaAbout Afrinnovator.comAfrinnovator (http://afrinnovator.com) is a leading sourceof knowledge and information on technology, innovationand startups in Africa. Afrinnovator has gained globalrecognition and has established itself as an authority onmatters regarding tech in Africa with a specific focus inSub-Saharan Africa.Follow Afrinnovator on Twitter(http://twitter.com/afrinnovator) for more. ContactAfrinnovator at info@afrinnovator.com 238

Innovative Africa: The new face of Africa

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