Africa’s digital iBuzz

2014-07-13 15:00

From Tunis to Antananarivo, Africa has a great number of tech hubs, according to research by the World Bank in partnership with technology companies iHub and BongoHive.

Most are “co-working” spaces like iSpace in Accra, Ghana, which sells itself as a “unique environment where technology start-ups can start up faster”.

Jokkolabs, a nonprofit, runs similar spaces in Senegal, Mali, Ivory Coast and Burkina Faso. In Egypt, veteran venture capitalist Ahmed El Alfi founded The GrEEK Campus, a technology and innovation park a block away from Cairo’s famous Tahrir Square.

In the Madagascan capital Antananarivo, Habaka has brought together academics, the private sector and tech investors to solve “local problems with ingenious solutions, new communication technologies and entrepreneurship”, its CEO Andriankoto Ratozamanana told City Press.

“Habaka is also running a training centre for different kinds of digital jobs and a co-working space for its members.”

Ratozamanana said the start-up scene in Madagascar was “old and new at the same time” as there were more young entrepreneurs and there was talk about start-ups in “Silicon Valley mode”.

“More and more online jobs, the drop- down of communication costs, easier access to information become opportunities to increase?–?on [a] daily basis – the numbers of start-ups in Madagascar,” he said.

“Most of the start-ups are not even legally registered, but when the ideas and the market is there, young ‘cheetah’ entrepreneurs jump into business.”

He was referring to the Cheetah generation, a term coined by Ghanaian economist George Ayittey to describe the fast-moving, net-connected and passionate youngsters who must take back the continent from the corrupt ruling elite called “hippos”.

Whether Africa’s tech hubs compare to Silicon Valley, the San Francisco Bay region where hi-tech businesses such as Google and Apple are based, is another matter entirely.

It is a question of money

Research firm CB Insights suggests: “Silicon Valley has dominated the spotlight for promoting and financing the growth of emerging tech companies.

“Since the start of 2009, venture capital firms have deployed $31.5?billion (R337?billion) across 3?308 deals into Silicon Valley-based tech start-ups.”

Joel Coulson, a deals analyst at private equity and venture capital research firm Preqin, said between January 2007 and March this year, most of the 116 venture capital deals in Africa took place in South Africa (24% of total deals), Kenya (21%) and Ghana (14%).

But looking at the aggregate financial sizes of the deals, Coulson found South Africa came out on top with $129?million, Kenya second ($45?million) and Nigeria third with an aggregate deal size of $26?million, 333% higher than that of Ghana.

“Preqin’s data show that the most prominent industries, in terms of the number of deals, were financial services, software and the internet, with the latter having the highest aggregate deal value of $55?million,” he wrote in a note to subscribers.

“These three sectors greatly outweigh all other industries and exemplify how venture capital firms are finding opportunities in Africa’s burgeoning middle class and technological advancements.”

88mph, a seed fund and incubator sponsored by Microsoft and Google, runs programmes in cities where the money is?–?Cape Town, dubbed Silicon Cape, Nairobi in Kenya (Silicon Savannah) and Lagos in Nigeria.

But Nikolai Barnwell, its Nairobi programme manager, said: “I don’t like to compare every growing tech industry to Silicon Valley. A huge and increasing chunk of all business is somewhat tech and it can’t be that every time someone starts a tech company outside San Francisco it has to have a name that suggests it wants to be a small copy of the US.”

He said his organisation had selected the three cities it operated in because they were neatly spread out, giving 88mph “good reach”.

On Ghana, he said: “Ghana is interesting and we did look at setting up. But we have to prioritise, and Nigeria is just a more obvious market to dive into because of its sheer size.”

No major deals have happened for start-ups in Madagascar yet.

Ratozamanana said: “National initiatives are converging to support start-ups in the form of training programmes, coaching and mentoring, business relationship development, research for funding, and new markets and business incubation centres.

“No major venture capital deals with start-ups have been official yet as we know, but we have started a partnership with VC4Africa this year.

“Madagascar’s just come out of five years of political sanctions and plans to attract investors, major venture capitalists and new partners,” he said.

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