In my last column, I investigated some alternatives to Silicon Valley in a broad sweep of some of the globe’s current and up-and-coming tech hotspots. I hurriedly mentioned that Africa’s tech scene was seeing pretty incredible growth, and then implored the particularly audacious members of Waterloo’s tech community to look into working there. Africa’s tech scene is incredibly interesting and deserves more recognition than a few sentences of brief attention. To be fair, it deserves a few thousand sentences, but we’ll make do with this article.</p>
What makes Africa attractive for technology companies? There are a number of reasons, but they all essentially boil down to the market’s huge untapped potential. There are currently approximately 700 million mobile subscribers in Africa across a range of devices that vary from smartphones (at around 18 per cent, as of last year) to the type of feature phones that you likely haven’t seen since 2002. This number is expected to increase incredibly rapidly, with estimates putting growth at around 100 per cent from 2014-2017.
Africa is often perceived as the final frontier for investment — a market where growth potential could outstrip traditional markets. The rapidly increasing number of smartphone users creates huge opportunities for software companies around the world. You may recall from the column I wrote to close out 2014 that Facebook, and to a lesser extent Google and SpaceX, have noticed this and are attempting to capitalize on the massive untapped market by providing Internet services.
More importantly, however, Africans have noticed and the continent has seen enormous growth in its tech sector from local talent. This is a stark departure from the way that wealth has historically been generated — imported knowledge and extracted resources. More than half of Africa’s economies now have at least one tech hub, which, as I mentioned in my previous article, comes out to roughly 90 continent-wide. These vary greatly in size and capability, with some aspiring or already performing at the level of a full-fledged incubator with support through startups and growth, while others are more aptly described as pre-incubators, which offer space for fledgling companies to collaborate and get off the ground. There are also varying success rates, with many hubs fleeting in and out of existence, particularly among those that tend towards providing a gathering rather than a formal hub space.
Africa is, well, really big, and grouping the entire continent together under one umbrella is somewhat misleading; the level of tech entrepreneurship across the continent varies pretty considerably. There are a few cities vying for the title Africa’s tech capital. Nairobi, Kenya; Lagos, Nigeria; Cape Town and Johannesburg, South Africa; and Accra, Ghana currently boast the highest number of startup and technology hubs.
Nairobi has been one of the most active cities for tech startups, receiving praise from investors, luminaries such as Google’s Erich Schmidt, as well as others, but there is evidence that it may be losing its lustre and business to locations such as Lagos, Cape Town, and others. Cape Town has been at the centre of Africa’s tech scene for years, with South Africa generally boasting higher numbers across tech metrics.
What kind of products are being produced? Many are similar to what you would find coming out of Silicon Valley, including social networking, communication, ticket booking, and e-commerce. Some, however, are tailored more specifically to the African marketplace. M-Pesa, Vodafone’s mobile money transfer and microfinancing service, has completely transformed Kenya’s payment landscape, with 60 percent of the country’s GDP sitting in M-Pesa accounts in 2013, meaning that the majority of transactions are done with the service. Ushahidi, an open-source software service for data collection, visualization, and interactive mapping was initially developed to track violence in the 2008 Kenyan elections. Njorku is a job search engine that helps its users find jobs across the continent.
There are hundreds of other startups all vying for a place in this rapidly expanding market. They will increasingly have to compete with their global counterparts as more and more companies turn their attention to the African marketplace.