Yesterday, I made an appearance on Al Jazeera English’s The Stream show to discuss the state of Africa’s tech sector. Prior to the show, I had a Q&A with the producers to help prep the discussion topics. I thought it was worth publishing here since we couldn’t cram everything into the one-hour program.
The Stream: Tech entrepreneurs seem to be receiving money for projects, but many people say that the tech industry in Africa is meeting its potential. What is the problem? Is the money going into the wrong places? Does the tech industry suffer from the same problems that occur within the so-called “aid economy?”
I think where we are right now is the input phase of Africa’s tech industry. For all the hype about it, we have to remember it didn’t really start exploding until about 5 years ago. The whole sector is very primordial. Telecommunications infrastructure isn’t complete, user base isn’t as yet sophisticated, indigenous venture capital doesn’t see it as an opportunity yet, international venture capital still doesn’t know how to do business in Africa. So the inputs are currently coming from sectors that have been on the ground for a long time and that is aid organizations. The ICT4D sector is project driven with organizations hiring young tech savvy individuals to build tools for them to solve a particular problem.
We are far from Africa meeting its full potential. It is not that the money is going into the wrong places, I think the problem is there isn’t enough money going into the right places in order to create a seismic shift in the tech landscape.
The Stream: If the aid economy isn’t the biggest problem, then what is?
The slow process of maturation. We have to be patient. Africa is good at leap frogging, but one thing we can’t leap-frog is the pace of innovation, education, adoption. I think the tech sector right now is tripping over itself trying to grow to fast. We are looking at 1 billion mobile devices by 2016, with a lot of them turning over to be feature phones and smart phones as the prices begin to drop, band width improvements, terrestrial infrastructure improves, and 300+ million consumers with disposable income change their consumer habits and adapt digital lifestyles.
For as much buzz as we’ve gotten, we haven’t even put in the requisite 10,000 hours needed to perfect anything, if I use Gladwell’s theory: Steve Jobs, Ballmer, Ellison, Gates all spent years perfecting their craft in garages, labs, bedrooms – wherever they could practice. By the time they launched their respective hit products, they had spent thousands of hours perfecting them, failing and trying again. And I think this where we are right now on the continent.
The Stream: This year, an op-ed in the MIT Technology Review said Africa’s first tech boom was in mobile phones, tech boom 2.0 were mobile apps, and tech boom 3.0 will be the large-scale creation of jobs and economic opportunities based on those innovations. What signs do you see of this 3.0 revolution becoming reality?
I actually don’t think that Africa 3.0 is going to happen quite to the scale they think that it will. I think we are very much at the end of 1.0 revolution. And I don’t consider that complete until about 2016 and our smart phone penetration rises above 50%.
Even then, I think what you are going to see is the digital economies helping other industries to accelerate and become more efficient. You will see a rise in requirements for digital literacy and proficiency of some kind in jobs outside the industry. You have to remember that the tech industry is not labor intensive. Someone could create an app in their bedroom and 100,000 people buy it and he may scale up to hire 4-5 extra developers. Tech is largely consumption-driven. The only way Africa 3.0 becomes a reality as a job creation accelerator is if we bring device manufacturing from China to Africa. It could happen, but very likely. Too many obstacles right now.
The Stream: Are poor infrastructure and the government bureaucracy in which some start-ups operate within part of the reason that their work is being held back?
I think so. In order for the tech sector to fully mature, you need a policy environment that nurtures innovation instead of threatening and choking it. I’d say Ethiopia’s policy environment is very stifling. Compare that to Kenya’s open government adoption and investments in the tech sector and how that country is leading. It makes a huge difference.
As far as infrastructure is concerned, connectivity is key to the growth of this sector. After the cables landed, now comes the work of connecting those pipelines to the last mile so that everyone has access. The energy grid is supremely stifling but surprisingly that hasn’t affected mobile adoption. It has actually spurred locally driven solution to the problem. There are entire cottage industries dedicated to solving the problem of charging devices off the grid.
The Stream: What are some most exciting developments right now in the African tech industry?
Speaking of infrastructure, I think one of the most exciting things happening right now are the tech hubs springing up all over the continent. I think these incubation spaces are going to be the unsung heroes for Africa’s emerging digital economies because they solve a lot of the problems that young digital entrepreneurs face in honing their craft. You have connectivity, support structures, mentorship and collaboration. I’d watch this space as they multiply and mature.
There’s a start-up in Congo, VMK that just launched the first African designed, China manufactured smart phone and are working on a tablet. This is big. I expect a lot more just like this one in the coming years and hopefully we’ll even bring that manufacturing to home soil as well.
Open government movement that is starting to take hold. Releasing government data into the public domain is going to be a huge catalyst for developers to create tools to analyze, interpret and identify where they can build digital solutions.
Can’t say enough about the full potential of mobile money payment systems on the continent. I think once we harmonize those services across carriers, then we’ll truly have the beginnings of new digital economies on the continent. I think you are going to see a decline or a revolution in the traditional banking sectors and this is huge. I think this will help create demand for investment in transportation infrastructure for delivery of goods and services. Additionally, the influence this will have on integrating economic zones and breaking down trade barriers is huge. App economies will of course lead on the backs of multinational carriers streamlining their services and hopefully traditional markets will also open up.
The Stream: How much of the problem is that of investors not having confidence in returns? Why are foreign investors reluctant to put money into Africa’s tech industry?
I don’t think you have any business investing [in Africa] if you don’t have confidence in the returns. Especially in Africa. There’s a lot of money to be made in this sector, I think what international investors aren’t comfortable with is that the landscape is relatively new and it is uncharted territory. Those that are familiar with doing business in Africa will fare the best. I think this is why it took Erik Hersman being in Kenya’s tech space for so long in order for the Savannah Fund to happen. VC capital is hard to come by but I think we’ll see more VCs taking a chance and setting down roots early.
The other thing that I find to be a problem here is that I think we need to stop waiting for international funds. There’s plenty of money on the continent. We need to coax it out and by making investments into the sector fool-proof. Create attractive investment vehicles with proven returns. I think this needs to be the central role of the tech hubs.
The Stream: Have the barriers to creating a tech start-up been lowered? What are some of the main challenges faced by tech entrepreneurs? What is the shelf-life of these start-ups?
I think the barriers are getting lower and lower as we see connectivity improve, as more tech hubs and incubation labs are growing on the continent. Also, as the base of people exposed to tech on the continent increases so, too, will the number of potential startups as more people begin to dip their toe into the digital economies.
Will all of them survive? No. I think at this point, you measure success by market potential and longevity. The market isn’t fully mature and those startups right now might very well be ahead of the curve. Staying the course might be the key to success rather than immediate adoption of their idea.
The Stream: Regarding this topic, are there any angles that aren’t being covered by the media?
I think there needs to be more attention to the contributions women are making to the tech sector. I think women will play a huge role on the continent both as consumers and as innovators. There’s an upside for investors and for startups looking to capitalize by catering to their needs.