From necessity to opportunity: Africa, Silicon Valley, and the drive to innovate

March 5, 2020 James Hayward

It’s easy to make assumptions about what’s happening on the African continent. For decades the media have typically only shown the negatives: war, famine, drought, disease, corruption. They combine to leave us with a one-dimensional view of a continent in need of saving.

Yet this couldn’t be further from the truth. Yes, countries across this very diverse continent suffer from these issues—as do many other parts of the world. But these issues don’t define the continent. And when we look beyond the stereotypes, we see a different story. Africa is alive with innovation.

At Davos, we set about to take a detailed look at what’s driving the innovation across Africa, how this is transforming lives of millions, and to understand what’s next for this exciting and rapidly evolving continent.

A booming ecosystem

Africa isn’t the first place considered when discussing hubs of innovation. Instead our minds picture the glistening corporate headquarters of the tech giants in Silicon Valley, Shenzhen and London. And there's a good reason for this: the African continent's technology ecosystem is tiny in comparison.

But it’s not where the ecosystem is now that’s important. It’s where it’s going that matters. And Africa’s tech ecosystem is booming. Just look at the number of tech hubs present on the continent. In 2018, GSMA counted 442 active hubs across Africa. In 2019 that number shot up to 618. That’s a 42% increase in a year.

African tech startups are also receiving record investment. In 2019, 311 companies received nearly $500 million in investor funding. This is a 47% increase over 2018’s numbers, according to Disrupt Africa. And 2020 is set to break records again.

Leaders of African innovation

Much of the innovation happening across the continent has arisen from the explosion in mobile adoption. Sub-Saharan Africa is the world’s fastest growing mobile market, and it’s expected to have over 500-million cell phone subscribers very soon.

This has given birth to solutions like M-Pesa. The wildly successful mobile money platform that has over 28 million users across East Africa. The solution has transformed lives by extending financial services to parts of the continent previously left unserviced. It’s made Africa a leader in mobile money and put African innovation on the map. But innovation on the continent isn’t limited to M-Pesa. There’s plenty happening around healthcare, agritech, transportation and eCommerce.

Three innovative making waves across Africa
Kenya’s Twiga Foods have built a marketplace platform that connects links smallholder farmers in rural Kenya to informal retail vendors in cities. Their solutions improve food security as well as providing farmers with a freer and fairer way to sell their produce. Over 17,000 farmers and 8,000 vendors are currently transacting on the marketplace.
Flutterwave is one of Africa’s most successful startups. Sometimes referred to as the Stripe of Africa, the company has built a payment infrastructure that better connects Africa to the global economy. The company has processed over $2.5 billion in payments to date.
South African based, Empty Trips was founded in 2017 by Benji Coetzee. The company uses machine learning and AI to match supply and demand for cargo space. Despite the cost of transportation across the continent being the highest in the world according to The World Bank, 38% of cargo trucks and over 60% of trains are running empty
 
What’s fueling African innovation? 

So why now? Why’s innovation in Africa booming? According to Mikkel Hippe Brun, Co-Founder & SVP APAC at Tradeshift, it’s all about necessity and taking advantage of an opportunity. “Shift happens,” he says. “As humans we’re constantly looking to improve our situation and the world around us. That’s what we’re seeing right now across Africa. The people there are looking to improve their situation and technology is giving them the opportunity to do so like never before.” 

Landry Signe, Professor & Founding Co-director at Thunderbird’s Fourth Industrial Revolution Initiative, agrees. He points to the continent’s youthful population as a major catalyst for change. Africa is home to 19 of the world’s youngest populations and nearly 30 percent of people on the continent are aged between 10-24 years old. “We call this the Cheetah Generation and it is extremely entrepreneurial and wanting to drive change quickly,” he says.

It’s not just technology that’s allowing this to happen. Signe points to other developments such as the improvement of governance. “This is making it easier to do business in many countries on the continent and creating new opportunities,” he says. “And there is more to come as the Intra Africa Trade Agreement comes into force this July. This is the largest trade deal since the creation of the WTO and it could transform how business trade on the continent and overseas.” 

For Onyeche Tifase, Managing Director at Siemens Nigeria, this all shows that Africa has many of the raw ingredients required to drive a huge shift. “There are challenges, but there are also huge opportunities,” she says. “People on the continent are tired of hearing the same story about Africa. So they’re taking upon themselves to drive change and build the solutions needed to do this.” 

How to shift the narrative

The narrative around Africa is shifting. And we may soon see African tech innovators making the same impact as those in the US, China and Europe. Innovations around mobile wallets and payments show that when you have the opportunity to start afresh. It’s also a powerful example of the transformational changes that can place when you are able to connect people digitally and provide access to finance.

But for African tech to make a mark globally it must scale. The solutions created cannot just solve problems  to a situation that is peculiar to a particular country or region. And for that to happen many African countries need a better connection to the global economic and trading ecosystem, says Tradeshift’s Hippe Brun. “We’ve seen it happen in China and Africa needs to take that next step. And when it does we will see true transformation.”

 

About the Author

James Hayward

James is a Senior Content Marketing Manager at Tradeshift, focused on crafting compelling stories that provide supply chain professionals with unique insights and actionable advice on how to take their organization to the next level. A journalist by trade, James was previously the Global Editor at Treasury Today magazine.

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