Tuesday, May 28, 2024

Is Africa Fit to Become the Next Global Technology Hotspot?

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Currently, 1.2 billion persons call the continent home. From a global perspective, the available labour supply has never been fully utilized (due to a myriad of reasons beyond the scope of this article). Such a premise has historically resulted in the migration of the region’s best and brightest minds, to other places in pursuit of their professional ambitions (ie the much-discussed “brain drain”).

However, with modern technology now making it more possible for anyone to work anywhere (even more so in a post-pandemic context), improving connectivity rates are now making it easier for companies (both indigenous as well as foreign) to seriously consider expansion plans into more places on the continent.

According to Interesting Engineering (a global digital publication that highlights the latest developments in science, technology, and engineering) –

“Africa’s technology industry is rapidly growing. There has been a massive growth in tech hubs across the continent, increasing by over 50% in the last several years.

This expansion of technology business in Africa is propped up by the increase in computer engineering talent being trained there. Microsoft alone is spending over $100 million on a development center to employ 500 employees in the next five years.

This trend of technological skills growth in Africa is poised to accelerate, and as more talent becomes available, more companies will be looking to invest.”

As of early 2020, there were 643 tech hubs across the continent, with the largest groupings being in Nigeria, Egypt, Kenya, and South Africa. However, there’s still a lot more room to grow, as 41% of the “tech hubs” are incubator facilities, 24% are innovation hubs, and 14% are accelerators (Forbes Magazine).

Introducing Silicon Savannah

A 2016 World Economic Forum report noted that most discussions on the origins of Africa’s tech advancement point to Kenya.

Between 2007 and 2010, four benchmarks were established to inspire the country’s tech ecosystem( now referred to as “Silicon Savannah”)-: mobile money; a globally recognized crowdsourcing app; Africa’s tech incubator model, and a genuine government commitment to ICT policy.

In 2007, the Kenyan mobile network operator Safaricom launched the M-Pesa mobile money product. It grew rapidly to become perhaps Africa’s most recognized example of technological leapfrogging: launching ordinary citizens with mobile phones right over bricks-and-mortar banking into the digital economy (World Economic Forum).

Another Kenyan milestone was the government’s 2010 completion of The East African Marine System (TEAMS) undersea fibre optic cable project. TEAMS increased East African broadband and led to the establishment of Kenya’s Information and Communication Technology (ICT) Authority. As a result of this initiative, Kenya now boasts of having one of the world’s fastest mobile internet speeds.

As of early 2021, “Silicon Savannah” is home to a tech industry worth roughly USD 1 billion, with over 200 startups, as well as established firms like IBM, Intel, and Microsoft (Wired Magazine).

They are working to solve local problems through tech applications. The company BRCK, for instance, is connecting off-the-grid schools to the internet through solar-powered routers and tablets. AB3D turns electronic waste into affordable 3D printers that produce artificial limbs (Interesting Engineering).

However, if Kenya’s key decision-makers have their way, the epicenter of Silicon Savannah would be the Konza Technopolis, a proposed “smart city.” This new city will span 5000 acres and is in the early stages of construction 40 miles south of Nairobi. The long-term aim is to attract companies involved in Business Process Outsourcing; Software Development; Data Centres, Disaster Recovery Centres, Call Centres, and Light Assembly Manufacturing industries.

There are also plans to build a university campus focused on Research and Technology, as well as hotels, residential areas, schools, and hospitals. It is also intended to include a science park, a convention centre, shopping malls, hotels, international schools, and a health facility. Konza Technopolis is projected to cost USD 14.5 billion and should be completed in the early 2030s (BBC News).

As impressive as Kenya’s Silicon Savannah is, it is only one facet (albeit a large one) of Africa’s continued emergence as a global technology hub. Increasingly, Nigeria is also becoming a key destination for big tech investment and commercially oriented start-ups (World Economic Forum).

As to be expected, investors and entrepreneurs are attracted by the prospect of scaling applications to Africa’s largest population and economy. Many such investors and entrepreneurs have established a presence in Lagos’s Yaba district. Located there is the headquarters for the e-commerce start-up Africa Internet Group and digital payments venture Pagar, which are not too far from the incubators Andela and Co-Creation Hub.

About this phenomenon, the World Economic Forum has made the following observation:

Nigeria’s tech sector is becoming representative of repatriate entrepreneurs reversing some of Africa’s brain drain and IT, and in so doing reshaping the continent’s global linkages.

All three of Africa’s most recognized e-commerce startups – Jumia, Konga, and MallforAfrica – were founded by Nigerians who earned their university degrees and initial private sector experience in the US.

A noteworthy portion of the roughly $600 million in VC to these entities comes from American and European investment firms. And the management of Jumia’s parent, Africa Internet Group, is a mix of repatriate Africans and MBA types from the US and Europe attracted to the continent’s IT opportunities over development work.

South Africa is also home to one of the largest ICT markets in Africa, with leadership positions in the subsectors of mobile software, security software, and electronic banking services (This will be examined in further detail in the next article of this series, which will focus on investment opportunities in South Africa).

As though all of these intriguing developments weren’t enough, in 2019 the Rwanda-based Mara Group launched the first-ever “Made in Africa” smartphone. The Mara X has 16GB (US$ 130) of storage, while the more advanced Mara Z has 32GB (US$ 190). Each phone is comprised of over 1000 subcomponents, all of which were produced on the continent itself. As such, Rwanda is now home to Africa’s first smartphone manufacturer, with the Mara Group producing up to 10,000 phones a day (World Economic Forum).

From Silicon Savannah in the easternmost part of Africa, to Nigeria’s Yaba district in the western portion, to South Africa’s burgeoning ICT program, the favourable economic developments taking place across the continent since the early 2000s (as discussed in the first article of this series), has left Africa uniquely positioned to benefit from the ongoing “Digital Revolution.” This is mainly due to its young, growing, and increasingly educated population; its vast resource base; significant growth potential, and the early effects of a “reverse brain drain.”

All of these being strong indicators of the continent’s possibility of becoming the next global hub of technological innovation. As such, sophisticated investors from anywhere in the world (particularly those with a special interest in the technology space) should find ample opportunity to participate on the continent in this arena.

Samuel Musila
Samuel Musilahttps://techknow.africa
Passionate Software Developer and Tech content creator From Nairobi, Kenya

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