The African challenge, which can also be an opportunity, is enormous given the tragic toll of unnecessary human suffering.
By Ron Leung | November 22, 2016
Solving Silicon Valley’s problem’ problem
Silicon Valley suffers from a problem’ problem that has been retweeted and circulated in its circles: It increasingly fails to tackle issues that can truly make a difference in the lives of many in the developing world. For the most part, Silicon Valley builds apps to improve the lives of people who are already quite well off. In the eyes of its idealistic employees and founders, it is not living up to its change-the-world’ philosophy.
Africa faces real problems, with tens of millions lacking access to water, having limited access to basic healthcare, and living in informal settlements (slums and shanty towns). But these problems also present an opportunity for Silicon Valley to contribute to real solutions. The UN Millennium Development Goals capture several of these big opportunities’ _ from infant mortality to access to safe drinking water.1 The UN’s final report in 2015 showed how much there is left to achieve, and highlighted many of the limits of the existing international development and aid model. The startup communities and tech hubs blossoming across Africa are creating an alternative, more local, and resilient growth path.
Select Development Indicators for Sub-Saharan Africa, 1990 vs 2015 (%)
Challenge as opportunity
The African challenge, which can also be an opportunity, is enormous given the tragic toll of unnecessary human suffering stemming from a lack of access to clean water, food, basic healthcare, decent housing, and sanitation. However, there is a history and context to this suffering. While Africa is emerging from a series of regional conflicts and political instability that peaked in the 1990s, African governments are still grappling with the legacy. This includes abysmal infrastructure, barriers to regional trade and co-operation, and a prolonged lack of investment in education and human capital. However, countries such as India have shown these impediments can be overcome. A rapidly growing middle class in many African countries is investing in its own future.
We find that several Silicon Valley initiatives align nicely with William Easterly’s manifesto to stop leading’ the Africans and Asians, and to support and enable domestic and local solutions. Aside from their Africa operations catering to local customers, Africa initiatives at Google, Microsoft, and Facebook predominantly aim to improve the enabling environment and create the conditions for Africans to found their own startups and actualise their own visions. For instance, Google pledged to train 1m young people in Africa in digital skills in 2016-17 through its online bootcamp. Its foundations and venture funds are financing impact startups, expanding access to the internet, and supporting the development of local startup ecosystems (e.g. Google for Entrepreneurs). However, the company is not alone.
A technology startup ecosystem
A good startup community should have engineers and entrepreneurs, a positive enabling environment with spaces for collaboration, ideation, and financing to incubate ideas from inception to success. At its heart is the creation of an ecosystem for the generation, nurturing, testing, and filtering ideas and people. It is not enough to just have the one big idea; it takes hundreds of ideas to execute and deliver a successful product. For instance, Google is not the first or only search engine; it just developed and delivered a better search experience than its predecessors and all newcomers. Hence, a successful startup ecosystem must make a distinction between founders who can actually implement their plans, and those who cannot.
Co-working spaces, incubators, and accelerators
A startup ecosystem should have spaces for collaboration and creation and development of ideas, such as co-working spaces where founders can focus on building without the distractions of setting up office space or securing a reliable internet/power connection. It should also have incubators and accelerators where founders can receive mentoring from established entrepreneurs, and obtain professional and advisory services such as accounting, tax, and payroll. The latter allows founders and startup teams to focus on building a successful product. As a community, failure can be made less costly if founders and startup teams are recycled into new startups, building on lessons and technologies learned.
These centres are popping up in major technology and financial hubs across Africa. Google for Entrepreneurs has partnerships in several such hubs from Lagos in Nigeria and Accra in Ghana, both in West Africa, to Nairobi, Kenya, in East Africa, and Johannesburg in South Africa. The visual below shows the value they provide to startup founders and their business models. Together, the co-working spaces, incubators, and accelerators can be financially self-sustaining and can add significantly to the likelihood of success.
Types of Startups
The Delma Institute, 2016
Inclusive, African development
Silicon Valley’s initiatives, as a result of self-interest or simply by accident, are helping Africans build the soft but critical infrastructure of co-working and incubation spaces, programming schools, and seed financing. In turn, it will be Africans who will create their own leaders, found their own startups, and come up with their own solutions. But the secret is out, and other countries and companies are following suit. One great example is Nest, a Hong Kong-based venture capital fund that has launched an African fintech partnership with Barclays. It has rolled out an accelerator programme and partnered with co-working spaces Nairobi Garage and Cape Town Garage.
In 2016, the number of tech hubs and incubation centres doubled to more than 300. We can expect more such arrivals onto the African technology scene as everyone beyond Silicon Valley realises Africa is getting ready for take-off.