What does the African startup scene need?(munyukim.blogspot.com)
munyukim.blogspot.com
What does the African startup scene need?
http://munyukim.blogspot.com/2012/10/what-african-startup-scene-needs.html
5 comments
Thanks for the kind words on kLab Jeff. :)
I would agree with most of what you said (I'm one of those expats in Kigali referenced above) but I would add that it is actually a tough market to make money in.
The consumer base is really small, with very little disposable income. So pretty much everybody has to target businesses. That is doable, but even those are few and far between.
In time the skill level will get higher here that people can compete on the world market, which is really the goal, the creation of an export. But that is still a ways off.
Incubation / Startup / Coworking spaces like the kLab should help on a lot of those levels, I'm obviously a big believer in that model. I think it will take a bit to instill that startup culture though, but it is happening.
I would agree with most of what you said (I'm one of those expats in Kigali referenced above) but I would add that it is actually a tough market to make money in.
The consumer base is really small, with very little disposable income. So pretty much everybody has to target businesses. That is doable, but even those are few and far between.
In time the skill level will get higher here that people can compete on the world market, which is really the goal, the creation of an export. But that is still a ways off.
Incubation / Startup / Coworking spaces like the kLab should help on a lot of those levels, I'm obviously a big believer in that model. I think it will take a bit to instill that startup culture though, but it is happening.
It's still pretty hard to start a business in Africa, period.
Lack of acess to capital, quite represive legal and tax environment, lack of cheap and skilled labour (that translates into expensive skilled labour), infrastructure that is very far from being sufficient (even if it's getting better) and potential constumer that remain quite poor.
So a scene of technology companies is pretty far fetched.
Don't let the growth rates fool you. Most of it is still related to oil, mining, construction and public works.
So a scene of technology companies is pretty far fetched.
Don't let the growth rates fool you. Most of it is still related to oil, mining, construction and public works.
The South Africans and Kenyans have already built a strong technology scene, so really it's not far fetched. The market is already there and still pretty much open for most products. The talent is available to kick start the industry, a lot of computer science graduates lying around doing nothing. All that is left is for the government,the corporate world and other stakeholders to take advantage of this opportunity. I would also like to point out that telecommunications companies like Econet and MTN have also contributed a lot to their countries' GDP. While the drawbacks you mentioned are significant; they can be solved if everyone involved can share the same vision.
One huge disadvantage also is that many Africans don't have access or the ability to get credit cards and so it locks them out of the ability to pay for hosting and cloud services. If someone can figure out how to connect the local SMS payment infrastructures that most countries have to Amazon AWS, then there could be some serious dough gained from the developer community. I learned this the hard way when I did a presentation on deploying Python Apps to Amazon at klab.rw in Rwanda. Everyone loved it but no one could actually try it out because even for the Free Tier AWS requires a CC.
Well that's a huge disadvantage; I had to ask someone to pay for my domain. Telecommunication companies are in a position to offer such a solution. I heard Telecel,Zimbabwe has been working on such a solution .
> Don't let the growth rates fool you. Most of it is still related to oil, mining, construction and public works.
I'm very interested in learning about growth in Africa, as there is a lot of potential to raise millions of Africans out of poverty as well as contribute positively to the global economy, and a lot of what I hear makes me optimistic (I think of things like, "Could a rising Africa offset a receding Europe?") This is not the first article I've seen talking about huge growth in cell phones in Africa, though I'm skeptical that "90%" of the continent has one... Is the proliferation of cell phones evidence that Africa is growing generally beyond a few key industries, or does that really not indicate anything interesting?
I'm very interested in learning about growth in Africa, as there is a lot of potential to raise millions of Africans out of poverty as well as contribute positively to the global economy, and a lot of what I hear makes me optimistic (I think of things like, "Could a rising Africa offset a receding Europe?") This is not the first article I've seen talking about huge growth in cell phones in Africa, though I'm skeptical that "90%" of the continent has one... Is the proliferation of cell phones evidence that Africa is growing generally beyond a few key industries, or does that really not indicate anything interesting?
Cellphones and cellular network are consumption, really.
Though 90% may be high (or they're couting phones per habitants without considering that many of us have multiple phones) the cellphone penetration rate is indeed high.
And when you think about how few landlines there used to be, it's just amazing. Or the whole point is that there were no landlines.
But we're still talking about a consumption market. And we're talking about a case in which technogical progress and the lack of infrastructure allowed us to leapfrog.
The real growth is still driven by the thousands of jobs created directly and indirectly by mining and oil. (even construction and public works depend on revenue from mining and oil)
And when you think about how few landlines there used to be, it's just amazing. Or the whole point is that there were no landlines.
But we're still talking about a consumption market. And we're talking about a case in which technogical progress and the lack of infrastructure allowed us to leapfrog.
The real growth is still driven by the thousands of jobs created directly and indirectly by mining and oil. (even construction and public works depend on revenue from mining and oil)
I don't want to sound cynical, but a repressive system is what capitalism has always preferred, right? So based on that alone you should see investors rushing for the gold already.
For potential angel investors, the lack of reliable statistics about the relevant markets is probably a big issue. Africa is also less homogenous than Europe, so we're talking about many different markets that need to be looked at individually.
For potential angel investors, the lack of reliable statistics about the relevant markets is probably a big issue. Africa is also less homogenous than Europe, so we're talking about many different markets that need to be looked at individually.
>I don't want to sound cynical, but a repressive system is what capitalism has always preferred, right? So based on that alone you should see investors rushing for the gold already.
They do. In extractive industries and anything that involves negotiating favours with a government. And I'm not sure capitalism prefers a repressive system or that systems in Africa are that oppressive (or the right kind of oppressive).
> For potential angel investors, the lack of reliable statistics about the relevant markets is probably a big issue.
Chicken and egg. Statistics appear when there is a market for them (investors).
They do. In extractive industries and anything that involves negotiating favours with a government. And I'm not sure capitalism prefers a repressive system or that systems in Africa are that oppressive (or the right kind of oppressive).
> For potential angel investors, the lack of reliable statistics about the relevant markets is probably a big issue.
Chicken and egg. Statistics appear when there is a market for them (investors).
I don't see why/how you would call this capitalism. It's got nothing to do with free markets. It's not something anyone who describes himself as a free arket idealist would endorse.
The only thing capitalistic about it is that someone accumulates wealth.
The only thing capitalistic about it is that someone accumulates wealth.
Capitalism does not require a free market and while people are free to describe themselves how ever they want the actions of the vast majority of successful capitalists places them firmly in the pragmatist--instead of the idealist--camp.
You need low corruption, rule of law, contract enforcement, and property rights.
There's probably a very wide gap between the best and the worst countries in Africa in terms of this -- it's not one homogeneous region.
There's probably a very wide gap between the best and the worst countries in Africa in terms of this -- it's not one homogeneous region.
Even though Africa is less homogeneous than Europe, it's roughly divided into two halves, the English speaking and the French speaking countries. I would like to believe it's still homogeneous if you look closely. I think http://en.wikipedia.org/wiki/Mxit have managed to scale , with over 40 million users and still counting.
a repressive system is what capitalism has always preferred
It sounds more than cynical, it sounds disingenuous.
It sounds more than cynical, it sounds disingenuous.
The skill is already there, as evidenced by the large numbers of developers flocking tech hubs such as the iHub in Nairobi.
What is needed is first is angel investors to help projects become startups. It's hard to build a startup on an empty stomach.
Next is successful role models for those in Universities and colleges to emulate.
Much contrary belief, I agree with you that there is a lot of talent. These developers are very talented and intelligent; they lack the experience and exposure. Given time and the right investment, there won't be much difference with the rest of the world.
Speaking of there being a lot of talent contrary to much belief, I recall seeing a TED talk that mentioned how people in many African cultures excelled at binary arithmetic when it was introduced to them because it was actually much more similar to their mode of thinking (as evident in binary-tree patterns in their art, IIRC) than the decimal system predominant in Western culture.
As someone who grew up in southern Africa, I'd love to put some time and resources towards efforts to help the start-up scene in Africa.
As someone who grew up in southern Africa, I'd love to put some time and resources towards efforts to help the start-up scene in Africa.
Kenyan and curious, what ideas do you have on how you can help?
Very few, at the moment - I only started thinking about it a few days ago when I saw the "AfricaHackTrip" on MeetUp.com. I would be unable to join them on that trip, but it's got me thinking about what else I might be able to contribute. Do you have any ideas?
Well, most damage(to hacker-mindedness) is done in high schools and universities, that's a place one can start with. I'm thinking our hackspaces need to have good libraries so a book donation inititave would help.
Do me a favor and email me, would you? mackrorysd's my gmail.
I imagine brain drain is a huge problem.
Once a startup gets enough success to make relocation accessible, why wouldn't they relocate somewhere easier?
Once a startup gets enough success to make relocation accessible, why wouldn't they relocate somewhere easier?
Many people feel that social connections like Family and Friends are worth quite a bit. Also, the average African is much better off than you might suspect as people tend to leave the worst areas.
I'm pretty uninformed about the African startup scene, what are some of the more interesting ones that have had some success?
Mxit, Mpesa, Usahidi, Thawte- sold to VeriSign
Mpesa and Ushahidi can hardly be classified as startups
Why the downvotes?
Mpesa was made for a VodafoneUk subsidiary. It's not network ubiquitous(& hasnt scaled as succesfully in other vodafone subsidiaries) but makes a lot of profit for its network.
Ushahidi is OS & not-for-profit & has shown "growth".
ps: I use Mpesa regularly and I've tried Ushahidi, they both 'fill a need' but differ on scaling & revenue.
Another thing about Rwanda that is surely affecting their growth and blows many African countries out of the water is they have wired most of the country with Fiber where most have dial up speeds. It is not yet common residentially, but for global businesses to establish a base in East Africa, this is huge. I lived two hours outside the capital in a mud house with out running water inside, but I did have 1-Mbps download (was near a rural, well-financed hospital, but still, it was faster internet than I had in Boston.) This is largely all due to the government there which is a pretty well-oiled machine with a bit of a benevolent dictator, but one who gets things done for the benefit of the country IMHO. Contrast with where I am currently living in West Africa in Sierra Leone where the infrastructure is dismal and there is no kLab type place anywhere. There is a lot less action in the startup/entrepreneurship scene. Bad infrastructure, a long civil war and countless other things feed into this.
In terms of startups...so much of Africa runs on mobile phones (the majority of small amounts of money is transferred via SMS) and most of what I saw in terms of startups was based around Mobile-Social-Local. Not unlike what you see in the US and elsewhere.