Our three takeaways from Africa Technology Business Forum

On June 22, the GSMA Ecosystem Accelerator team took part in the Africa Technology Business Forum, an event organised by the Africa Technology Business Network as part of London Tech Week and with the aim of ‘showcasing Africa’s emerging technology opportunities’. Around 150 participants, including investors and start-ups, took part in the discussions.

 

Here are three takeaways from this insightful day that we wanted to share with you.

1. Fintech, fuel for innovation in Africa
According to a Disrupt Africa Funding Report published earlier this year, the fintech sector received close to 30% of the funding raised by African start-ups last year, second only to the solar tech sector. The growth of the sector in Africa is real, as is the interest from international investors. Fiona Ghosh, an e-finance expert at law firm Addleshaw Goddard and panellist at the event, confessed it was already her 3rd panel in London on fintech in Africa since the beginning of the year.

As highlighted by most speakers during the day, one of the key interests of the fintech sector for African economies is its enabling power. Due to the lack of local legacy financial services, fintech is acting as a facilitator for start-ups in other sectors, principally agriculture, recruitment and e-commerce. A great illustration of that was given by Charlene Chen – COO from Kenyan fintech start-up BitPesa – and Ernesto Spruyt – founder of Tunga.io, an online marketplace for African developers. Tunga is using BitPesa to receive payments from its clients and then pay the developers in Kenya in Uganda. “Bitcoin is by far the best and cheapest way for Tunga to pay developers on the platform” noted the start-up founder.

 

Combo 1

 

2. Mobile operators are partners of choice for African start-ups
New figures shared by our head of programme, Max Cuvellier, attested to the enormous potential of mobile in the continent: 557 million Africans own a mobile phone today.

In this context, mobile operators appear more than ever as partners of choice for local start-ups. The high attendance from both investors and start-ups at our break-out session on “Accelerating Mobile Innovation Through Start-up/Operator Partnerships” clearly proved the interest for these collaborations.
While traditional fears on revenue sharing or exclusivity deals were raised by the participants at our roundtable, a consensus emerged that things are progressing in the right direction and that interesting initiatives are taking place (a high-level summary of some of these initiatives was actually compiled in an article by Disrupt Africa this week: 5 mobile operators backing African tech start-ups).

There are a number of assets that mobile operators can open up to start-ups, from soft ones like market knowledge all to way to hard assets like their actual towers. An example came up during the showcase session of the event, as start-up Kukua.cc explained how they are using mobile operator masts in Nigeria to install their weather stations and gather localised data to then share accurate weather forecasts with local farmers by SMS.

 

new combo

 

Discussion at our roundtable ended with another very valid question: should African tech start-ups go with native mobile apps for smartphones or work with mobile operators on SMS and USSD types of channels for their digital services? With smartphone penetration in Africa still at around 23%, the second option appears relevant in most countries for start-ups aiming to target the mass market.

 

3. The specificities of Africa Tech’s funding gap
“There is more capital available for African start-ups today than there has ever been”. This perception, expressed by VC4A founder Ben White, was shared by most participants at the event but hides some specificities than need to be unpacked.

To the question “who in the room has invested sub-$1M tickets in African ventures”, only two or three hands were raised. The famous ‘missing middle’ issue is actually a ‘missing bottom and middle’ issue for African start-ups. Pre-seed start-ups are still struggling to raise funding, even in the range of $5,000, sometimes lower. This very early stage funding is crucial, especially for hardware start-ups that need a prototype to be used as proof of concept. Anna Lowe, co-founder of tech hub Kumasi Hive, gave the example of Solomon Odong’o Maxwell and his Uganda based start-up Emali Creation who came up with a mobile phone charging bicycle device. Emali Creation was only able to build a prototype after receiving a small local grant.

A second point that was mentioned by a number of panellists and speakers during the day was the need for local or diaspora investors (and successful entrepreneurs) to invest more in African tech start-ups. In the case of local investors the key is to encourage them to direct more investments to start-ups instead of oil & gas or real estate companies. When it comes to the diaspora, it’s about accelerating the trend of talent and capital returning to Africa to invest into, or launch, start-ups. Angel investment networks were mentioned as a way to support this trend.

 

Combo 3

 

As a way to conclude this blog, we would like to thank and congratulate Eunice Baguma Ball, founder of Africa Technology Business Network, for putting together this great event and allowing us to contribute.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.