On 20 and 21 November, the GSMA Ecosystem Accelerator team took part in Emerging Valley 2018 in Marseille, France. The two-day event – which took place at Palais du Pharo on Day 1 and at ‘thecamp’ in Aix on Day 2 – gathered a crowd of African entrepreneurs, tech hubs, government officials, investors and other stakeholders, to discuss the continent’s innovation ecosystem, with a strong focus on French-speaking countries. As is now customary, we have put together a short blog to highlight our key takeaways from the event.
Mobile technology is top of mind for all of the players in the ecosystem
Mobile technology is now more than ever at the centre of the innovation ecosystem in Africa. Whether it is a means to communicate with their customers, through an app or a simple interface such as USSD, or to accept payments, mobile phones have become a central piece of most products and services developed on the continent. This reality is recognised by all players in the ecosystem, including governments, and so is the importance to break barriers between markets by harmonising technology and policy, to facilitate start-ups’ pan-African growth. Othman El Ferdaous for instance, Morocco’s Secretary of State in charge of Investment, summarised the role of government as follows, “The role of public policies is to establish the pillars on which start-ups can rest to allow for economies of scale [in a very fragmented African market]: connectivity, mobile payments, and customer data.” This point was also raised from the perspective of a mobile operator, with Orange Digital Ventures Africa Investment Manager Grégoire de Padirac highlighting that, “a mobile operator like orange in Africa has strong distribution networks, payment systems, customer data etc. which are assets start-ups can leverage on their path to scale.” In this context, many speakers also reminded the audience that technology should not become a source of exclusion. Jérémie Pellet for instance, Deputy CEO of the AFD – the French development agency – concluded his opening keynote by stating the organisation’s core focus on making sure that digital technology in Africa does not aggravate inequalities but remains as inclusive as possible.
Entrepreneurship and social impact cannot be dissociated
The importance of social impact appears in two of the specificities of African digital entrepreneurs according to Janngo (Cote d’Ivoire) CEO, Fatoumata Ba: They address real local challenges, they need to deliver commercial sustainability at the same time as social impact, and they must leverage technology to support local SMEs. Kenza Lahlou, co-founder of investment firm, Outlierz Ventures (Morocco), made two very similar points when she mentioned that local start-ups must not develop ‘nice-to-have’ services but answer real local needs, and that B2B models are still probably the most promising in markets that are very fragmented, and where citizen’s purchasing power is low. This principle was the starting point for the second edition of the Social & Inclusive Business Camp organised by AFD and focusing on accelerating African companies with societal impact. Sixty companies were selected to take part in the week-long bootcamp with renowned mentors and sponsors such as Fatoumata Ba or Bosun Tijani (CC Hub, Nigeria). Three of the start-ups funded by our Ecosystem Accelerator Innovation Fund joined this cohort: Lynk (Kenya), Optimetriks (East Africa), and SudPay (Senegal – pictured below).
Supporting local ecosystems through partnerships is essential to developing local capacity building
The importance of local structures supporting the innovation and entrepreneurship ecosystems in each market is illustrated by the growth and evolution of the tech hubs landscape in Africa. We have estimated that Africa today boasts close to 450 tech hubs, with most markets showing tremendous growth in the past 18 months. For newer structures, as well as in lesser-developed ecosystems, additional support is needed from organisations like Afric’Innov, which was created to help professionalise incubators through capacity building and networking (see their latest World Bank funded report on Incubators in West Africa). Another trend among structures supporting innovation is their increasing level of specialisation. For instance, with ‘agritech’ now in the top three most dynamic sectors in terms of fundraising in Africa, new initiatives emerge like TAIC (Tubaniso Agribusiness Innovation Centre) which was announced at the event by Arounda Modibo Touré, Mali’s Minister for Digital Economy and Communication. The programme is funded by the World Bank, and aims to become a place for incubation, acceleration and knowledge sharing for agritech start-ups in the Sahel region. The World Bank also announced recently that it was launching the second edition of it XL Africa programme, renamed ‘L’Afrique Excelle’ as it is to focus on Francophone Africa start-ups looking to raise between $500,000 and $5 million in commercial investments. One last example of the growing activity in this field was the official launch of the Digital Africa platform which aims to become a one-stop-shop for African entrepreneurs to connect and access resources and funding opportunities.
Capital is still too scarce, but it is coming
More and more Africans aspire to become entrepreneurs: Ifeyinwa Ugochukwu of the Tony Elumelu Foundation, which selects 1,000 early-stage entrepreneurs across Africa every year, shared the number of applications to their first four cohorts, a number that grew from more than 20,000 in 2015 to over 40,000 in 2016, above 90,000 in 2017, and higher than a staggering 150,000 for the 2018 edition. Demand for capital is therefore extremely high, and not yet met by the market. In this context, Olivier Furdelle, co-founder of Teranga Capital (Senegal) explained why a specific breed of investors is needed, who can compromise between financial returns and impact because smaller tickets are less profitable and riskier, and that a lot of these projects are not ´investor-ready’. A growing number of investors are trying to address the market’s needs, from very early-stage seed funding to the ‘missing middle’, like the various local funds supported by I&P. Donors are also allocating additional funding to support entrepreneurship, from DFID to the AFD who recently earmarked 1 billion Euros for such activities over the next five years.
I would like to end this blog by thanking the Emerging Valley team and Samir Abdelkrim in particular for a very relevant event and for inviting GSMA to share its work at one of the panels.