IT Ecosystem & Startups

Assets and Disabilities of 4 of the Top 10 African countries

In Africa, the ecosystem for inciting, encouraging and nurturing startups in the field of technological innovation requires intelligent interaction between Startups, Companies, Governments, Institutions and Investors. Startups are in the inspiration and ideation to bring technological solutions to economic and social issues. But inspiration and ideation alone are not enough if they are not complemented by actions. This is where Companies step in and take over, to bring startups from inspiration and ideation to prototyping, by setting up either incubators or co-working spaces to promote and support startups and their technological innovations in an operational way. Once the impulses of ideation and inspiration are being transformed into concrete technologies and applications, the Government will also have to play its role as a public authority whose mission is secondary. Thus, the Government can set tax incentives, public subsidies and other forms of assistance. The Government is then an accelerator for the startups in the field of technological innovations. The Investors play another role. They will ensure at first the growth and then the startups expansion, by bringing them the financial and the necessary technical resources, by the means Venture Capital funds or scale up funds. This is the logical case of the startup ecosystem in the field of technological innovation. In a descriptive and comparative approach, here are the strengths of the IT and startup ecosystems of Morocco, Ivory Coast, Kenya and Ghana, all of which are in the Top 10 “African capitals of technological innovation start-ups”. The dossier of Bridges Builder.

Morocco

Strong promotion and operational support and low supply of financing

In terms of promotion and support for startups, Morocco is well endowed thanks first to its Casablanca Technopark (2001) which is an African and world reference in terms of support for startups. Then, structures such as Startup Weekland, Startup Maroc Road Show, Injaz, Morocco Cisse, Start up Yourlife, Enactus, and co-working spaces such as Secteur 21, Emerging Business Factory, 7 A.Y and the Technopark of Casablanca. Morocco developed an offer in terms of promotion and operational support to startups in the field of technological innovations. In this area, Morocco’s weakness lies mainly in the development of incubators specializing in social entrepreneurship, seed financing (OutlierZ), and the growth and expansion of its startups (Azur Partners, SEAF). Another deficiency of Morocco’s ecosystem is the lack of venture capital funds, Scalpe up funds (Endeavor) and business angels (MNF Angels) have an under-covered offer, while public subsidy and crowdfunding offer are relatively low. However, global giants such as Atos, IBM, Oracle, Sage have chosen to locate in Casablanca and use it as a launch pad to Africa. The Moroccan banking sector has a growing interest in the IT sector. Three banking giants – Attijariwafa Bank, BMCE and Banque Populaire – are investing up to MAD 20 million (EUR 1.9 million) in the IT sector. Morocco has equipped itself with excellent infrastructure in terms of Internet connection. And The arrival of 5G, expected by the year 2020, should position Morocco as one of the best cities on the continent in terms of connectivity. With 42 million mobile subscriptions, the penetration rate of smartphones in Morocco reached 70% in 2017. However, Morocco does not count any data center (cloud hosting servers) Finally, the question of skills remains. If Morocco trains competent engineers and technicians, many of them are attracted by foreign countries.  More than 2,000 young people leave the country every year,” laments Mehdi Alaoui, director of the Factory, an organization specialized in coaching start-ups. Even if salaries are rising by 20 to 40 percent a year for engineers and technicians, this is not enough to retain them.

Ivory Coast

Promotion and operational support developed, seeds funding, and low growthsance faibles

Ivory Coast inspired by the Moroccan model set up its Technology Park and a framework for promotion and operational support dedicated to start-ups evolving in technological innovations. It is a relatively developed offer.Various tools of promotion does exist like atp, French Tech Abidjan, Orange, African Web Festival, or Akendewa. Concerning incubators, there are several: ADN, Vitib, Prodije, Seedstars, Incub’Ivoir, Baby Lab,Y’ello Startup. Co-working spaces got created as per JokkoLabs, Akwaba Village, or Colab.  The support of challenges such as CGECI (organized by the Ivorian Ministry of Communication, Digital Economy and Microsoft) makes Ivory Coast a key player in the French-speaking countries of the Uemoa region.

However, two obstacles are hampering Ivory Coast’s full potential in the field of technological innovation start-ups: the weakness of the supply of seed funding and public subsidies, which has repercussions on the growth and development of its start-ups, and the lack of establishment of large groups in the field of venture capital as well as the existence of technological support. In the field of infrastructure, Ivory Coast already has three submarine cables and inaugurated a fourth one last October, while waiting for a fifth cable the end of the year 2020. In Ivory Coast there are no taxes for LLCs with capital of less than 10 million CFA francs (around 15k€). Additionally, there other facilities such 5 years tax exemption for companies established in the Grand Bassam technology. They pay 1% tax from the sixth year.

Kenya:

Very advanced in Promotion, Incubation and Acceleration. Handicap in Seed funding and Venture Capital insufficiently covered

In Kenya (as in Nigeria, South Africa and Egypt), compared to the French-speaking areas, it is like entering a whole other world especially in the field of technological innovation and entrepreneurship. Kenya is known as a country of mobile finance and world capital of the e-Money. It has a promotion framework, incubators and accelerators, co-working spaces and various start up supports very well developed. At the level of promotion, SOAR and New Tech Africa Play perfectly their role. Undoubtedly Kenya is an African champion thanks to the level of its incubators and accelerators. Unreasonable East Africa, The Tony Elumelu Foundation, Sinaps, NailLab, Eila Africa, mLab, B.A, Spring, Kenya Climate Innovation, IU, have made Kenya an African leader in the field of technological innovations.

The only weakness in the Kenyan ecosystem remains the relatively uncovered supply of seed funding and venture capital, and with extremely limited public subsidies. Services account for half of Kenya’s GDP thanks to  real estate (8.9%), retail (8.8%), transport (8.3%), finance and insurance (7.4%), education (6.1%), public administration (5.4%), professional services (2.5%), health (1.8%) and information and communication technologies (ICT) (1.6%). In terms of employment, the sectors that account for the largest GDP’s share are at the bottom of the ranking. Health, education, ICT and public administration are the biggest providers of jobs, while finance, insurance and real estate are at the bottom. The development of ICT is remarkable, with the best-known example being M-Pesa -a mobile payment application- now leader in its field. The application is used by two thirds of the Kenyan population and enables the equivalent of 25% of GDP money transfer. The viability of the system depends on the high mobile penetration rate of almost 90%. About 40% of the population has access to the Internet.

Ghana:

The Most Successful Ecosystem and Least Difficult Access to Finance in Africa

What makes Ghana’s ecosystem unique and dynamic is its strong network of local universities either public institutions like the Kwame Nkrumah University of Science and Technology (KNUST) and the University of Ghana, or private universities like Ashesi University (founded by former Microsoft’s Patrick Awuah). In the ecosystem penetrates the economic fabric and technology centers. For example, when iSpace and Impact Hub opens at Accra, Ghana’s most technologically active city, hubs such as Kumasi Hive are paving the way in Kumasi, while the HOPin Academy is paving the way in Tamale and Ho Node is paving the way in the Volta region. And these technology hubs work together collaboratively, supporting each other through the Ghana Technology and Business Hub Network (TBHNG) creating thriving innovation clusters across the country. And it was not for nothing that Google chose Ghana to open its first Artificial Intelligence Research Centre. In terms of infrastructure, Ghana’s position on the West African coast and its political stability have made it a key landing point for international submarine telecommunications cables. It is connected to five major international cables, including the African Coast to Europe system; the Glo-1 cable between the United Kingdom and Nigeria; the South Atlantic 3 / West Africa cable linking South Africa to Portugal and Spain; the West African Cable System; and the main link between Portugal, Nigeria and several other West African countries. Thus, Ghana has a significant capacity for international communication. One of the main factors behind the growth of new technology companies is the supporting ecosystem. A virtuous circle has been created: established companies support university and colleges focused on technology-related sectors, as well as mentoring in the country’s technology incubators.

At the same time, two handicaps are likely to slow down the startup ecosystem dynamics in Ghana: access to capital and highly skilled engineers who increasingly prefer to return to large companies. Indeed, while the process of obtaining credit is simpler in Ghana than in many other sub-Saharan African countries, many startups still cannot afford to obtain a bank loan because of the interest rates. They tend to be very high – usually in double digits.

Siré Sy

See also :
The application that connects hospitals, pharmacies, doctors and patients
Support investors to find start up Gems in Africa
Kenya: 52 million mobile connections and 17% penetration of social networks
Ivory Coast: 12 million Internet users and a mobile connection to 131% of the population
Cameroon: Fear on the CTO 2020 ?

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