I have just spent 2 months visiting tech startups and tech hubs across South and East Africa (South Africa, Ethiopia, Kenya, Uganda and Rwanda) thanks to my Fellowship from Winston Churchill Memorial Trust. (Check them out, they’re awesome).
I was particularly interested in businesses aiming to have a social impact (edTech, cleanTech, healthTech etc). If you hate tech and are evil, move along. There’s nothing for you here. But if you like tech and making the world better, here’s 10 things I learnt...
1. When your country is facing significant social and environmental challenges, like an 83% youth unemployment rate, as in Uganda, or lack of access to clean water (most places), every business is a social business
‘Social’ enterprise was not a distinct category in most of the places I visited. And for most of the entrepreneurs and hubs I spent time with, that’s a good thing. They are creating jobs, making health improvements and so on. But they see it as a business — they don’t think of themselves as ‘social’ entrepreneurs.
This means they have a laser sharp focus on building sustainable business models and have less self imposed barriers by getting over concerned (or dragged into) crap that social entrepreneurs have to deal with, like overly onerous complex impact measurements in day one of their funding and so on. (Impact measurement is important, but you can’t have impact business if you haven’t got the ‘business’ part down).
2. The Accelerator scene in the UK is pretty good. It’s not so good in Africa
In the UK the accelerator scene is, on the whole, definitely more advanced than in the countries I visited in Africa. The reason is that UK accelerators are much more focused on pushing businesses to grow and scale fast, with the pressure that accompanies this.
Most spaces in Africa that self-identify as incubators are still finding their models. The problem is that, despite some initiatives to connect them, they are doing this independently. This means there’s a lot of ‘reinventing the wheel.’
This issue is compounded by the fact they are often funded by foreign aid agencies, meaning they are juggling conflicting and disparate requests from a range of funders, rather than focusing on a core business model or value proposition. Where incubators have become self-sustaining they are doing much more interesting things.
A special shout out goes to the self-defined co-working spaces. There are less of these than you think. But those that are doing this are doing it very well. For example, the Office in Rwanda, they call themselves a co-working space, and focus on creating an amazing co-working environment. They don’t pretend to be anything else, and do that one thing very well.
A community building for civic, cultural and entrepreneurial exploration in Kigali, Rwanda
3. There’s not enough devs. Ever
Wherever you are in the world, finding devs is a problem. We need more developers. End of. There’s a range of people doing something about it, like the amazing Tunapanda Institute who are based in, and train, people from the Kibera area in Nairobi. But the world needs more devs. If we focused back to work programmes in the UK of tech training rather than stacking supermarket shelves, everyone might be a little better off. Except Tesco, but you know, they’re doing alright on their own.
4. African mission driven businesses generally have much tighter business models than their counterparts in the UK
By virtue of seeing themselves as businesses above all else, the (would-be social) entrepreneurs I met were, on the whole, much more savvy about commercial growth—whether looking at measuring key metrics like Customer Lifetime Value, through to iterating business models. I think some of the infrastructure and support around social enterprises in the UK has actually harmed them. For example, certain funding and legal structures imposing asset locks and pushing people to have a certain ‘type’ of social enterprise.
The focus by African entrepreneurs I met on finding business models also means that many are much better at intertwining their business growth with social impact, rather than seeing the social value as being manifested through other means, such as a redistribution of profits. An example of this is Safemotos in Rwanda. Given that 80% of all accidents in the capital, Kigali, involve motorcycle taxis, they created a taxi company that has safe motorcycle drivers. People are paying a little more for the taxis, but are getting a safer ride. Their KPI is safety. The safer they are, the more people take their service—equalling more money—but also the more that people are safe the more social impact.
In Africa, people are building sustainable businesses that offer services to marginalised (poor) people.
M-Pesa is the (too) often used example of this, but I’ll use it anyway as it demonstrates a vital point. People can make business models out of high volume, low value transactions. This means valuable services are accessible to the poor just as much as the rich. In the UK it often works the other way around. Social enterprise business models are generally built on low volume, high value transactions and some of that revenue is used to subsidize or give free services to marginalised or vulnerable people.
For example, I sell you a premium priced product, but you’ve helped support marginalised people in my supply chain. Or I’m paid through a local government contract to deliver services for vulnerable people in the community. This results in a split between users of the service and customers that can split priorities. Equally this means that with a subsidised business model, marginalised people don’t get sustainable access to services.
6. Funding is a problem, but the lack of investment pipeline is a bigger problem
There’s the same gap in funding in Africa that we see in the UK — the ‘missing middle’. It’s the gap after accelerator and pre-series A. In the UK it’s between 150 —350K (ish), in Uganda, as an example, it’s 20—100k. This gap exists because it’s too risky for commercial investors to step into, and too big for grantmakers. We need to plug this gap if we are to see mission-driven businesses operating at scale.
7. Development aid isn’t always that helpful for the startup scene. For example, big NGOs push up rents and similar operational costs for small start ups. This makes it harder for them to operate.
That’s pretty self-explanatory.
8. Ex pats are active and building business across all of Africa. There’s pros and cons of that, which we could talk about for days
Let’s not now though.
9. On the whole, the supporting infrastructure in Africa is really bad (especially outside the capital cities). In the UK, we take this for granted...and so risk losing it
There are power outages, the internet cuts out repeatedly and data is very expensive. The Government has an important role in supporting SME tech companies we don’t always appreciate or focus on in the UK. They provide vital infrastructure both physically and through policy that you don’t know you need until it’s there. Equally that means we have to keep fighting for the privileges we have, for example, open access to the internet, the right to encryption and so on. Also, as an aside, arguably we have a lot less corruption in the UK and US. Well either that, or it’s just a lot more legal.
One of the many informal settlements in Kibera, in Kenya's capital Nairobi
10. The UK can learn a lot about over-engineering from African start ups who are using ‘older’ technologies much more effectively
Partly this is due to the technical restraints they face, for example the prevalence of smartphones is still very low, so it makes much more sense to use SMS than to build an app. But all the same, we could improve a lot by thinking more about what users need, and less what we’d like to build because it’s an interesting technical challenge.
When you’re building that hospital appointments system, maybe you don’t need to build an app just because you can. Maybe you use SMS. It’s not sexy and it’s probably not very interesting for you. But it will probably work a lot better for the 85 year old who is still getting her head around turning off caps lock when texting.
So yes, let me know if you’ve got any more lessons I’ve missed. Or quite how terribly wrong I have got it...
"They have a laser sharp focus on building sustainable business models and have less self imposed barriers by getting over concerned (or dragged into) crap that social entrepreneurs have to deal with, like overly onerous complex impact measurements in day one of their funding."