African Tech Hubs Work In Tough Conditions To Bridge The Digital Divide

Written by Kevin Mwanza

Apr 30, 2014

From WSJ

In its recent report on global trends in Internet connectivity, the World Economic Forum found countries in Africa are still lagging many of their peers in other areas of the developing world.

“Sub-Saharan Africa slowly continues to develop its information and communication technology infrastructure,” the report noted. “Severe weaknesses persist in the region’s business and innovation ecosystems,” the report warned, adding that addressing those weaknesses would be crucial to ensuring the benefits of digital innovation reach the broader population.

Undeterred by the sluggish development of Internet access across the region, technology hubs are sprouting across sub-Saharan Africa, attracting sizable investments and growing attention. Communities such as Kenya’s iHub, ActiveSpaces in Cameroon, RLabs in South Africa and CTIC in Senegal are aiming to provide the kind of environment that will enable home-grown technology start-ups to thrive.

Technology-focused investment vehicles are emerging, too. Savannah Fund, a roughly $10 million fund focused on incubating technology firms in Africa, has recently invested in three new companies as part of its accelerator program, Erik Hersman, a partner in the fund, told WSJ Frontiers. The companies will receive $25,000 each and will have three months to prove themselves. BiGxGh.com, a music website in Ghana; UniSmart, a student loyalty platform in Nigeria; and Zevan Limited, a startup in Kenya, will all receive mentoring and coaching through their process.

Savannah has seen 10 companies through its program so far and it is looking to invest its funds over a five-to-six-year period, Hersman said. The fund invests mainly in early-stage, high-risk companies but is also open to taking positions in more-established players. “We’ll be making another two to three investments in the coming months that are outside of the accelerator, at larger amounts,” Hersman said.

The fund, which was set up in 2012, recognizes it is facing more challenges than just the relatively low levels of Internet penetration in Africa: “The biggest problem is that companies are spread in a much larger geographic region than the Bay Area,” says Hersman, who grew up in Kenya and is also the founder of Kenya’s tech innovation space iHub. “We are pulling in companies from Ghana and Nigeria as well as Kenya and Uganda. We also have to do some real due diligence.”