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Africa’s Silicon Savannah Dream Overrun By Aid Money

Africa’s Silicon Savannah Dream Overrun By Aid Money

Africa’s Silicon Savannah that brings to mind a hyper-tech innovation zone could just be a pipe dream supported by non-profitable organization that are propping up tech startups with fluff money from western donors, experts have cautioned.

A report on wired.co.uk says that Africa’s most visible technology products such as iCow, M-farm and M-Kopa Solar that occupy the social enterprise space, are being overhyped and that ready availability of NGO funding for such social apps could be damaging the business ecosystem and stifling innovation and growth in the region.

A recent private equity confidence survey  suggests that Kenya in particular is one of the place where fluff money from aid agencies has overrun the tech startup scene. The east African nation has more than often been overlooked by investors in favour of Nigeria and South Africa.

“In Lagos, there’s no fluff. It’s hard business, tough deals, the right kind of business. The first investors made good money. The ecosystem is very healthy,” Nikolai Barnwell, investor and director at Nairobi incubator88mph, who has offices in all three Africa tech hubs — Nairobi, Johannesburg and Lagos — told wired.co.uk.

“When you look at the infrastructure here, we should be miles ahead. But there’s so much fluff money, no hard talk, NGOs propping businesses up — it kills it.”

Andrea Bohnstedt, director of private equity consultancy Africa Assets, told Kenya’s Standard newspaper that “the hype about Kenya as a Silicon Savannah is in fact not translating into business opportunities.”

But why would a country whose capital city Nairobi has consistently been ranked among the top 10 cities in Africa fall behind Nigeria whose second largest city Lagos was ranked the “Worst city in the world” by BusinessWeek?

Wired.co.uk says this favorable ranking of Nairobi has made the country attractive as a operation areas for international aid agencies and, by extension, why there’s plenty of NGO money around, which can create precarious dependency within an economy.

“The only way that everyone’s critical needs can be solved is by building businesses that both address a human problem and have a business model to ensure it can keep solving that problem in a scalable and sustainable way,”  Timbo Drayson, who recently left Google in London to start OkHi, a technology company solving the lack of address system in Kenya, based out of his Nairobi garage, told wired.co.uk.

He says aid agencies solve a problem, but questions is this is sustainable, adding that he sees this period in Kenya’s tech scene as “a fascinating inflection point”.