Innovation Hub Watch Uganda: 2022

Wednesday, May 11, 2022

Let the Pharaohs rise-Egypt’s Technology Ecosystem

Distinguishing yourself amongst the rest

If you have been following our studies in the last few months, you will see that we have often referred to the big four. Egypt, Kenya, South Africa and Nigeria. We have referenced them with regard to the attraction of Venture Capital Funding in the last few years. These countries have come up at the top and are now effectively technology hubs in Africa or at least hubs that are dominating their respective regions. In Kenya we noticed the attractiveness of the ecosystem there and the friendliness of the participants as well as the variety of platforms upon which growth was taking place. South Africa was astonishing in so far as her ability to link with institutions in ways similar to those of Silicon Valley as well as the regional angst that was expressed in the spaces there. In Nigeria on the other hand we noticed that the country had harnessed its population towards the adoption of mainly fintech taking advantage of its very highly educated and banked populace.

Entrepreneurship and Technology

This time we deal with Egypt and we confess that we owe a lot of what we will write about today on a paper written for the Ecosystem in Egypt that focused on Entrepreneurship and the Global Entrepreneurship Index (https://www.mdpi.com/2071-1050/13/13/7171/htm). So we will be trying to equate the success of lack thereof of the Technology Ecosystem to that of the Entrepreneurial Ecosystem and using the GEI (Global Entrepreneurship index) as a guide in that. First a little background around the development of Egypt’s technology ecosystem and its growth.

The rise and rise of Egypt’s Technology Ecosystem

According to a Disrupt Africa’s African Tech Startups Funding Report 2019, 311 startups on the continent raised a grand total of US$491,623,400 in 2019, up 46.7 per cent on 2018. Funding did not go to the first three (South Africa, Nigeria and Kenya) that made 2019 a little different.

Eighty-eight Egyptian tech startups secured investment over the course of the year, more than any other African country, and accounting for 28.3 per cent of the overall total. This represented growth of 159 per cent on the 34 startups that secured investment in 2018.

These startups secured almost US$90 million in funding, a higher figure than South Africa and one bettered by only Kenya and Nigeria. This accounted for 17.4 per cent of Africa’s overall total funds raised, and was up 45.5 per cent on 2018 (Notes taken from https://disrupt-africa.com/2020/02/04/how-egypt-established-itself-as-an-african-tech-hub-to-be-reckoned-with-in-2019/).

Here is what is on the ground in Egypt.

You have accelerators and incubators, local venture capital firms and angel groups, government support and not for profits, co-working spaces, regional and international venture capital firms, events, meetups and boot camps as well as startup media and insight groups. And here is he it works. You have the small business idea that is born in a co-working space that often hosts events, meetups and boot camps. Through these events especially competitions and hackathons, a few emerge as being talented having won the competitions, these then attract the interest of incubators who take them on with ideas on how to improve. Incubators normally work with businesses in their infancy. These then progress to accelerators that can further drive growth for these small businesses. Eventually they attract the interest of local or international VCs who then invest in them. By connecting with government or not for profits organizations, these come up with solutions that are relevant. Later on based on success these groups then gain the attention of media which serves to generate regional and global growth.

The Global Entrepreneurship Index, Entrepreneurship Ecosystem and Technology.

The paper recognized the importance of entrepreneurship in regional economic development. This was done by examining or analyzing the characteristics of the Egyptian Entrepreneurial ecosystem using the Global Entrepreneurship Index. Data was taken from 2006 to 2017.

The Egyptian Revolution and the Arab Spring-where optimism on the street did not translate to optimism in the market

Notable in the study was the year 2011 and the few years that followed this momentous year where Egypt had its revolutions, and the region faced the Arab Spring with effects. According to the report, “the lowest GEI score was in 2012 due to the social and economic issues that accompanied the Egyptian revolution of 2011. This revolution began in December 2011, when mass demonstrations broke out all over Egypt protesting against poverty, government corruption, unemployment, and low economic levels in the country. Subsequently, Egypt went through various drastic changes that affected all the economic sectors and processes. After this period, the Egyptian GEI scores expanded to increase social and economic opportunities….”

The pillars examined

The report further reveals that, “the Egyptian entrepreneurial “Aspiration” pillars play a promising role in the Egyptian entrepreneurship ecosystem, especially the “Process Innovation” (new technology and the average number of science institutions and the availability of scientists and engineers) and “Risk Capital” (informal investment and capital markets) pillars. Although the entrepreneurial “Abilities” pillars appear as shortcomings in the Egyptian GEI, especially the "Opportunity Startup" (opportunity motivation and governance with taxation) and "Competition" (competitors and competitiveness, market domination and regulation) pillars. Furthermore, Egyptian entrepreneurial “Attitudes” pillars are considered to be the main disadvantage of forming the Egyptian GEI score. It also proved that the “Risk Acceptance” (risk perception and country risk) and “Networking” (know entrepreneurs, urbanization and infrastructure) pillars appeared as the weakest aspect of the Egyptian entrepreneurship ecosystem. Consequently, developing national policies and strategies to enhance these two pillars will improve the Egyptian GEI score by 2%.”

Below is a useful list of the map of the Technology Ecosystem as it stands. We have made it brief giving just two examples of each except when it came to the success stories. Those are listed in full. We think that the stages below can be useful when mapping the progress of your start-ups.

https://fi.co/insight/egypt-s-startup-resources-list-for-entrepreneurs-accelerators-incubators-investors

Startup Stages

There is no one right way to build a technology company, but for the sake of simplicity we have outlined a basic, common, sequential framework.

1. Idea Stage

This is where new entrepreneurs get inspired, learn best practices, develop skills, validate ideas, and begin to build their team and product.

A. Inspire

Egypt Startup Media: Centralized local information, listings, and news. (i.e. startup blogs / publications / lists / FB groups / newsletters).
Inspirational Egypt Startup Events: Open, inclusive startup events that often focus on ideation. (i.e. Startup Weekend, idea fairs, and inspirational meetups)

B. Educate

Best Practices: Beginner knowledge-sharing tech events. (i.e. beginner events that serve to educate more than inspire).

Training & Feedback: Skill & Idea development events and startup bootcamps for entrepeneurs. (Includes comprehensive training programs, like Founder Institute, General Assembly, Lean Startup Machine, code camps, etc)

C. Validate

Team Formation: Events for Finding Co-founders in Egypt. (i.e. tech networking events or other resources that facilitate early-stage recruitment and cofounder matching)

Build First Product: Hackathons & product events in Egypt.

2. Launch Stage

In this stage, entrepreneurs establish and formalize the company, develop the product, get feedback from customers, and prepare for the next step.

A. Start

Establish: Egypt law firms & banks for startups

Egypt Workspaces: Co-working and flexible workspaces for startups in Egypt.

B. Develop

Formalize: Egypt accounting, development and HR tools for early-stage startups.

Egypt Incubators: Groups that prepare companies for seed investment and provide advanced mentorship. (i.e. advanced knowledge sharing, later stage events and resources)

C. Launch

Egypt Seed Accelerators: Seed funding mentor programs (Techstars-style programs that provide funding)

Pitch & Demo Events: Tech events that showcase Egypt startups for investment.

3. Growth Stage

Here, a startup proves their utility, receives recognition, and scales up. This usually requires funding, angels, VCs, and ways to connect them to startups.

A. Recognition

Egypt Investor Networking: Events and groups that connect professional investors with founders.

Major Media: Mainstream local business press that often showcase local startups.

B. Funding

Egypt Angel Investors: Seed-stage investors and micro-VCs.

Egypt Venture Capitalists: Series A and beyond

C. Growth

Infrastructure: Office space, HR, local business insurance. (i.e. office space/ HR/ insurance providers for capital-rich companies to grow and scale)

Expansion: Egypt Growth accelerators and consultants. (i.e. programs and business consultants for capital-rich companies to grow and scale)

4. Egypt Startup Success Stories

Successful homegrown companies that have raised significant institutional funding, employ a large workforce, or have achieved liquidity.

Supporters

To facilitate the steps, every ecosystem needs strong supporters.

1. Egypt Startup Leaders

Successful local founders who lead the ecosystem & frequently mentor newbies.

2. Government Startup Resources

Public organizations that facilitate local economic development

3. Talent

Major local business or tech universities and employers that attract and retain local talent.

Local Egpyt Tech Universities (universities with prominent technical or business programs)

Egypt Tech Employers

Friday, April 15, 2022

Secret Sauce: Kenya’s Tech Ecosystem Explained

Kenya is on the list of most developped countries in Africa. It is no wonder that she has found herself on the list of most popular destinstions for venture capital in the last ten years. If you have been following along in the last few months, you will notice that we have been covering the African Continent and trying to map out the Technology Ecosystems here. We started off with Uganda which we covered in the Intersection Magazine (a print and online magazine accessible via twitter @TersectionMag as well as other platforms). Uganda was a source of interest because this is where the author of the article resides and this is the territory more familiar. We covered the spaces in Uganda from some of the earliest ones like Hive Colab (located in Kanjokya St. in Kampala itself a suburb that attracts a host of technology companies) and Outboxhub (located in Solis house on Lumumba Ave. in Kampala a short distance from the city center). We wanted to see what made these places unique and what contribution these two were making to the tech ecosystem in Uganda. Later on we covered Innovation Village (located in Ntinda as one of the largest and the one fulfilling the most in terms of ecosystem coverage) as well as Design Hub Kampala. We were looking for those that were topic focused such as DHK which is created with a strong design bent but that also caters to fledgling entrepreneurs.

Collaborative Mindsets

One of the things that stood out to us while we were doing our research was the importance of goodwill and the nature of the developer community that one surrounds themselves with and this is where Kenya comes in. The message we found on Hope’s TL is what we are talking about. The importance a collaborative mindset in an ecosystem. This is the message that stands out and that i think should be the heart of every ecosystem globally.

The importance of Historical players

If you do a little research in the history of the ecosystem you will find that there are some players without which the system would not exist. For example iHub was founded in 2010 and has to date helped launch

Of about 450 startups with global following of about 500,000. These are the people or companies upon which the templates that are created are built. These are the players that have supplied the road map to others and mentoring it is these that are to be replicated.

The challenge of replication

One of the major criticisms that i have come across with regards to the tech ecosystem in Kenya is the fact that there is far too much replication where there should be collaboration. There are times when you need not reinvent the wheel. Does the ecosystem already have something similar to yours that is already working? Then design differently and support what exists already! Are there solutions hat match some of what you are doing? Collaborate to make those solutions better! There is a phase right at the start when the spaces that existed at the start could not take care of all the needs that existed in the ecosystem. This is where replication of the initial ones was necessary but past that stage what you are creating begins only to drain resources that may be limited.

Political fears

Kenya had a tough season in the elections of 2007. This brought about some pressure to the system and fears that were transferred to investors who almost always prefer peace to chaos. The challenges that Kenya faces are similar but not as great as those that are faced in the Northern parts of Nigeria. This is why we chose the mural that states that my tribe is Kenya and not a particular ethnicity. The great result is that there is already a major push to drive development away from the center to cities like, Kisumu, Taita Taveta, Eldoret and Mombasa. What this does is force those that are in charge to to improve the cities in which they govern and to create systems that can drive up growth.

The importance of foreign players

The list of foreign players in the Kenyan economy is quite large from Microsoft, IBM, Oracle, Google, Uber, Cisco Systems, Done by None, Nielsen, Amazon, SAP, all these are evidence that the country is doing something right. This means that Kenyans and other Africans can benefit from the advantage of working for multinationals right where they are.

Local and foreign venture capital attraction

While Kenya in the past was an attractive destination for VCs, there has been a marked growth in Venture Capital firms that are Nairobi Based. This is an attractive approach because you get rid of the feeling that investors are flying in to capitalize on the local talent very often with little or no knowledge of the landscape. With local VCs you can at least hope for some local knowhow and expertise. While you could argue that these firms are not necessarily owned by Kenyans, the idea that they are based in Nairobi is a plus. Please refer to https://startupuniversal.com/country/kenya/ for more information.

Current focus areas

The report we referred to also points to some of the most important areas of investment that is summed up into three areas. Agtech, Fintech and HealthTech. Kenya can benefit from much investment in Agriculture given the economy depends on a large part on Agriculture. Agriculture contributes to 26% of the gross domestic product (GDP) and another 27% of GDP through linkages to other sectors. It also employs 40% of the population and more than 70% of Kenya’s rural people. The other drive has been towards Fintechs even if this has had a negative impact with loans and defaults causing quite a lot of trouble for Kenyans.

In 2020/2021 there was an allocation of 10% on the health for the country. This was up from the previous year and can be attributed to the Covid Virus. What some researchers (http://www.brookings.edu) is that there is too much of a dependence on foreign aid for health. What can be done is invest in local solutions for health as well as innovations that are built by and for Kenyans. We see linkages between the innovation hubs and local health care providers for home made solutions.

A healthy mix of players

There is also a very active group of investors as we have mentioned both locally based and international, accelerators such as well as incubators not to mention co-working spaces. As can be expected the cycle starts at hub level or co-working space level where ideas are birthed and then incubated, then accelerated and finally and hopefully invested in.

Monday, March 14, 2022

State of play-Nigeria’s Technology Ecosystem

Nigeria is part of a list that has managed to grab the attention of venture capitalist funding for the last few years. The other countries are Kenya, South Africa, Egypt. While looking at Uganda, we recognized the importance of competitions in the creation and birthing of a healthy technology ecosystem, we also noted the value of Non Governmental Organization in the creation of several different paths that those who are looking to learn can take to become part of the ecosystem. By this we mean for example United Nations in its various manifestations coming up with say population hackathon for ideas around demographics, or development ideas for the UNDP or climate change innovations or maybe even health innovation with WHO. We also noted the importance of having a very focused approach for each technology hub where the actual learning takes place. With South Africa, we see the value of Geographies in the creation of effective ecosystems-this we saw in the way in which the South African ecosystem varies from site to site and is very relevant based on where it is located. Additionally is the value that the South Africans place in partnership with great Universities something that is also reflected in Silicon Valley.

Population

This is one of the most important cosiderations in the technology ecosystem in Nigeria. You cannot go against the sheer numbers that can be gained by those who develop solutions for the different types of markets in Nigeria. Based on UN data Nigeria has a current population of 214,769,314 people as of March 13, 2022. Nigeria’s most attractive technology city, Lagos on the other hand has a population of 14,862,000 people. Whatever the focus is of your solutions these numbers are great and present endless possibilities. From the numbers, we also gather that by 2020 43% of Nigerian population comprised children 0-14 years, 19% 15-24 years and about 62% below the age of 25 years. The numbers also show that of the whole population, 51% of Nigerian adults are using formal financial services such as banks, microfinance banks, mobile money, insurance or pension accounts.

This leads us to the next point that makes the ecosystem attractive and that is:

Financial literacy

The numbers are in favour of Nigerians. The idea that so many people exist amongst the populace that have fluency in finance means that there is a market for products that are based on this single need for services. In an article by https://www.makemoney.ng (top startups to watch in 2022) we find that a half of the applications mentioned in the piece are fintech products. Paystack-payment processing startup, PiggyVest-was developed to enable Nigerians to save money, Carbon (Paylater)-quick loans without collateral, Migo (KwikMoney)-loans without collateral, and Quidax (crypto)-allows Nigerians access to Crypto using Naira. So there is a market for fintech products in the country and those who have designed with this in mind.

The source of Nigeria’s development

Olumuyima Olowogboyega (https://notadeepdive.com) wrote a piece that he titled Nigeria’s Startup Ecosystem in made in America. In it he talks about the idea that most Nigerian startups have the banking based in America and that this therefore limits them. For example, the startup that has its finances based in America will often have to deal with regulations that come the American system. To make matters worse, there is often a limitation to the banking system because the bank that you use can often be dependent on another bank. This bank that depends on another then faces the limitations that occur with regulations that the bigger bank may have. This means that when the foreign bank sees any transactions that are not familiar or that are too regular or that exceed a certain amount, one could find their startup shut down because of these issues. While this is a disadvantage, it can also be seen as an advantage because at the moment the bulk of all VC funding comes from the U.S.A. So it would makes sense to align to the system where the bulk of the money comes from.

Development and infrastructure

The lack of development is a great hinderance. But it can also be a great opportunity for the creation of new things and innovation. An article from http://www.qz.com by Tolu Olasoji refers to an fDi report that was written a few months ago. And quotes directly from the report stating that,

"Although Lagos is renowned for its start-up ecosystem, there is a significant disconnect between the city's tech ecosystem, its surroundings and the wider country and the wider country, which suffers from chronically poor infrastructure and education, and recurring political instability and security issues,” the report highlighted."

Quartz Africa noted that promising start-ups with plenty of potential to contribute significantly to the economy such as Bike-hailing apps, popular alternatives to Lagos's traffic jams and poorly maintained road networks were banned for security purposes by the Lagos state government, while the central bank craacked down on crypto stat-ups.

The Leading Tech Hubs

African Vibes a site that is devoted to Contemporary African Connection has a list it compiled of the leading technology hubs in Africa and this list has two NIgerian firms featuring. The first is Wennovation Hub in Nigeria. They hub brings people together through social spaces, events, shared workspaces, and digital networks. It was established in 2010 and focuses on infrastructure, clean energy, education, healthcare and agriculture. The hub reaches four locations Kaduna, Ibadan, Abuja, Ikeja. It works with both growing start-ups or established enterprises. Start-ups supported by Wennovation Hub include Crop2Cash, Reliance HMO, ProNov, Afrimash and FarmMonie.

The second that is featured in the piece is Co-creation Hub. It is an incubator that functions as a multi-purpose space that catalyzes creative social technology ventures. Co-creation hub promotes collaborations among impact investors, tech companies, social entrepreneurs and technologists in and around Lagos, Nigeria. Founded in 2010 has has so far supported 95 ventures that are using technology to solve social problems. Start-ups accelerated by CcHUB include Doctoora, E-health ltd.,DoLessons, Embinix.

The advantage that exists in showcasing these hubs is that you tend to get the attention of VC funding as well as the counter result which is the encouragement of younger developers to be part of the ecosystem.

fDi Intelligence and Briter Bridges report

The report highlights the work that is done in both South Africa and Kenya as top performers in the tech space. With Nigeria though, the focus of this article, the country was ranked 6th in the list of top 17 tech ecosystems in Africa overall. Nigeria however did not make it to the list of the top 10 ecosystems when it comes to connectivity, the country did not make it to the list of 8 that have a great Foreign Direct Investment Strategy (part of this is because they are probably still working on better legislation and policy to guide local and foreign investors as well as start-ups), Challenges regionally and in the nation also meant that the country did not make it on the list of attractive ecosystems when it comes to lifestyle and human capital, However on the list of start-up status the country ranked 2nd .On the list of business friendliness Nigeria was 6th. On the list of top 10 most cost effective ecosystems Nigeria was nowhere to be seen, while on the list of Economic potential Nigeria was 4th.

Tuesday, January 25, 2022

A look at South Africa’s Tech Ecosystem

After having examined the technology ecosystem of Uganda and also that of Rwanda, it makes sense that we should look a little further down at one of the continent’s largest economic powers.

Economic Factors

There are a few things playing in the favor of South Africa. The first we have mentioned and that is the size of the economy. Even if the bulk of the economic power held by South Africa comes out of mining, this economic power does have a major effect in the performance of its digital economy. The massive inflows generated from these vibrant parts of the economy can be used to drive development and innovation in other sectors. Information Communication Technology has the advantage of being one of those cross cutting professions that touches almost all other sectors and can have a positive impact on them all. If you look at the four countries that attract the bulk of venture capital funding in Africa one uniting factor in all of them is economic size. Kenya, Nigeria, South Africa and Egypt are all major players in economic terms and this power generates interest in VC funding.

Population

The second factor that is important in capturing and keeping interest is population size. If you have the number there is a great chance that you will attract the funding. The numbers are attractive firstly because they represent potential markets, and secondly because of the possibilities of generating pools of talent.

Education

The factor of population and economic size are both important but rest on the significance of a good educational base. Numbers are great…educated numbers with relevant skills are better. If you look closely at South Africa in general and Cape Town and Johanesburg in particular (both cities feature prominently in the statistics) both are home to world class Universities and institutions University of Cape Town, Stellenbosch University. You will find this pattern repeated almost eveywhere that there is a thriving innovation ecosystem. Silicon Valley is an example with Stanford University and the University of Carlifornia.

Geography

The other factor is Geography. Whether we like it or not certain geographies seem to be more attractive to creativity and innovation. Maybe there is infrastructure in place that favors the business environment maybe there are shipping routes and ports that favor export. Perhaps it is the altitude maybe it is the closeness to waterbodies.

Above two South African cities are part of the top ten.

Clusters

Clusters as defined by Michael Porter are geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure. Clusters also often extend downstream to channels and customers and laterally to manufacturers of complementary products and to companies in industries related by skills, technologies, or common inputs. Finally, many clusters include governmental and other institutions—such as universities, standards-setting agencies, think tanks, vocational training providers, and trade associations—that provide specialized training, education, information, research, and technical support.

In South Africa you could speak of the mining cluster and their own wine cluster.

For more https://hbr.org/1998/11/clusters-and-the-new-economics-of-competition

South Africa’s Spaces

SmartXchange

We found two major hubs that were mentioned in a page that compared the top ten in Africa. https://www.africanvibes.com/the-top-10-african-tech-hubs/ from the site AfricanVibes. But the list of South African hubs is rather extensive.

Smartxchange is a Durban technology hub established in 2012 to provide enterprise development support and services in the region. The African tech hub offers this support in the electronics, ICT, and media sectors. SmartXchange partners with corporates from these sectors as well as tertiary institutions and government to upskill youths and entrepreneurs in South Africa.

SMEPlus, Tag Your Delivery, AdNotes, and Mzansi Smart TV are some of the companies that have been supported by SmartXchange. The Durban tech hub provides an online incubation application form on its website. Interested youths and entrepreneurs can apply to become members.

Silicon Cape Initiative

The Silicon Cape Initiative is an ecosystem enabler for tech startups in South Africa. This innovation hub was launched in 2009 to offer an inclusive environment for tech-enabled startups. The African tech hub invites top entrepreneurs and technical talent to assist them in creating world-class startup companies.

Its ultimate goal is to promote the use of technology across different sectors in the Western Cape. Silicon Cape Initiative offers various benefits through its five membership plans. These benefits include tech tours, curated access to the tech ecosystem, access to resources, and more. Interested individuals can select their preferred membership plan online, register, and pay for their membership to join the community.

Silicon Cape is an NPO and an ecosystem enabler for tech-enabled startups in the broader Cape Region of South Africa. They work to connect stakeholders, curate ecosystem data, amplify the stories coming out of the ecosystem and advocate on behalf of stakeholders through their membership programme.