5 areas under the spotlight this year in Africa

It is becoming more and more evident that Africa is a fast growing continent and a land of opportunity for not only the economic sector, but also as a cultural influence worldwide. Based on the events in recent years, here is what is happening this year in several key areas.  

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Image courtesy of Tilemahos Efthimiadis at Flickr.com
  1. Women:
    More than half of Africa’s total population are women, most of them under the age of 25. These women have endured economic exclusion, discriminatory financial systems, limited or no participation in political and public life, lack of education, gender based violence and cultural practices that go against their human rights and life quality. However, at the 8th African Union Gender Pre-Summit held in January, the union confirmed their agenda to make sure African women have rights to own and inherit property, sign contracts in their own right, own businesses, hold at least half of the managerial positions in the public and private sectors and eradicate harmful cultural practices. There have been considerable advances in Zimbabwe on the matter, where there was a ban to marry anyone under the age of 18. And in Gambia last December, there was a bill passed to criminalize female genitalia mutilation with a penalty of up to life in prison.

  2. Education:
    The fastest growing industries in the world are healthcare, engineering, management consulting, semiconductors and circuits all tied to the development of technological gadgets and software. This means that education will definitely have to focus more on subjects such as math, science, economics, accounting and business science to keep up with these developments. Also research efforts must be made in STEM areas (science, technology, engineering and mathematics) to make sure these advances are well implemented to fit the African context. The African Leadership Academy in Johannesburg South Africa has already made this change. This secondary school has a two year academic pre-university program for young leaders of ages 16 to 19 from all across the continent. Its syllabus is multidisciplinary and includes English, Mathematics, Entrepreneurial Leadership, African Studies and Writing and Rhetoric; students can also choose a combination of Cambridge-administered IGCSE, AS or A2 electives that can include courses from the Natural Sciences, the Humanities & Languages and Commerce. Outstanding students have the opportunity to join research groups in the Sciences, the Humanities or Creative Arts.

  3. Energy:
    Africa’s great amounts of natural resources make it a potential for earth-friendly alternative energy generation. Currently, about 600 million people on the continent have no access to electricity and only 7 continents have access rate to electricity of over 50% of the population (Cameroon, Cote D’Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa). Thanks to renewable sources such as gas, hydro, solar, wind and geothermal sources soon 70 to 80% of Africa will have access to electricity with about 1.2 terawatts of capacity that will cost $800 billion in capital per region to generate, transmit and distribute.
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Image courtesy of International Rivers at Flickr.com

Advances in this area include the Grand Inga Dam hydroelectric project that could potentially save $32 billion in capital spending and 60 megatons of carbon emissions each year. Morocco has built a solar mega-plant in Ouarzazate city. This plant will help provide almost half of the country’s electricity from renewables by 2020. In Kenya, 300,000 households have been connected to solar energy by M-KOPA and the plan is to reach one million homes by 2017. The advantage of this system is that customers can buy a solar power home system at only $35 and then pay installments of 45 cents a month for a year.

And then we have gas which will account for over 40% of the electricity from renewable resources. The plan is to use biogenic methane which is extracted from cow manure and methanogens that eat the organic garbage in landfills that produce methane. Since agriculture and livestock are 32% of Africa’s GDP, animal manure will definitely not be hard to find.

  1. Business:
    Economists are already saying that this year is going to be one of the most challenging of all with all the startups shaping the African economy. According to a report from VC4Africa, a startup funding initiative, more than 40% of startup firms are successful in securing external capital. Among the most successful new businesses are computer software, internet and e-commerce set in Nigeria, Kenya and South Africa. In 2015, South Africa was the top investment destination, having raised approximately $54 million, followed by Nigeria with approximately $49 million and Kenya with approximately $47 million.

Thanks to Africa’s young population (70 percent of Sub Saharan Africa’s population is aged below 30), the continent will continue to house a great number of startups under the initiative of entrepreneurs attempting to provide services where they are needed.

  1. Technology:
    the sub-sector to focus on this year will be the gaming industry. According to a report by PwC, the gaming industry generated profits of around $181 million in 2013 in South Africa, $71 million in Nigeria and $44 million in Kenya.

 

How startup ecosystems need to improve in Africa?

There has been a lot of noise around the up and coming startups of Africa and how they are changing the game. The reality is that they truly have all of the possibility of going big, but in fact don’t do as much as they could due to the reality that many entrepreneurs face in Africa when trying to follow their dreams. The startup ecosystems are not up to par, or practically non-existent, to the thrive behind the brilliant and hard-working entrepreneurs.

When analyzing and comparing different locations around the world where a group of entrepreneurs and like-minded individuals unite to start to develop their ideas, you can’t do this by discussing cities or countries. This is mainly true because even in the same city or country you could find two completely different ecosystems sharing a zip code, but not the basic characteristics of what make them tick. Due to this, usually startup ecosystems steal the attention.

What is a startup ecosystem?

A startup ecosystem is a group of people, companies and market conditions that interact with each other to a system that motivate and help new startups emerge. These ecosystems could be physical or virtual, but either way their end result is the same. The elements of a startup ecosystem are the intellectual work of the entrepreneurs, startup at their different stages, along with their members, entrepreneurs, Angel investors, startup mentors and advisors and basically everyone and anyone interested in startup activities or with some experience in entrepreneurship. As participants, each one takes on a role and does their part, all with the same objective in mind: to help new startups make it. Many organizations take part in this ecosystem for instance universities, funding organizations, incubators, accelerators, research organizations, service providers like legal or financial services companies, and large corporations.

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Image courtesy of Upstart Africa TV at Youtube.com

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Challenges in the African startup ecosystems

Africa, besides being this mecca for startups in the past few months in the news, is a place that unfortunately is still lacking in some aspects like basic financial aid, available mentoring and government support. Understanding the context that Africa lives in is essential to knowing that there are basic needs that were not met and are still behind due to a series of conflicts and wars the continent has lived. The needs that affect directly the startup ecosystem range from education quality and level in Africa to lack of funding opportunities. Businesses in Africa are constantly in search of ways to make it big but here are some of the common reason why they don’t get off the ground.

  •      Lack of integrated entrepreneur community

Many competing entrepreneurs have been known to be jealous or overly protective when it comes to sharing thoughts with other influential thinkers in their ecosystems. Unfortunately, for a startup ecosystem to work there has to be an active mentoring program, so that everyone has the opportunity to learn and grow.

  •      Hard work that doesn’t necessarily pay off

While analyzing many of the startup initiatives and business ideas, it becomes evident that many of them would take off immediately if set up in a different ecosystem in the United States or the UK. So, it comes down to African entrepreneurs having to work twice as hard to simply make a monthly income.  

  •      No risk capital, more like private equity

In Africa it is becoming common to see investment firms interested in a project if and only if there is a high profit margin or if there is some kind of collateral property that can be used. The reality is that most situations compare more to private equity then risk or venture capital. This obviously slows down the growth of startups in Africa significantly.

  •      Doesn’t have a viable consumer market

Even though there is a big growth in the tech industry of entrepreneurs, companies and startups hitting the scene, if you analyze carefully there is not quite enough people to sell to. In countries like Kenya, 45 percent of the population live below the poverty line, which puts buying or investing in tech gadgets last on their list. So, that brings the question, who will they be selling to if these are the conditions in their ecosystems. Therefore, it is important to recognize which is the opportunity for tech business ideas, which should spill over into real life to see real effects.

  •      Unemployment rates

In some countries in Africa, there is a new wave of educated, but unemployed entrepreneurs in search of a break. In the meantime, the unemployment rates continue to grow and business looking for talent are still not finding what they need. Hopefully one of the many initiatives like iHub, Nailab, among others will help to assure these entrepreneurs find what and who they need.

  •      Government corruption and lack of regulations

In general, many countries in Africa are still struggling against government corruption that leads to too many consequences to mention here, but in regards to startups and entrepreneurship it is holding many people back who are eager to find a path in their ecosystems.

African startups: striving for a world with cleaner energy

African countries are some of the world’s top places to apply technologies related to renewable energy. Hence, the December 2015 announcement that WeChat would invest about $3.4 million USD in African startups didn’t come as a surprise. Here are a few examples of some of the initiatives that may hold the key to the future of clean energy:

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Image courtesy of Gerry Machen at Flickr.com

Smart Solar Kiosk

Based in Rwanda, this team claims to have developed a mobile solar Kiosk, aimed at charging small electronic devices, product sales and Wi-Fi internet access for on-the-move customers.

Henri Nyakarundi leads the project, which has implemented 20 kiosks in Rwanda thanks to a partnership with Airtel Rwanda. You can watch a video demo of these kiosks at their official website, http://www.a-r-e-d.com/

ColdHubs

This Nigerian startup thought of a solution to store and preserve vegetables and fresh fruit: modular, solar-powered walk-in cold rooms that are installed in farms and markets that are close to retailers and farmers. The temperature in said rooms (5°C) prolongs the freshness of vegetables and fruits up to 21 days instead of 2 days with no refrigeration. Their business model includes a pay-as-you-store option that allows farmers to pay a flat fee every day for each crate that they store.
You can read more at http://www.coldhubs.com/

Strauss Energy

With the promise of providing disruptive energy solutions, this company’s goal is to diminish the energy deficiency in the African continent. Led by Tony Nyagah, they introduced a new technology to the Kenyan market: solar cells on roof tiles, which are capable of powering a house while saving roofing costs at the same time.  

They plan to feed the excess power from commercial or residential units into the country’s  grid in order to provide home owners with additional income. A return on investment is estimated to be reached in 18 to 24 months.
Their website: http://straussenergy.com/

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Image courtesy of Sterling College at Flickr.com

GreenChar

GreenChar produces and distributes charcoal briquettes out of agricultural waste. GreenChar’s briquettes are cheaper, produce little smoke, provide higher amounts of energy and last longer than conventional burning materials. They are sold to households in rural settlements that spend an average of $1.50 every day and experience health problems from polluted air caused by cooking with firewood and charcoal.  They also mitigate deforestation and help reduce CO2 emissions.
Read more at http://www.greenchar.co.ke/

Biogen Kenya

They are committed to produce environment-friendly, renewable fuel. This bio-diesel is derived from excess vegetable oils. The company is located in Nairobi and it follows a complete production cycle to process waste vegetable oil and turn it into fuel. They list six key points within their strategy: ease of use; power, performance and economy; emissions and greenhouse gas reduction; energy balance and security; toxicity, biodegradability, safety and recycling; and economic development.
Read more at http://www.biogenkenya.co.ke

PayGo Energy

Their pay-as-you-go model aims to provide users in rural areas with affordable, clean gas. Through micro-payments, potential customers can avoid cost barriers and have access to a reliable supply of gas for cooking purposes. Their slogan: “modern energy for all”.  Their website is http://paygoenergy.org/

Nadji.Bi

Nadji.Bi develops, manufactures and commercializes solar products through a distribution network in Sub-Saharan Africa. They can be found in Burkina Faso, Cameroon and Senegal. Among the products they offer are solutions for off-grid systems, solar streetlights, solar modules and solar inverters; all with the ideal of lowering costs and keeping their products affordable.
Read more at http://www.nadjibi.com

Juabar

All the way from rural Tanzania comes Juabar, a solar-powered charging kiosk that uses a 50W solar system. It is capable of charging between 10 or 20 phones simultaneously, as well as other electronic devices. Their mission is to create opportunities for small businesses in Tanzania while meeting the connectivity and energy needs of the community. Each kiosk works as a retail and charging platform.

According to their website, their longest running kiosks have been in operation for more than an entire year and their operators charge about 20 phones every day.
You can read more at http://juabar.com/

Skynotch Energy Africa

Founded in 2012, this company promotes access to renewable energy and focuses mainly on distribution of solar lanterns, energy generation and real-world application of solar energy. They develop projects involving initiatives such as solar and hydro farms and promote water pumping and purification through solar powered appliances. In alliance with development agencies, civil society organisations, academic and microfinance institutions, they provide energy solutions to meet the needs of their target audiences and potential customers. By doing so, they add value and enable social and economic development. In 2013 they joined forces with the World Bank to become one of Kenya’s innovators in renewable energy, to provide access to clean energy solutions to the off-grid community in said African country.
Read more at http://www.skynotchenergy.com/

How is Hack for Big Choices helping startups in Africa?

Africa is a continent that has suffered a lot despite the fact Africa is the richest continent in the world thanks to all the natural resources and mines found there. A brief list of products there are in Africa includes copper, gold, iron, steel, nickel, zinc, platinum, titanium, lead, phosphate rocks, uranium, oil and diamonds. Fortunately, the last two decades Africa have been experiencing different positive changes led by important countries such as United States and among others who aim to the Africa’s emergence through new startups creation. Nowadays, different entrepreneurs are encouraged to invest in this continent because aspects such as human-rights application at work and young people are attending schools at their villages for then mastering abroad are factors that lead people to think about Africa in a different way. Moreover, statistics show how fast is the growth of the middle class in Africa. Nevertheless, this process has not come alone and it is evident this emergence is something led by people who care for Africa and for that reason, Aurora Chisté and Irina Issakova founded H for Big Choices.

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Image courtesy of Viewminder at Flickr.com

What is Hack for Big Choices?

Hack for big Choices is non-profit and global community created for change makers all around the world who are connected within the community in order to empowered big ideas to solve problems. They strongly believe big changes come from little changes and it is inside these communities’ little changes emerge. Collaborators are spared around the world, main cities are New York, San Francisco, Guadalajara, Bogotá, Sao Pablo, London, Venice, Accra, Bangalore, Moscow, Sydney, Singapore, Hong Kong and Shanghai.
What are the issue areas Hack for Big Choices is working on?

Hack for Big choices has three main lines and within these areas, they establish challenges they consider are vital to work on. Issue areas and some challenges are:

Design & Technology:
This issue area helps and guides people who are interested in working on these subjects. Experts around the world on this area give advices and recommendations about how people can find solutions to the challenges. Companies also invest their money in order to develop new technologies that are helpful not only for African countries but for all countries around the world too because these problems affect population in general.

Car driving safety, Simulation of crisis management activities, Human identification     on-the-fly, Automatic people counting, Food safety, Intelligent parental control, B2B platform for international businesses.

Healthcare:
Challenges inside this area affect various host cities, that is way participants are supposed to think about solutions as unique ones because they must be focused on an unique community. Challenges are taken from global health crisis that affect societies, these challenges are: Confronting Depression, Health Data In Action, Geo-Localized Health Solutions (in this topic there are 3 micro-challenges that are Sanitation, Pregnancy Complications, Metabolic Syndrome) Sexual Health.

Education:
It is not a secret poverty has its roots on illiteracy and in the past, it was really difficult to deal with this problem in Africa. Now, as wars are diminishing, interest can be guide towards education. The following challenges are being taken into account: International Accreditation of Academic Programs, Education in Remote Areas, Education for Special Needs Students, Nutrition Education at School, Bridging the gap between research and markets, Telematics for education.  

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Image courtesy of BK at Flickr.com

What are the steps Hack for Big Choices follows in order to create successfully projects?

As there is a platform that linked collaborators, steps are quite simple as follows:

  1. The Call for Action: This is a calling for people around the world to change the world with small actions. They make people be aware about importance of little changes.
  2. Integrate Software Solution: They link problems solvers and experts who guide in them in the process.
  3. Options for Change:  Start a focused challenge-tree area from which problems can be selected and solved

Who is Aurora Chisté?

Aurora Chisté (Guadalajara) is a social entrepreneur travelling the world to develop new business opportunities for communities around the world.  She encourages people to make little changes that have a meaningful impact in people’s lives.

Does Hack for Big Choices have partners?

Yes, it does. Fortunately, the organization has more than 70 partners who are engaged with Africa’s development. Some of them are FACEBOOK, HONDA, TECNOLÓGICO DE MONTERREY, WORDPRESS, ACM, GOOGLE DEVELOPERS, among others.  

According to the founder Aurora Chisté, it is time, efforts and right people what make a change but building a new community is something that requires more than that. It requires commitment and dedication but it is essential to engage young generations earlier to this change makers’ programs because future belongs to them and when starting a new company, they are in charge of apply their passion and talent towards improving people’s lives.

Why investing in African startups really pay off?

Africa has real problems that need real solutions. Startups reflect this reality and set out to solve everyday issues with brilliant ideas. In Africa there is a growing movement of young entrepreneurs looking for a way to make life better and are doing just this with some of the solutions they have come up with. It’s no surprise that many investors around the world are looking to Africa as the place to put their money. But, despite all of this let’s explore more in detail why it’s worth investing in Africa and looking to these young entrepreneurs as the next big thing.

Potential to grow

In Africa, the lack of resources, energy and basic essentials in some places around the continent sets the scene for a plethora of opportunities for those willing to find solutions amidst so much adversity. But the up and coming generation has proven to be innovative, creative and full of potential, in such a way that they are solving their own problems in very effective ways.

Since there is room to grow and invest Africa has become a haven for venture capitalists, incubators, accelerators, angel investors, private equities and an array of events and conferences geared towards startups. So, quickly before moving on just to clarify what the difference is between all of the previously mentioned investors:

  • Venture capitalist (VC): Looks to invest in early-stage startups that usually represent as much high potential as it does high risk. Usually, the VCs in Africa are a group of local firms or international non-profit fund.
  • Incubator: Usually keep the majority of the shares, by developing an idea with an outside team that will be in charge of managing it.
  • Accelerator: By supporting the idea or project for about six months they help to accelerate the growth of the business.
  • Angel investor: This is usually a wealthy investor who believes in paying forward and supporting new talent.
  • Private equity: As opposed to VC they take on a business later on when it’s developed. They usually restructure to optimize financial performance.

Through events, conferences and events all of the key players in startups are able to network and create communities, contacts and at the of the day opportunities. Of course, we can’t leave the media, which plays an essential part in creating the narrative of the growth in Africa for the world to see.

Growth in past years

Revisiting what the experience has been for Africa to grow their startup ecosystem exponentially in such a relatively short amount of time. African startups started invading the financial news back in 2011, and it seems that this was just the start. Everyday, more and more Africans are getting an education either locally or abroad, and coming back to Africa to open up their own business. The amount of startups in the last years has surpassed expectations, reason why it has become a referent for the young entrepreneur startup movement. There is still a long way to go in some areas to truly create a sustainable ecosystem, but the different fields are building strong foundations for the future.

Some examples

African startups stand out due to the nature of their ideas. They are not just creating apps that can be stored away on your phone, or generating business ideas for your leisure time. Instead, they are investing in those ideas that help improve Africans lives and deal with everyday issues such as loss of energy, addressing or lack of clean water.

  • BRCK: This startup is attempting to make a backup Internet generator that will allow you to use the Internet even if you are located in a remote location with no electricity.
  • OkHi: In Africa, many houses don’t have a proper address, which makes it quite difficult for people to get correspondence or to be found for that matter. This app is tracking people so that it guides people to where they are with no need of an address.
  • M-Kopa Solar: In search of finding ways to solve Africa’s problem to reach so many isolated villages with electricity, but with the evident lack of power grids and possibility to build them, this startup has designed a pay-as-you-go solar power that can reach those destinations that before had no possibility of having energy in their homes.

    CLICK TO VIEW M-KOPA SOLAR VIDEO

What’s next?

In 2016, the number of startups emerging from Africa is only expected to rise. The tech startups are the ones to look out for, which isn’t to say that others like: commerce, education, and health are not doing their part as well. Africa will continue to grow and with international investors willing to support the business ideas from this growing population of entrepreneurs. We are likely to see growth from many countries, but the ones that are expected to lead the pack are South Africa, Nigeria and Kenya.