Whatever your take on the ‘Africa rising’ narrative, there is little room for doubt that global interest in African startups is on the up and up. While still castigated for crime and corruption, African cities at the same time described as ‘the next Silicon Valley’ in a nod to their potential as regional technology hubs. According to the recently published (and confidently titled) The Next Africa: An Emerging Continent Becomes A Global Powerhouse, by 2018 venture capital funding to tech startups will exceed $600 million, up from $414 million in 2014.
The importance that the tech sector might hold for economic development and diversification is recognised, and state investment has been forthcoming in various ways. In some cases, funds have been put forward for the building of ‘incubation’ centres and meeting places as was the case for Nigeria’s Information Technology Entrepreneurship Accelerator in Lagos.
In more extreme examples, whole ‘cities’ are being designed and built to support the tech industry. As part of its lofty Vision 2030, Kenya has begun construction on the brand new £9.1bn city of Konza (Silicon Savannah), designed to attract investment in technology companies and to inspire domestic entrepreneurs. Located 37 miles from the capital of Nairobi, this patch of Savannah currently only occupied by a highway will eventually be home to two business parks along with 35,000 homes, schools, and a University for residents with a connection to Kenya’s tech industry. Similar projects are also underway in Senegal and Ghana.
Trying to harness investment and industry by encouraging area development is nothing new to the continent. Special Economic Zones (SEZs), that offer a combination of tax-and-tariff incentives to promote industry, have been around sub-Saharan Africa since the 1970s. Planned cities like Konza are heavily influenced by existing examples on the continent, including Mauritius’ Cyber City and Egypt’s Smart Village. But how successful are these attempts in trying to boost African-owned and African-developed startups? Is government led funding the most important element in the formation of tech enclaves?
It is clear that there have been some notable successes in boosting national technology profiles, particularly when it comes to attracting foreign investment, as has been the case in Mairitius. But in other places, there are concerns over whether pouring funds in to the construction of entirely new living and working spaces can translate in to gains for domestic tech firms (many of which would make an invaluable contribution to improving public services) who may struggle to source funding. Critics of Konza have suggested that the money might be better spent by giving commercial lenders incentives to invest in Nairobi’s established startup community, and more education programmes for young Kenyans.
In a suburb of Lagos called Yaba, the concentration of tech startups has earned yet another version of the ubiquitous moniker ‘Yabacon Valley’. As well as rising new startups such as Bus Stop, a transit app for negotiating your way around Africa’s informal public transport systems which recently gained a place on MITx Global Entrepreneurship Bootcamp, it is also home to established and expanding companies with a continent-wide footprint. Last December Africa Internet Group, the consortium behind Hellofood and Easy Taxi, moved the majority of its business to Yaba following a similar move by Konga (one of Africa’s biggest online retailers). This is pretty significant given that the gross domestic product of Lagos state alone is bigger than the entire economies of Kenya or Ghana.
The reason for Yaba’s ascendance as a tech enclave in Nigeria is not only to do with direct government investment in the area. Compared to the other upmarket areas of Lagos rents in Yaba are still relatively affordable for startups to begin operations. Yaba is also home to a number of important educational institutions, including the University of Lagos and Yaba College of Technology, both of which promote linkages to other institutions and the private sector as well as stressing the importance of technology research. These universities provide a pool of fresh young talent, eager to make its mark in a region where increasing Internet penetration has already shown how technology can provide a panacea to struggling public services. And as increasing numbers of firms set up shop on the mainland, the expanding network of companies, engineers and designers spurs innovation further.
For many years people have puzzled over how it might be that the original (that is to say non-African) Silicon Valley has produced the most powerful and innovative tech companies in the world. Little is ever really said about government blueprints and roadmaps in the US case, and a great deal of credit goes to the support of regional universities such as Stanford, the availability of farm land in San Francisco Bay and a pervading ethos of liberalism and innovation within the startups themselves. If Africa really is to host the next Silicon Valley(s), it cannot just be in the interest of attracting foreign-owned companies with glass and chrome, but capitalising on cultures of innovation in young, domestic tech startups.