Startups use Africa’s challenges to spark innovation

Brid-Aine Parnell

Wednesday 12 October 2016

African startups are solving the continent’s basic problems – and expanding around the world into million-dollar companies.

On the face of it, Africa has a lot of challenges for prospective tech entrepreneurs. Unstable political environments, a lack of early stage capital, low internet penetration in some places and unreliable power infrastructure are all significant impediments to a budding startup ecosystem.

But look a little deeper and Africa also has a lot economic drivers propelling a culture of innovation. A reverse brain drain is bringing young people back with the education, experience and enthusiasm of the US and European tech scenes and the inside knowledge to get their ideas off the ground back home.

A huge mobile phone penetration along with growing smartphone use is offering tech companies the opportunity to leapfrog right over a lot of bricks-and-mortar economic growth straight into the digital economy, as with the frequently mentioned example of banking and payments in Africa.

These factors are contributing to a growing startup culture that’s spreading across the continent and sparking technology firms that are expanding into international markets.

Going global

BRCK, built by Kenyan startup Ushahidi, is a great example of a technology that started in Africa and has since gone global. The device solves one of the most elemental problems of the new online life of Africans – connectivity in an uncertain infrastructure. The self-powered mobile Wi-Fi hotspot gives users eight hours of battery life that will keep them online during power outages, and switches between multiple networks to ensure internet access.

Nearly half of sub-Saharan Africa has no access to electricity, but with this technology, they could still be online. BRCK is ruggedly built to withstand the heat and dust of the continent, cloud-enabled, solar-powered and can even work as a mini-server when hooked up to a computer, such as a Raspberry Pi for example. The tech is so ingenious, it’s now being used in digital dead spots in the US, Europe, Asia and South America.

Reverse brain drain

These kinds of innovations in Africa are often the brain children of returning students, who have studied in the US, Asia and Europe and been exposed to ideas and internships in their digital economies. Nigerians Tunde Kehinde and Rahael Afaedor, for example, graduated Harvard Business School and returned home to found online retailer Jumia in 2012.

Capitalising on Nigeria’s relatively high internet penetration of 30 per cent and its growing and under-served middle class, Jumia has been growing at a phenomenal rate of around 20 per cent a month, with orders now reaching millions of dollars a month. The company has warehouses in countries from Egypt to Cameroon to the UK, and counts firms like Rocket Internet and Millicom among its investors.

Rwandan Henri Nyakarundi is another returnee, having studied at Georgia State University. In Rwanda, 70 per cent of the population has a mobile according to the Rwanda Utilities Regulatory Authority, but only 18 per cent have access to electricity according to the World Bank. Recognising this mismatch, Nyakarundi came up with a solar-powered cart that can charge phones. These kiosks can charge up to 80 phones at a time and can be towed around by a bicycle.

Nyakarundi’s company African Renewable Energy Distributor (ARED) uses micro-franchising to lease the kiosks to agents across the country, who then earn money from charging the phones and added extras, like selling phone credit.

Necessity is the mother of invention

In many ways, the challenges of operating a digital economy in Africa are also the sparks for the greatest innovations. Cameroon engineer Arthur Zang came up with the Cardiopad – a touchscreen medical tablet that can conduct heart exams like electrocardiograms (ECGs) – as a way to bring modern medicine to rural areas of Africa. Best of all, while the test is conducted by the Cardiopad, the results are sent electronically to the specialists back in the cities who can interpret them, removing the need for an expert to go out there or for remote patients to travel to urban areas.

These startups are answering Africa’s challenges, but they’re no niche proposition. What Africa is getting from its patchwork startup ecosystem is the beginnings of a digital economy that’s likely to change the face of the continent – and expand beyond it, as Jake Bright, co-author of The Next Africa: An Emerging Continent Becomes a Global Powerhouse, pointed out in an article for the World Economic Forum.

“It’s only a matter of time before some of the region’s commercially oriented startups create Africa’s first big headlines, i.e. IPOs, acquisitions and unicorns,” he said.

“We already had a preview of this with Africa Internet Group’s recent Goldman Sachs-backed billion dollar valuation, followed by reports that fintech company Interswitch may soon go public on a major exchange – likely the London Stock Exchange.”

Both in spite of and because of the environment it’s seeded in, African innovation is taking off and the result could skip much of the hard yards of traditional economic growth and propel the continent directly into a vibrant digital economy.