Hype around NGO-funded apps is stifling Africa’s innovation (Wired UK)


Nairobi, Kenya
Nairobi, Kenya

A technological oasis in sub-saharan Africa

Aleksandar Todorovic/Shutterstock


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The Silicon Savannah brings to mind a hyper-tech innovation
zone, a mini-city of mirrored buildings ringed by sandy sub-Saharan
scrub. Closer to the truth is a handful of industrial-style offices
that occupy the top-floors of mirrored buildings and overlook a
traffic-clogged Nairobi city artery called the Ngong Road.

Another common misconception is that Nairobi’s most successful
tech startups connect small-scale, rural farmers with the wonders
of the worldwide web, or provide pre-natal care for penniless
pregnant mothers cut off from urban amenities. It’s true that some
of Kenya’s most visible technology products occupy the social
enterprise space, but experts caution that the hype surrounding
apps such as iCow and M-farm is disproportional, and that the ready
availability of NGO funding for social apps could be damaging the
business ecosystem and stifling innovation and growth.

A recent private equity confidence survey suggested Kenya’s tech sector
was not performing as well as expected, and is often overlooked by
investors in favour of Nigeria and South Africa. “The hype about
Kenya as a Silicon Savannah is in fact not translating into
business opportunities”, Andrea Bohnstedt, director of private
equity consultancy Africa Assets, told Kenya’s Standard newspaper.

Nikolai Barnwell, investor and director at Nairobi incubator 88mph, has offices in all
three Africa tech hubs — Nairobi, Johannesburg and Lagos. When he
compares business in Nairobi with business in Lagos, the
disparities are stark. “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,” he says.
“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.”

Lagos, Africa’s biggest city, was once dubbed the “Worst city in the world” by BusinessWeek and is
considered the fourth worst destination for ex-pats
(Economist, 2013). Nairobi, meanwhile, consistently ranks
among the top 10 cities in Africa. And as a relatively stable and
reliable partner, it’s understandable why so many NGOs base their
international staff in Kenya, and, by extension, why there’s plenty
of NGO money around.

But donor money can create precarious dependency within an
economy. In September last year, Kenya suffered the worst terrorist
attack in over a decade when gunmen stormed a popular shopping
centre. A string of smaller attacks involving explosives have since
heightened concerns. What if the situation worsens, and NGOs pull
out?

Barnwell believes that the best way for the aspiring tech
entrepreneurs to learn is not from visiting consultants, but from
the success of their elders or even contemporaries. “But where are
the prominent tech billionaires?” he asks. “There is immense
opportunity — which is why we are here.”

Mark Kaigwa, founder of
Nendo, a strategy and storytelling consultancy for digital Africa,
is more optimistic. He believes the next big thing will emerge from
the social enterprise space, from “the grey area between capitalist
enterprises and more socially conscious ventures”.

M-KOPA Solar is one such
venture, proving that it’s possible to target the lower social
strata and make money. It provides off-grid clean energy solutions
that are both affordable to people in rural Kenya and profitable.
And its investors include both venture capitalists and charitable
foundations.

“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,” says 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. NGOs, he says, solve a problem, but can they keep
solving that problem indefinitely?

He sees this period in Kenya’s tech scene as “a fascinating
inflection point”. The forecast
for global smartphone  growth is stratospheric: from 1.9 billion smartphones in
2013 to an expected 5.6 billion in 2019, leading to an estimated
tenfold increase in mobile data traffic. Mobile money is becoming
ubiquitous, and technology is finding ways to circumvent typical
bureaucratic stumbling blocks.

To make the most of the current investment climate, Drayson
says, developers need to get out on the streets more: “A lot of
tech entrepreneurs spend a lot of time at their desk. They go to
launch it and the chances are they’ve got it wrong.”

Entrepreneurs, he says, need to think in terms of problems, not
ideas: “An idea assumes you’ve found a solution to your problem.
Invariably your idea is wrong, but your problem is right. Fall back
on the problem and find a new solution.” And they need to think
big. “For the first time you have an opportunity as a business
person in Kenya to have a complete global audience,” he explains.
“You can be getting paid in strong currencies with thousands of
customers around the world, but developing it at low cost in
Kenya.”

The True Ananse Trailer (Windows Phone/Nokia Lumia)

Leti Arts produces
video games and comics

Leti Arts

One rising star who seems to have got it right is Wesley
Kirinya
. Kirinya had no angel investors or NGO money when he
first dreamed of making video games in 2002 — at the time, Kenya
had only satellite internet. Supporting himself with part-time
jobs, Kirinya spent five years pouring over free, painfully
slow-to-load online tutorials and donated books. In 2007, he
presented the world with Nyangi,
an African version of Lara Croft, and sold a handful of copies on
CD. Today, he’s one of the most promising of tomorrow’s
super-stars; financing and advice for his company Leti Arts is more
forthcoming. But Kirinya relishes those early days, when there were
no grants, when he paid for his own failures, and gradually
improved his products. He learnt his best lessons from getting
things wrong, struggling to break even, and eventually getting it
right.

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Kirinya’s dream? “To see games inspired by African concepts
played globally.” He knows that it won’t be easy. “Entrepreneurship
is not just about solving a technical challenge or coming up with
the right business model, it’s also about influencing one’s
environment or community to change their thinking. The hard part is
that the thinking can only be changed once the usefulness of the
product or solution is evident. But it’s this change that allows
the business to survive long term.”

10 June 2014 | 4:30 pm – Source: wired.co.uk
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