Embracing Technolgy As a Driver of Africa’s Economic Rise

THE 21st century is known in some quarters as the African century because this is a 100-year period in which it is believed, Africa will finally rise.

It is hoped that by 2100 Africa will be on par if not ahead of the rest of the world. But this will not happen by itself. Deliberate measures need to be put in place before it is too late.

For any continent or country to go ahead economically, it has to be at the forefront of the emerging economic revolution of that age. USA, Europe and other Western countries are economic powerhouses today because they led the industrial revolution.

Africa’s opportunity lies in the information technology revolution. Unfortunately the technological revolution has already started, again led by the USA, Europe and to some extend China with very minimal participation by Africa. This continent has no choice but to hijack this revolution, if this century is to truly belong to Africa.

For us to succeed, we have to embrace a model that is already working, implement it aggressively and make it our own. Africa has to adapt the Silicon Valley model. Silicon Valley is a tech entrepreneurship ecosystem found in San Francisco in the USA state of California where most of the technology entities are started and grown from start-up phase into global enterprises.

Facebook, Apple, Twitter, Google, Whatsapp, Instagram, Dropbox are all, among others, products of the Silicon Valley ecosystem.

When a Silicon Valley model is adopted, a Windhoek, Lusaka or Lagos based young engineer or self-taught tech enthusiast with a brilliant entrepreneurial idea must be able to turn it into a product and bring it to the market without start-up capital being an obstacle.

She must have access to venture capital firms or angel investors to whom she will pitch hisher idea and be funded in exchange for equityshares in the start-up. The venture capitalist who is usually a very well networked person with experience in the business world would then join the board of the start-up, thus boosting its organizational capacity and increasing its chances of surviving into a big enterprise.

This model is well-suited to Africa, where due to historical reasons, there are high levels of poverty and thus aspiring entrepreneurs do not have collateral, which is usually a requirement when applying for start-up capital from traditional financial institutions such as banks.

The Silicon Valley model has proven to be not only good for entrepreneurs and the society at large, but it also has potential for huge returns on investment for institutional investors such as pension funds from where venture capitalists raise their funds, if it is applied with due diligence.

A good example is that of a venture capital firm Andreesen Horowitz which invested US$250 000 in Instagram in 2010 and made US$78 million when Instagram was sold to Facebook for US$1billion in 2012. Facebook’s first investor, Peter Thiel who invested US$500 000 in Mark Zuckerberg’s social networking company got returns of over a US$1 billion from Facebook.

Closer to home, South Africa based Namibia-born technology entrepreneur, Herman Heunis is reported to have sold his software company for R52 million and used the money to start Mxit which he then also sold for an undisclosed amount but believed to be hundreds of million rands.

Africa is playing a minimal role in the technology entrepreneurship revolution but as illustrated by the Herman Heunis story above, there are some glimmer of hope. Africa is for example leading in mobile money innovation. Kenya’s success story in mobile money, Mpesa is now being rolled out in Romania and indication from influential tech blogs is that USA is interested in this technology as well.

Back in Namibia, the technology entrepreneurship culture is still at an infant stage, mostly led by the Namibia Business Innovation Centre (NBIC) at the Polytechnic of Namibia. Notable technology entities are among others, the mobile money company Mobipay, Tusk mobile and Omalaeti technologies with their mobile App Lela.

The Development Bank of Namibia (DBN) has called for an expression of interest to study the viability of setting up a venture capital fund late last year and the Bank of Namibia in partnership with the South African venture capital firm Knife Capital and the UCT Graduate School of business held a two day workshop on venture capital investments in November 2013 which was attended by aspiring technology entrepreneurs, institutional investors, business incubation center, private equity firms and other financial institutions.

Tulinanye Sheya is a UCT educated electrical engineer employed in the telecommunication industry and a hobbyist microcontroller’s programmer. He writes in his private capacity.

Source : The Namibian