12 predictions for Africa Tech Scene in 2012

By Mbwana Alliy  |  December 28, 2011

 

It has been a banner year for the Africa technology scene as the world begins to turn to the continent – the Economist Africa rising cover story article was for many, a big validation in the future opportunities as well as challenges for Africa. The best follow up post worth reading is by Professor Juma of the Harvard Kennedy School in the UK Guardian blog, both recognize the importance of the technology scene in supporting Africa’s prosperity.

In the spirit of the new year and holidays, I compiled 12 predictions for 2012 based on my experience and trends I am seeing as a Silicon Valley professional, observer and participant within the East African tech startup scene, many inspired from stories we covered here over 2011. Here’s to a great year in Africa Tech. I hope to continue covering this exciting area next year and beyond.

1) Feature phone to Smartphone + a touch of Tablet: Smartphone adoption will grow among Africa’s emerging middle class as entry prices for an unlocked phone continue to dip below $100. Nokia/Microsoft Symbian/Windows Phone and Google/Samsung Android will battle for smartphone dominance- Nokia’s strong brand and feature phone momentum will prove to be an advantage. But affordable Chinese smartphones led by Huawei’s Ideos will continue to tempt Africans to upgrade. Tablet usage will begin growing as prices drop below $200 starting within education sector. Check out the Nigerian tablet from Encipher based on Android, locally designed hardware customized to a big local market like Nigeria is a smart strategy if prices are kept in check. RIM’s Blackberry will continue to be adopted by the elite and corporate circles- one of the last bright spots for RIM’s declining dominance who initially popularized the smartphone category.

Huawei Ideos

2) Evolution & Maturity of Mobile Money: Mobile money will begin to grow with other mobile operators in other countries (emulating Safaricom’s M-PESA success in Kenya) after operators refine and adapt their marketing and customer education programs after some slow starts. For example, Gates foundation provided Vodacom Tanzania with marketing support before the service started to take off this year.
New models of mobile money will be explored that are less dependent on mobile operators, such as Pagatech in Nigeria, but their growth will be relatively slow given the lack of a strong agent network to begin with. More application of mobile money into vital sectors from health, education and energy but access to financial services will still remain big- especially with the support of donors and the banking sector. Long awaited Mobile Money APIs will finally arrive, empowering developers to build more interesting applications. Recent mobile money outages such as seen with MTN Uganda will not be tolerated and steps will be taken to further regulate as billions is put at risk within these systems which are the digital financial future economy of many African countries.

3) Mobile Commerce & Payment Wars Intensify: We are in the early stages of an amazing change in how electronic payments are done on the continent. Africans will begin to gain more trust from mobile online commerce as trusted global brands including VISA, MasterCard and Paypal enter and compete to play in the ecosystem they previously ignored. We may see new unexpected players such as Google and even local banks (maybe another acquisition of a startup like Fundamo this year?). Verticals that solve key problems in ecommerce will take off first, these include remittance, travel, education and healthcare. We will also see many hybrid models bridge the mobile money world to conventional payment, banking options as was evident with Mastercard/Airtel/Standard Chartered’s Pay Online solution.

4) Mobile broadband Internet Access and the 3G Divide: Mobile broadband rollout will start going more rural, but the urban story will continue to grow strong. The Urban/Rural “internet digital divide” will be a topic of conversation as much as the feature phone vs smartphone debate. Otherwise why should a low income African living in rural areas buy a smartphone if 3G coverage is spotty in their area? Smartphone adoption and mobile broadband rollout are obviously positively correlated- the faster 3G spreads, smartphone demand will follow.

5) Mobile Health coming of Age but still not mature: MHealth projects will begin to move from pilot to scale and impact investors will salivate at the results. We have seen this with Praekelt Foundation in South Africa and expanding into Tanzania, and the successful launch of MedAfrica in Kenya. However business model sustainability will remain a challenge for startups that don’t achieve broad scale to survive longer than 1-2 years.


6) Media disruption takes root: Social media, led by Facebook growth will continue – we will begin to see Facebook API used in more apps. From social gaming niches to media. Africa’s advertisers might even leapfrog into more effective social media marketing bypassing traditional banner/display ad networks- with exception of mobile (Inmobi is a clear leader here). Twitter will continue to break the news faster than traditional African press can keep up with- new opportunities for new media will be exploited to take advantage of this disruption. We might see the chaos of Arab spring fueled by social media head south as African citizens demand more from their Governments.

7) Rush and stumble to Invest in Africa Tech: New investor interest thanks to continuing coverage of Africa economic growth potential vs other markets- especially in the attractive mobile segment (700M subscribers barrier will definitely be crossed in 2012). But most new investors will be spending the year “getting to know” Africa and be largely risk averse. They will realize that Africa is a “negotiated market” coined by Helios Investment Partners’ Tope Lawani-– no one size fits all, rather searching out unique opportunities on the ground vs relying on vanity macro-economic country metrics as a guide. Smart investors will set up offices and presence on the ground at key hubs and hire mix of foreign and local talent, while others will attempt what I call “driveby investing” from abroad, many will not succeed in adopting to the local culture fast enough. Private equity or late stage investing will continue to focus on much needed infrastructure to support growth and of course on those Tech parks.

8 ) Rise of Angel & Seed investing “Sea Turtles vs Residents”: There will be more seed funding for African tech startups as investors realize they need to take more risks to generate deal flow and more tech savvy angel investors begin showing up in Africa to fill the void. Domestic tech investing will start to take off as more capital is mobilized from the Africa elite class and successful first generation entrepreneurs realize the strategic value of investing in Africa tech vs other areas. Returning Diaspora, similar to the “sea turtles” of China (educated abroad and swimming home) in the first wave of tech startups there, will lead the charge based on technical and business skills, but resident Africans will learn fast and outsmart diaspora/sea turtles with their unique understanding of the local market- teams that combine a smart mix of both local, foreign and diaspora talent are poised to win. Events such as Pivot25 and Convergence will be the primary go-to areas to find investments, but smart investors will look harder in unexpected places.

9) Impact Investors figure out what “impact” actually means in Africa and add Tech to their portfolio: Impact investors (a growing movement and a confused asset class) will realize software is eating up the world and that includes Africa, but many investors will move on to the “next big thing” (first it was microfinance, then health, education and energy) but balance it with investing more on livelihood via job creation for real impact as they realize jobs for Africa’s youth is the continent’s biggest challenge for stability. Others of course have already figured this out- such as Omidyar Network.

10) New Africa Tech Hub Challengers emerge: Nigeria will emerge (“Silicon Lagoon”?) as a region to challenge Kenya’s “Silicon Savannah” but Kenya will still lead based on strategic position, business culture, welcoming policies and hungry talent- this will accelerate post 2012 election. Silicon Cape in South Africa will also continue to exert influence with the launch of Umbono accelerator.

11) China lays down infrastructure, India and West builds services: Increasing multinational corporate interest in Africa, led by mobile, business process outsourcing, cloud computing vendors and hardware. China and India based firms will lead the charge in new firms operating in the region with their respective strengths. China will continue to exert their influence by providing cheap hardware, networking equipment and infrastructure- India and the West focus on services and software development.

12) Africa Tech Talent and Skills shortage is real. Steps to strengthen continue: A continued focus on education and incubation as a key pillar in building an African entrepreneurial tech community. Kenya ICT board showed this in their Julisha Report. Diaspora talent will begin to help out more in building tech communities at every level from technical capacity to finance. Government incubators will begin to show their weakness- a realization that technology excellence, passion and fostering of strong “hacker” communities are key to succeeding. World Class Universities will begin to build partnerships with African educational institutions to strengthen a tech ready talent pool as we saw with Carnegie Mellon and Rwanda. And if you missed it, Bob King who made a fortune investing in Chinese search engine Baidu, donated $150M to Stanford University to explore, research and support emerging market entrepreneurs– Africa is clearly in sight. Corporates such as Samsung will further roll out training programs, others will follow in their lead.

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  • dabu

    I don’t know but i think English speaking africans don’t support french speaking africans project.
    You talk every about Encipher tablet which is only an China noname (OEM) tablet. but you don’t talk about Way-C (http://www.vmktech.com/way-c) who is the realy first african tablet.
    It’s a shame, because in tech too africa is not unite !

  • “Nigeria will emerge (“Silicon Lagoon”?) as a region to challenge Kenya’s “Silicon Savannah” but Kenya will still lead based on strategic position, business culture, welcoming policies and hungry talent”

    Amen! 🙂

  • Excellent analysis and predictions

  • maina

    I disagree with Huston. First Kenya has alot to prove to the world, in an election year. Secondly, Nigeria is a natural leader. If doesn’t happen in Nigeria it probably won’t happen elsewhere in Africa. As Dabu says, Africa is divided. Your predictions are therefore one sided.

    • Thanks- totally agree. Given I’m from East Africa, I am definitely biased to that side. Given that, I did try link in Nigeria- and I give Nigeria the “challenger” status. I would argue Ghana is also a contender. Whilst we are discussing Africa, Egypt and other north african countries too, but many would categorize them as arab speaking (MENA).

      Part of it is the strength of innovation coming out of Kenya right now- very aggressive Govt policies, mobile money leader and a lot of good marketing/PR…. Election 2012 is the major speed bump if overcome and momentum sustained will put Kenya in the lead.

      South Africa also great due to financial market access- African tech startups might IPO there vs anywhere else on the continent.

  • We wrote a cover on the cashless society in South Africa recently – http://www.mysubs.co.za/Finweek-Eng – there is some fabulous innovation happening here in this sector.

    I’m feeling incredibly bullish about Africa. Compared to the rest of the world at the moment Africa feels like a land of opportunities and it is nice to see foreign capital slowly being pushed onto the continent to drive growth

  • Victor Asemota

    It amazes me when people talk about technology in Africa and the focus is not on South Africa and Egypt where the really heavy stuff happens and it is spread to the rest of Africa.The rest of Africa use “temporary innovations” to overcome current constraints and are praised to the heavens for “baby steps”. Will Mobile banking the way it is being done now spread to the rest of the world the way inovations from Silicon Valley have? I guess not. Rather Visa and Mastercard have now woken up and are coming in to take advantage of the numbers and putting their technology in place. Even then Visa started by acquiring a “South African” company. The real world beaters are in SA and Egypt. Let us stop this nonsense and focus on reality. After Egypt and SA by next bet would be Francophone Africa.

  • I enjoyed your predictions, Alliy. For me the shift happens when facilitation for innovators, being planned through Parks etc., reaches beyond the traditional Western and Eastern models to something which takes advantage of the Internet and the far more affordable tech. We’ll start seeing what’s already happening in the world of software in Africa creep into hardware. The Tech Parks need to be light weight and inter-connected, like the Fab Labs (one of which I run fabLab.uonbi.or.ke). Learning will need to take an irreverent turn, recognizing maker talent not just prowess in the theoretical. Degrees should be issued on the back of proven can-do talent, and more importantly pedagogies must expand to hands-on, peer-learning, use of Internet instructables etc. then we’ll see a more home-frown leap in Africa..

  • Hi Kamau. Yes, the maker movement is an important sector of the innovation map in Africa. But I think we are still in the early stages of it and we will see it making a real difference beyond 2012. it is certainly not “maturing” like say mobile money. Maybe 2-3 years out? The applications for the masses can even include interent connected sensors that can be used in monitorting, healthcare etc… Clearly we are not there yet in 2012.

    I also agree we need more smaller hubs/parks that focus on hardware talent development so we enable more innovation, R&D and commercializetion down the road.

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  • I think the problem with Nigerian culture is that there is a lot of bureaucracy when it comes to access to information, etc. More than that, Nigeria has a culture of talking big which sometimes doesn’t add up to real projects with miles in them. Nigerians also like following big brands instead of starter brands which restricts the growth of startups especially in fields like tech. I see Nigeria coming to lead the continent on the adoption of technology, but they are 5 – 10 years removed from this leadership position.

    Most leading tech brands will spring out of Kenya (leadership position and mobile adoption) and South Africa (more available capital). If this is the case, expect to see these businesses scale up and become household names across the continent. They will then promote, support and fund other businesses within their region before we look at West Africa. The best way for Nigeria to take the leadership position will be in figuring out a solution within their global export, namely financial services. If they can crack it, they then have a lot of companies that can quickly spread these solutions across the continent.

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  • Excited to see much needed light shedded upon African IT, and African solutions for African Problems. Very strong and educated opinions in the comment section 🙂 looked forward to seeing more direct investment from stand off-ish investors of the diaspora (and European/American diaspora) in the sleepy and sluggish U.S. and the bumpy, weathered E.U. in infrastructure, software, hardware and mixed business models. The future is now

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