Africa: Innovation hubs galore

The most encouraging trend that has emerged from Africa over the past decade has been the huge upsurge in innovation.

Innovation hubs are continuing to spring up across Africa. According to a study of the continent’s tech hubs by the World Bank, there are as many as 90 tech hubs around the region. Although South Africa hosts the most, there are signs that other countries are catching up. Kenya has already vowed to launch a tech hub in every one of its 47 counties.

Hubs are also popping up in the unlikeliest of places. For example, Orange has just established its third incubator partnership on the continent – this time in Niger. The project, called CIPMEN, is an SME incubator and aims to support cutting edge Niger-based companies that are trying to launch themselves.

There is a lot of variation in terms of the hubs that are appearing across Africa – including in terms of their aims and their size. The World Bank attests that the list is “growing on an almost weekly basis”.

The majority conform to what might be described as pre-incubators or spaces where individuals can meet and bash out ideas for business enterprises. However, ICT business incubators are also cropping up.

Mobile money users in Africa make 77% of the world’s transactions, which comes to $5.7bn

These provide already formed but still embryonic businesses with office space and other resources, helping them to get off the ground.

The business models of the hubs themselves also differ. Some rely on seed financing from outsiders like the Nokia Greenhouse Nairobi or from NGOs like infoDev’s mLabs, which are based in Kenya and South Africa. Some government-driven hub initiatives are also emerging.

For example, Botswana Innovation Hub is a government project, although with the help of the World Bank, it is trying to adopt a more sustainable model.

Mobile money innovation continues
Africa has been the world’s innovation centre when it comes to mobile money and has been so since the launch of the revolutionary mobile money transfer service, M-Pesa in Kenya in 2007.

Mobile money services are becoming increasingly popular across Africa – with around 70% of all mobile money transfers in the world taking place on the continent, according to MasterCard: 58% of the 218 mobile money service providers in the world are positioned on the African continent: 66% of registered accounts are also in the African region. Mobile money users in Africa make 77% of the world’s transactions, which comes to $5.7bn, according to MasterCard.

Trends to look out for include an increasingly intense tug of war between banks and mobile operators over control of the market. It is likely that, overall, banks will try and dominate the market as they have consistently taken the lead in countries, eager to ensure that mobile providers do not push them out.

Some exceptions are emerging, however. For example, Ghana’s central bank has given mobile operators the green light to offer money transfer services. The move has effectively slashed money transfer costs because of the increased competition. In terms of where next for mobile money innovation in Africa, analysts are anticipating one major trend in particular.

They expect the next big step for mobile money to be merchant payments, or near field communication – which basically means paying for goods and services via mobile money in physical shops, on public transport or even online. Real movement in terms of the development of mobile merchant payment options in Africa got under way in 2013, when Safaricom launched Lipa Na M-Pesa, which means ‘pay with M-Pesa’ in Swahili.