The biggest business stories of the past year across Africa have revolved around tech. According to research company Briter Bridges nearly $5bn was raised by African startups last year, up 100% on 2020 in terms of value of deals and 25% in terms of volume.
Of this, 62% of funding raised went to fintechs, digital payments and other finance-related solutions. And yet African entrepreneurs frequently have to contend with subpar infrastructure and limited ecosystems.
Smart Africa, a pan-African institution endorsed by the African Union and the brainchild of President Paul Kagame of Rwanda, was created to help enhance the digital landscape in Africa, working both with private sector and governments.
Smart Africa’s board contains private sector representation, and its remit is wide, from working with policymakers to improve the regulatory environment, to harmonising regulation across the continent, and working with governments and telcos to reduce data prices. In sum it’s about creating a thriving environment for African techpreneurs to succeed.
We meet Lacina Koné, director-general of Smart Africa, in Barcelona during the Mobile World Congress, the biggest gathering of tech and mobile operators in the world. Based in Kigali, he has spent the last week on the road. He came to Barcelona from Brazzaville, Republic of the Congo. Earlier in the year he was in Estonia, which has won plaudits the world over for its technological innovations and digital uptake.
The US-educated Ivorian previously served as an advisor to President Alassane Ouattara on ICT, following a long career in the US at global consultancy Booz Allen Hamilton working in IT and the tech sector.
It’s evident from the outset of our meeting that Koné enjoys turning problems on their head and that he enjoys shaking the apple cart. In that respect, he’s as much a disruptor as the entrepreneurs and wider community he’s trying to empower. Yet he is bluntly unhappy with the progress made in terms of investment the African tech sector is attracting.
“Africa is the third biggest continent in the world and [the investments] are not enough. We have a population of 1.3bn people and we have seven unicorns. I just finished a meeting with Dr Davit Sahakyan, the deputy minister of the hi-tech industry of the Republic of Armenia. They have a population of 2.5m people and yet they have set up a national venture fund with the ambition to create 10 local unicorns within five years.”
Koné worries that too much of the current investment is foreign capital.
“I’m not blaming [others for investing] but we need to be promoting the idea of venture capital in our own backyard. That’s how Silicon Valley was created, with local money… Right now, only the operation is in Africa. The money is foreign. The company is registered outside of Africa and as a result the value will go elsewhere. It’s not in Africa’s long-term interest.”
This issue of sovereignty comes up time and again. Koné knows that Africa’s got the talent and the local know-how to take advantage of the opportunity, and says it will require what he calls hard partnership [the adoption of foreign hardware] and smart soft partnership, in which Africans provide the ideas and expertise to apply technology to the local context. He is particularly strident when it comes to the ownership of data.
“Today, Africa controls only about 1.5% of data. The US controls 70% and China about 22%. Europe less than 4%. We may be latecomers but we need to learn from the mistakes of others; that’s the differentiation and advantage of disruption. It is also an issue of sovereignty and African data needs to be on African soil. That’s the reason why we’re pushing for local data centres and local African clouds.”
Digital ID is essential
Recounting the motivation behind e-government and the digitisation of the economy in Estonia, he says that at the centre of this was digital ID. He believes this is the single most important issue for governments in fully leveraging the digital opportunity.
“It’s a cornerstone. Without digital ID you can’t get anything [done]. If we want digital inclusion, e-government and to be able to conduct KYC and other checks, we’ll need some form of digital ID… We call it the invisible scandal. Right now all the KYC by startups and the private sector is based on mobile numbers.”
He has his work cut out to convince policymakers and the business community. Partnerships are the only viable solution, and this is why, he argues, Smart Africa was set up with both public and private sector representation.
“If you look at the whole planet, the combined supplied submarine cables, deployed fibre optic cables and satellite coverages cover close to 94% of the world population. But how come Africa is still below 40% based on connectivity? The world, according to OECD data, is only 54% connected. And if you look at the capacity price of the submarine landing cable and the retail price in-country, it’s probably four times in Africa.
“The only solution is for governments and private sector to work on the last mile connectivity and continue to invest in infrastructure. The target is for data to cost 2% of average revenue per month, and despite progress Africa is still the most expensive place to access data as a percentage of wages.”
Africa has not missed the boat
If Koné is travelling the continent it’s largely to get policymakers to think in a strategic and harmonised way in terms of laws, data protection, regulation and on issues such as hyperscale cloud capacity. He’s impatient and he knows that progress needs to happen even more quickly. He’s worried by what he sees as a brain drain, especially when it comes to software engineers, and is calling for a complete rethink of the education system.
But he also thinks Africa has not yet missed the boat and that there is everything to gain. “Where is Nokia today?” he asks. “The only constant is that things are changing ever faster. We’ve become a mobile-first continent. We control 60% of global mobile money transactions.”
Countries, he concludes, may be moving at different speeds, but they all recognise that without a strong ICT backbone, they will be left behind. The message is sinking in.