Africa ripe for investment

Innovation in Africa is underpinned by a belief that if a new product or solution works in Africa, it will likely work anywhere else in the world. This innovation, coupled with the potential of an untapped African ICT market, provides investors with a ripe opportunity.

This is according to Mark Walker, director of Vertical Industry Practice for IDC Middle East and Africa. He believes that, although traditionally the African market was viewed as risky and the projected return on investment relatively small, certain markets offer distinct opportunities going forward.

The telecommunications landscape has always been a strong market in Africa, he explains. Most of the investment in the telecoms space has been geared towards the development of undersea cables; however, most of these have been completed or are near completion, continues Walker.

The opportunity for investment now resides in the development of terrestrial backbone connectivity, he notes. The investment needs to move towards connecting big cities to international broadband and connecting smaller cities to the bigger ones.

A strong investment point, advises Walker, is the development of contact centre services in Africa. He explains that although India dominates this space, Africa offers a strong alternative. “Africa offers a pool of English-speaking resources and also our time zones are better aligned to Europe.”

Other investment points include software development and African social networking offerings, he adds. All in all, Walker believes now is a good time to invest in Africa, but urges seed investors and venture capital firms to thoroughly research the markets as to where and how to invest.

Looking to harness the potential of African innovation, European micro seed fund, Seedcamp, will attend local conference Tech4Africa to identify African start-ups for potential investment.

“Once a team is selected for our annual Seedcamp Week, in September, we will bring them together with the other top start-ups, creating a network effect with other entrepreneurs at a similar stage, and with a further 300 world-class mentor network, venture capitalists, investors and product specialists,” explains Reshma Sohoni, CEO of Seedcamp.

“At the end of this week, the top teams selected will then benefit from a further intensive three-month support programme, where we work closely with teams to develop their business and ideas,” she continues. The three-month support includes a great deal of focus on mentorship, from the Seedcamp team and the network that stretches across the US and Asia.

“Seedcamp has always had an interest in the entrepreneurial scene in Africa, and feels it is very under-represented throughout the EMEA. By teaming with Tech4Africa, we feel it is the right time for Seedcamp to help unearth some real entrepreneurial talent we know is just itching to get noticed and become part of the wider entrepreneurial community,” says Sohoni.

Venture capitalist firm Invenfin has been ahead of the curve in harnessing African ICT investments, reporting that its investees have already enjoyed some early successes.

Invenfin CEO Brett Commaille says that, despite the shaky economic climate, Invenfin continued to invest in local companies, because he believes opportunity will continue to present itself despite tough times.

“Some of the best global successes stem from companies founded during tough economic climates. The belief is that if you are able to succeed in these challenging times, it can only get easier once things stabilise,” he continues.

The company's first two investees, contextual advertising firm Ad Dynamo and gaming platform ChessCube, have fared encouragingly well in global markets, reports Commaille.

Ad Dynamo delivers more than 300 million pay-per-click ads per month, he states. More than 15% of Ad Dynamo's revenue is generated abroad, and the company is being readied for expansion in the US and Europe.

Invenfin's other internationally focused venture, ChessCube, the chess gaming platform, has attracted more than a million users in over 200 countries. The unveiling of its second game is in the pipeline for later this year.

Commaille notes that, despite these successes, African innovation is not yet truly competitive. He explains that, while Africans are enterprising, inventive and have the right attitudes, they lack a support structure from government.

He urges government to support venture capitalist initiatives and the early or start-up commercial phase. With the right support and systems, Africa's potential to deliver truly commercial and competitive enterprises will flourish, concludes Commaille.