Tech hubs power funding to Africa's start-ups

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International tech giants such as Google and Facebook have played a significant role in boosting tech hubs across Africa.
International tech giants such as Google and Facebook have played a significant role in boosting tech hubs across Africa.

African tech start-ups raised 53% more funding in 2017 compared to 2016, promoted by skills and development support received from tech hubs throughout the continent.

This is according to research by the GSMA Ecosystem Accelerator, which provides an analysis of tech hubs operating across Africa in 2018 and keeps track of the ever-increasing role innovation and entrepreneurship play in African economies.

GSMA defines tech hubs as "physical spaces designed to foster and support tech start-ups", which include incubators, accelerators, co-working spaces, fab labs, makerspaces, hackerspaces, and other innovation centres.

Tech hubs today are efficient vehicles to not only attract capital and expertise, but to lead the very debate around technology and progress, notes the report.

Since 2016, the number of active tech hubs across Africa has grown by over 50%: from 314 in 2016 to 442 hubs currently active on the continent, with dozens more expected to launch this year. The leading country in Africa by number of hubs is South Africa with 59 active hubs, followed by Nigeria (55), Egypt (33), Kenya (30), and Morocco (25). Together, these five countries account for over 45% of Africa's tech hubs, the research reveals.

Research co-author Dario Giuliani explains: "This growth of tech hubs across Africa over the past two years has been accompanied by three trends. First, several tier-2 ecosystems and new ecosystem cities (beyond South Africa/Cape Town, Nigeria/Lagos, and Kenya/Nairobi) have emerged across the region as internationally attractive technology centres. Secondly, the volume of funding raised by tech start-ups all across the continent soared. Thirdly, an increasing questioning and urge to rethink flawed business models has led several hubs and programmes to narrow down their offering and target specific niches."

GSMA further found that international tech giants such as Google and Facebook, as well as mobile operators, played a significant role in spurring tech hubs across Africa.

"As an illustration of the increased importance of these new ecosystems are the much-publicised visits of Google's Sundar Pinchai and Facebook's Mark Zuckerberg to Lagos' ccHub and Nairobi's iHub; French president Emmanuel Macron and Dutch prime minister Mark Rutte's visit to Accra's Impact Hub and iSpace initiative; and Alibaba's Jack Ma's visit to East Africa.

"Optimistic signs of growth have also been shown by Kigali (Rwanda), which has ambitiously strived to position itself as the second tech hub in East Africa, despite a fierce competition from Dar es Salaam (Tanzania) and, to a lesser degree, Kampala (Uganda)," say research co-authors Maxime Bayen and Dario Giuliani.

In July, pledged $20 million (R260 million) in grants over the next five years to NGOs working to improve lives across Africa. In November, Facebook announced a nationwide initiative in Nigeria which, according to the company, will further cement its commitment and investment in the country and across the continent.

Furthermore, 14% of the tech hubs are partnering with mobile operators, with Telenor, Axiata, and Telkom Indonesia being the most represented, notes GSMA.

According to the Disrupt Africa Tech Start-ups Funding Report 2017, funding in African tech start-ups surged 51% to reach $195 million in 2017, as compared to figures of the same period in 2016.

According to the report, tech ventures in the region raised an estimated $129 million in 2016, while 125 tech start-ups managed to collect $186 million in 2015.

"The number of African tech start-ups to raise funding hit 159 - up from 146 companies in 2016 and 125 in 2015. South Africa, Nigeria and Kenya proved to be the top three destinations for tech investors in 2017, both in terms of numbers of deals and total amount of funding, [although] for the first time since tracking began, the amount of funding secured by Nigerian start-ups overtook SA," notes Disrupt Africa.

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