The landscape of technological innovation in sub-Saharan Africa has been aptly dubbed the “Silicon Savannah.” The IT sector in the region has truly become a transplant of Silicon Valley. Google, Facebook, IBM, and others have ventured into the continent, spurring innovation and laying internet infrastructure in cities like Nairobi. President Obama organized the Global Entrepreneurship Summit there back in 2015, applauding Kenya for leading the way in African innovation. Yet, despite this productive energy, funding for the Silicon Savannah is drying up.
Disrupt Africa, a news site covering the African technology ecosystem, collected data that show total capital raised by Kenyan startups declined from $47 million in 2015 to just $10.5 million in 2016. Western donors and agencies like USAID were more cautious about giving funding to start-ups, instead focusing on nurturing talent through mentorship and innovation hubs throughout the sub-Saharan region. These membership-based hubs, often sponsored by western IT companies, offer creative co-working spaces and IT training programs, but can crowd out true competitive progress in the Silicon Savannah. The hubs expose a critical flaw in regional development: Western tech companies are creating a market for their own products and services, not those made by homegrown industry.
On paper and in principle, the network of innovation hubs in the Silicon Savannah shows symbolic growth. iHub, the largest innovation lab in Kenya, has launched over 170 start-ups since 2010 and has 16,565 registered members. Its partners include such giants as Facebook, Google, and the World Bank. Outside of Nairobi, academic institutions and local entrepreneurs alike have built tech hubs in cities across the country. But Nairobi is starved of growth capital, so entrepreneurial development is diffused in an oversaturated market of start-ups. Companies are flopping and innovative energy is dropping. Misguided confidence in these innovation hubs deserves some of the blame.
Despite this shaky status quo, no one is more confident in the innovation hubs than Western technology companies. Google, in particular, has made obvious its intentions to bring Africa online. The company has set up internet infrastructure and mentorship programs to help start-ups, and it aims to train 10 million people in internet skills, mentor 100,000 software developers, and provide $3 million in equity-free financing to 60 companies. iHub is one of Google’s chief partners in this goal—the two organizations co-hosted a “Launchpad Start” boot camp in 2016 to give start-ups actionable, in-person mentoring. While its productive pedigree and partnerships appear promising, iHub has not met profit expectations: the missing piece, once again, is capital.
For foreign companies, supporting these innovation hubs is a great marketing venture both for positive publicity and for setting up a consumer market in the Silicon Savannah. But investing in Kenyan start-ups comes with perceived risks and daunting liabilities. Moreover, if Silicon Savannah wants to nurture truly disruptive companies, investors will need to risk their precious capital. Nairobi’s tech sector is nascent enough to excuse the lack of game-changing start-ups, but its novelty is not the cause. These innovation hubs are insufficient surrogates for venture capitalists.
Larger international conglomerates often subsume those few ideas that gain traction in the region. For example, in 2007, during a fraught presidential election in Kenya, American-educated Kenyan activist Ory Okolloh helped create a not-for-profit website called Ushahidi. The platform pioneered technology that aggregated eyewitness accounts of violence using text messages and Google Maps. The website made headlines as a beacon of innovation in the continent. Google hired Okolloh as its African Policy Manager, appropriating her innovation before it had an opportunity to further develop.
After a few years at Google, Okolloh left to join Omidyar Network, a philanthropic investment fund started by eBay co-founder Pierre Omidyar that actually provides capital to these nascent start-ups. The organization works closely with iHub, providing funding and connections for the lab. One of the co-founders of Ushahidi, Erik Hersman, also happens to be the founder of iHub, and is working to diversify sources of funding. Hersman published a blog post entitled “iHub: the Next Chapter,” in which he pledged “to tighten up our service offerings and make them more profitable, and to help us figure out how not to just find startups but to grow the ones that are getting traction… We strongly believe that iHub can play a key role in this phase.”
iHub plans to be fully self-funded in the coming years, independent of the former 30 percent funding funneled in by its Western partners. Hersman and Okolloh both recognize the need for revenues and global scaling in the African tech sector. With innovative energy already present, the task now is to translate the pioneering energy into a profitable industry to boost the economy of the region as a whole. The innovation hub model is not inherently flawed—in fact, it has tremendous potential to transform the Silicon Savannah if the hubs consolidate their efforts. With time, investment and homegrown innovation could turn Nairobi into the tech capital of Africa.