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Startup Fever Heats Up in Africa

Jonathan Ortmans

I report this week from Africa which is enjoying its greatest economic success in decades and where there has never been a better time to be an entrepreneur. With economic growth rates this year around 6 percent in one-third of the 49 sub-Saharan African countries, the IMF forecasts that Africa will have the fastest-growing economy of any continent over the next five years. The World Bank in turn has reported earlier this month that more than 20 sub-Saharan African countries, encompassing more than 400 million people, have gained middle-income status, while the number of people living in poverty is down by roughly 10 percentage points over the past decade.

Young people are a large part of this swelling consumer base and talent pool. Those below age 30 represent the majority of Africa’s population, according to the 2011 Africa Youth Report compiled by the Economic Commission for Africa. This young population is tech savvy and connected unlike ever before and they are driving a surge in startup creation among African men and women. Today, I am in Kenya where, for example, 23-year-old Ory Okolloh helped found Ushahidi, a Web 2.0 crowdsourcing software initiative that tracks emergency events in real-time via cyberspace. Originally geared to spot political violence after Kenya’s bloody presidential election in 2008, the technology has soon evolved to broader uses and is now a tool Google uses.

This week, I join a gathering of leaders behind LIONS@FRICA—the Liberalizing Innovation Opportunity Nations Partnership—which is investing in connecting young African businesses to the global innovation grid in order to increase their scalability and sustainability. Our hope with Lions is to enhance and deepen the startup and innovation ecosystems of targeted fast-growing African economies. This initiative includes DEMO, which is known around the world for launching the most innovative companies in disruptive technologies, and Global Entrepreneurship Week, the grassroots movement leading the largest celebration of entrepreneurship around the world. See the full list of partners, on the LIONS@FRICA site.

Despite only recently being launched, the LIONS@FRICA partners meeting is showing evidence of early progress. For example, I will participate in DEMO Africa this week in Nairobi October 24-26, which is offering the most innovative emerging and established companies from African countries the opportunity to launch their products on stage and to gain exposure on a global level as they present their startups to global press, prolific bloggers, investors and potential strategic partners. At the same time, the event is acting as a platform for companies outside the region looking to launch in the African market. I am excited to be able to take a first-hand look at the freshest innovative ideas coming out of the region.

This event and many other programs and activities planned by partners like Microsoft and Nokia and Startup Weekend (who will cover over 30 African cities), will not only highlight the entrepreneurial talent and spirit that exists on the continent, but will also motivate future African innovators and help develop a network of mentors working across borders to continue to drive the continent's economic development.

They will also motivate the rise of a stronger local investor pool. Currently, most funding for African startups comes from outside the continent. But, as you may have heard already, there’s an upcoming fund called the “Savannah Fund,” that may just be the one to consolidate African early-stage investment.

The emergence of a strong network of continental entrepreneurship resources will perhaps be most clear to the world during Global Entrepreneurship Week, which will take place from November 12-18, 2012, in 128 countries around the world, including more than 25 African countries. In partnership with infoDev, the ‘Meet the Lions’ competition will be a featured event during GEW, helping African startups turn their ideas into reality. Inspired by GEW’s ‘Meet the Dragons’ competition in Europe, a select group of African entrepreneurs will have the opportunity to present their startups or business plans to prominent mentors, investors and business executives from the continent in an effort to secure support, mentorship and up to US$100,000 in funding.

It also good news for Africa that governments in the region seem to be valuing entrepreneurship in their efforts to set in motion a long-term economic growth strategy. According to the 2012 Doing Business report by the World Bank, 36 of the region’s 46 economies implemented regulatory reforms making it easier to do business between June 2010 and May 2011. Several African countries are among the top reformers, namely Cape Verde, Sierra Leone and Burundi. And these are on-going efforts. During the past six years, Rwanda (45th) has made more progress than all but one country in the world, pushing it to the third spot in the region, behind Mauritius and South Africa. By other measures, the same performers stand out, leading the way for its regional neighbours. In the Index of Economic Freedom, for instance, Mauritius is ranked among the top 10 worldwide.

Government interest in innovative entrepreneurship is also clear in the rise of infrastructure investments like Konza Tech city here in Kenya and Tanzania’s Rhapta’s city, as well as in the participation of several Ministers of Education, Science and Technology and other representatives from across the continent at the Innovation Africa Summit in Cape Town earlier this month. This summit and others provide useful platforms for much needed conversations in face of a catalyzed role of African governments in entrepreneurship promotion. For instance, it has been argued by regional entrepreneurship guru Mbwana Alliy and others that African leaders need to be aware that single efforts, no matter how expensive, cannot alone do the trick for startup creation. For example, while infrastructure is important for entrepreneurship, regulatory and policy reforms across many areas are crucial.

Without any doubt, the best actors in Africa´s entrepreneurship ecosystem are the risk-taking entrepreneurs themselves. Fortunately, with clear evidence that mobile banking and new access to existing technologies has helped the region leapfrog inadequacies in education, health, and other areas, many more are now confident that the marketplace is an effective vehicle to affect positive change. Take investor Chris Schroeder´s account of this phenomenon:

“With hundreds of thousands of cell towers providing reception to the most rural corners of the world, mobile providers have been compelled to build their own power generators. As a result, they've spawned entire ecosystems of entrepreneurs who are using the excess electricity to power local towns and build community charging stations. And thanks to ‘social entrepreneurs,’ people with little voice are using mobile technology to report crime and corruption to authorities while holding the ‘powers that be’ accountable — which was impossible even a few years ago.” The potential of powerful ideas, smart thinking and hard work—combined with a passionate desire to make a difference in our world—opens new doors to addressing old and new challenges arising from poverty, disease and unemployment. As African entrepreneurship thought leader Will Mutua has put it, Africa´s young people “do not have immediate memory of colonial times, and so are not living with that burden on their minds, they see a world open to them to explore, where they can compete with contemporaries from across the globe, and share and learn from them.”

My bet is the next chapter in Africa´s history will be largely written by its new generation rather than by foreign aid organizations. More importantly, I expect Africa to lead in fresh thinking about problems and in producing world-class innovations that will benefit us all.

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