Tech & Science

Silicon Lagoon: Africa’s Tech Revolution Heads West

Ghana tech
12/09/16
In the Magazine
The market in Kwame Nkrumah Circle in Accra, Ghana, is mostly dedicated to cell phones, computers and electronic gadgets. Ghana's tech scene has flourished in recent years and Ghanaian incubator the Meltwater Entrepreneurial School of Technology (MEST) is hosting the Africa Technology Summit, which kicks off in Lagos on December 6 and brings together prominent figures from the sector. J. Perdigó & C. Aldehuela

Across the street from a church and in front of a dilapidated school is a grimy, sand-colored building that looks like any other here in Lagos, a prominent Nigerian port city.

But inside is something far from ordinary: the center of West Africa’s burgeoning tech scene. On the walls, posters preach disruption: “Move fast and break things.” In rows of blue and orange desks, millennials are trying to do just that. Small groups huddle around laptops, discussing ideas for the next big tech company. One person is working on his digital marketing startup; another is teaching a child how to code. When they’re not working, many here take a break on the roof, which is layered with AstroTurf and often hosts barbecues for local tech geeks.

Welcome to the Co-Creation Hub, a workspace-cum-incubator in the heart of Yaba, Lagos’s tech district. Since its launch in 2010, the hub has groomed more than 60 startups that focus on solving social problems. Recently, it partnered with Microsoft to find and mentor another 20. It was also the first stop for Facebook founder and CEO Mark Zuckerberg when he turned up unannounced in Nigeria for a two-day visit in August. The hub is located close to the offices of Andela, a Nigerian startup that trains software engineers, in which the Chan Zuckerberg Initiative, the philanthropic investment company set up by Zuckerberg and his wife, Priscilla Chan, recently led a $24 million investment round.

The visit confirmed something that CcHub’s founder, ‘Bosun Tijani, already knew: Nigeria’s technology startup economy is flourishing, along with West Africa’s tech sector.

Nigerian tech workers The technology sector in Nigeria, which has the continent's biggest population and one of its strongest economies, is generating significant investment from venture capital firms both inside and outside Africa. Adeola Olagunju

Outside of Africa, many have long associated the continent with conflict, famine and public health crises. The dominant news story in Nigeria for the past seven years has been a deadly Islamist insurgency conducted by the Boko Haram group that has resulted in the deaths of thousands of Nigerians. But while challenges remain in the region, technology is changing how Africans live and do business, often in remarkable ways. Incubators and accelerators have sprung up across the continent, centered in urban hubs like Lagos and Accra, the capital of Ghana. Although huge barriers still exist—from creaking infrastructure to the comparatively undeveloped investment culture—technology has huge potential to transform the continent. “There’s this energy here. You feel it as soon as you get off the plane,” Zuckerberg told developers in Lagos. “[It’s] not only remaking Lagos and Nigeria but shaping the whole continent and influencing how things are going to work around the world for the next generation. I think that’s a story that is underappreciated in a lot of parts of the world.”

The birth of Africa’s tech scene—excluding South Africa and Botswana, which serve as relatively advanced outliers—is usually traced back to the rise of the so-called Silicon Savannah around the Kenyan capital Nairobi between 2007 and 2010, according to Jake Bright, co-author of The Next Africa , a book about the continent’s technology sector. Several developments, including the creation in 2007 of M-Pesa, a mobile money platform now used by 19 million Kenyans, helped establish Kenya as the center of Africa’s technology scene. These private initiatives have benefited from government projects too, including the laying of a 3,100-mile fiber-optic cable along the ocean floor between the coastal Kenyan town of Mombasa and the United Arab Emirates, which in 2010 brought high-speed broadband to five countries in East Africa.

Kenya may have gotten a head start, but over the past few years, the tech revolution has spread across the continent. As of June, there were 173 tech hubs and incubators in Africa, according to the World Bank. Venture capital funding in African tech startups increased by a factor of 10, from $41 million in 2012 to $414 million in 2014, and is expected to rise to more than $600 million by 2018. That’s still tiny compared with more developed markets. Silicon Valley generated $128.7 billion in venture capital investment in 2015 alone. However, it does show that the sector is on an upward trend.

Yaba The Yaba district of Lagos, Nigeria's biggest city, has served as a hub for the West African country's budding tech and startup scene. Adeola Olagunju

Connections with tech hubs outside of Africa—most notably Silicon Valley—are also starting to grow. The Chan Zuckerberg Initiative’s funding for Andela was its first lead investment, and Zuckerberg has hailed the company as a key means of addressing Africa’s “gap between talent and opportunity.” Events like the Africa Technology Summit, which kicks off in Lagos on December 6 and is hosted by Ghanaian incubator the Meltwater Entrepreneurial School of Technology (MEST), are bringing together prominent figures from the sector. European- and U.S.-educated African entrepreneurs are heading home to create innovative companies, while African startups are going the other way to join Silicon Valley incubators.

“Africa is probably the next great emerging opportunity on the horizon that people haven’t jumped into yet,” says Dave McClure, the founder of Silicon Valley–based accelerator 500 Startups, which funds and supports promising startups. McClure’s company has invested in six startups in Ghana, Kenya, Nigeria and South Africa, and McClure says he is exploring setting up a regional fund based on the continent in the next few years. “We’re going to be trying to make 20 to 30 investments a year in Africa as we go forward,” he says.

While Kenya continues to attract significant investment, West Africa—led by Nigeria—is beginning to catch up. Nigerian startups attracted $49.4 million in funding in 2015, second only to South Africa, according to a report by tech portal Disrupt Africa. The country also produced the continents’ first unicorn—a private startup valued at more than $1 billion—in March when Africa Internet Group, the accelerator behind Nigerian e-commerce giant Jumia, secured investment from parties including investment bank Goldman Sachs and German incubator Rocket Internet. “In time, Nigeria’s influence will be felt beyond Africa. Nigeria will become a tech superpower in the same way China and India are about to do so today,” says Jorn Lyseggen, CEO of software company Meltwater, which runs the MEST incubator in Accra and has recently expanded to Lagos.

Mark Zuckerberg Nigeria Facebook founder Mark Zuckerberg takes a selfie with Nigerian President Muhammadu Buhari (center) and Vice-President Yemi Osinbajo during a visit to the presidential palace in Abuja, Nigeria, on September 2. Zuckerberg was full of praise for Nigeria's technology sector during his surprise visit. SUNDAY AGHAEZE/AFP/Getty

But even in Nigeria, Africa’s most populous country, the tech sector faces fundamental challenges. Online payment portals in Nigeria frequently don’t work. And almost 37 million of Nigeria’s 93.5 million adults do not have bank accounts, according to a 2014 survey. So online transactions are not as simple as in the West, where most people regularly use banking services.

In Nigeria and the continent as a whole, the basics needed for a thriving technology sector—reliable electricity and internet access—remain some way off. Only two in five Africans live within range of an electrical grid. Sub-Saharan Africa’s total electricity consumption is less than that of Spain, according to the Africa Progress Report 2015. The figures are even bleaker for internet access—only 20 percent of Africans use the internet, according to the International Telecommunication Union, a United Nations agency that monitors and coordinates global broadband usage; that’s a quarter the number of internet users in Europe.

In places like Yaba, however, those problems are being rapidly overcome. In 2013, the Lagos state government laid 16 miles of fiber optic cable, delivering fast internet access to the area. The district, which has variously been dubbed Silicon Lagoon and Yabacon Valley, is now home to more than 30 technology businesses, according to Tijani. Nigeria’s original incubator, CcHub, is planning to expand into a 10-story, custom-built innovation center, with construction due to begin in early 2017 under an $8 million budget. “This vision is going somewhere,” says CcHub’s Tijani. “It’s taken us five or six years to get here, so imagine where we are going to be in 10 years’ time if we continue this way.”

In our new series on Africa’s tech revolution, Newsweek profiles—with a focus on West Africa—some of the most successful companies and promising startups on the continent. These entrepreneurs are not just driving development at home—they’re helping their countries compete in the global economy.

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