Africa native and investment advisor Eric Osei gives a summary…
Tech hubs (also referred to as ‘knowledge labs’, ‘incubators’, or ‘co-working spaces’) are the shining beacons of every startup ecosystem in Africa, writes David Winkelmann.
They’re cited by journalists as evidence of a country’s entrepreneurial drive, aiming to churn out hip startups that employ the brightest and most ambitious talent that the country
has to offer.
Take Rwanda’s KLab as an example: Disrupt Africa portrays the Kigali-based tech hub as ‘the symbol of the country’s development’ and ‘crucial to Rwanda’s vision of becoming a middle income and knowledge’based economy by 2020’.
African tech hubs, like Nairobi’s iHub (which Mark Zuckerberg visited during his Africa trip), BongoHive in Zambia, or MEST in Ghana have attracted so much fanfare and positive press in recent years that it’s no wonder that their number has skyrocketed. GSMA, a global trade organisation of mobile operators, estimates that the number of tech hubs in Africa has more than doubled in less than a year, increasing from 120 in September 2015 to 314 as of July 2016.
Now the ultimate question is whether this new, much-lauded institution actually delivers on its promise of being the thriving epicenter of a country’s startup scene. Let me highlight two common hurdles that tech hubs face in pursuing this goal, namely community building and unrealistic expectations.
Firstly, organising a vibrant community is tough. Tech hubs face a consequential tradeoff between selectivity and openness. Should they be open to everyone – university students, tech enthusiasts, startup founders, etc – creating a large, diverse, yet oftentimes weak community? Or should they be more selective and only support the most promising startups?
Nicolas Friederici, analyzing this dilemma at Rwanda’s KLab, notes that an overly inclusive approach can lead to ‘internet café syndrome’, where it ‘isn’t clear anymore who [is] there to work on a digital product and who [is] just browsing Facebook or torrenting.’
Further, too many expectations can plague tech hubs. They have to meet a plethora of diverse and seemingly contradictory expectations, from nurturing as many new startups as possible via accelerator or incubator programs to hosting weekly tech events that are open to the public. This lack of focus is catalyzed by a tech hub’s board of directors, which often hosts a diverse set of stakeholders, like government officials, successful entrepreneurs, university professors, and representatives from multinationals. These stakeholders come with diverging vested interests and a tech hub has to master the art of meeting all demands, impairing it to master even one.
The fact that most tech hubs on the continent are not self-funded, but rather financially supported by government ministries, multinational tech companies or telcos greatly contributes to this dilemma. Even iHub (Kenya), the flagship of Africa’s tech hubs, is ramping up its consulting services to become completely self-funded, currently having only 70 per cent of its expenses covered by these services.
These challenges show that, away from the flashy news articles about them, the daily operation of tech hubs is tough business. And the fact that most of them are financially dependent means that funders can easily shut them down. The proliferation of business incubators in the 1990s in the United States serves as a warning: following the dot-com bubble, more than a quarter of them closed down.
The rise of tech hubs across the continent should be seen as a sincere desire by governments and other stakeholders to foster local startup communities. They represent Africa’s ambition of partaking in the IT revolution that is spreading from Silicon Valley and Bangalore across the world in lightning speed.
However, we should work on making them more effective and sustainable. Otherwise, the danger is that many of them will disappear once the next recession hits or their sponsors realise their fruitlessness and cut financial support.
David Winkelmann is a German entrepreneur who is based in Rwanda and is currently working with SafeMotos, a startup that has launched an Uber-style app that connects customers to safe motorcycle taxi drivers in Kigali.