[AfrICANN-discuss] 12 predictions for Africa Tech Scene in 2012

Anne-Rachel Inné annerachel at gmail.com
Mon Jan 2 12:07:14 SAST 2012


12 predictions for Africa Tech Scene in 2012

Posted by Mbwana Alliy on December 28, 2011, filed in: INNOVATION

It has been a banner year for the Africa technology scene as the world
begins to turn to the continent – the Economist Africa rising cover
story article was for many, a big validation in the future
opportunities as well as challenges for Africa. The best follow up
post worth reading is by Professor Juma of the Harvard Kennedy School
in the UK Guardian blog, both recognize the importance of the
technology scene in supporting Africa’s prosperity.

In the spirit of the new year and holidays, I compiled 12 predictions
for 2012 based on my experience and trends I am seeing as a Silicon
Valley professional, observer and participant within the East African
tech startup scene, many inspired from stories we covered here over
2011. Here’s to a great year in Africa Tech. I hope to continue
covering this exciting area next year and beyond.

1) Feature phone to Smartphone + a touch of Tablet: Smartphone
adoption will grow among Africa’s emerging middle class as entry
prices for an unlocked phone continue to dip below $100.
Nokia/Microsoft Symbian/Windows Phone and Google/Samsung Android will
battle for smartphone dominance- Nokia’s strong brand and feature
phone momentum will prove to be an advantage. But affordable Chinese
smartphones led by Huawei’s Ideos will continue to tempt Africans to
upgrade. Tablet usage will begin growing as prices drop below $200
starting within education sector. Check out the Nigerian tablet from
Encipher based on Android, locally designed hardware customized to a
big local market like Nigeria is a smart strategy if prices are kept
in check. RIM’s Blackberry will continue to be adopted by the elite
and corporate circles- one of the last bright spots for RIM’s
declining dominance who initially popularized the smartphone category.

Huawei Ideos

2) Evolution & Maturity of Mobile Money: Mobile money will begin to
grow with other mobile operators in other countries (emulating
Safaricom’s M-PESA success in Kenya) after operators refine and adapt
their marketing and customer education programs after some slow
starts. For example, Gates foundation provided Vodacom Tanzania with
marketing support before the service started to take off this year.
New models of mobile money will be explored that are less dependent on
mobile operators, such as Pagatech in Nigeria, but their growth will
be relatively slow given the lack of a strong agent network to begin
with. More application of mobile money into vital sectors from health,
education and energy but access to financial services will still
remain big- especially with the support of donors and the banking
sector. Long awaited Mobile Money APIs will finally arrive, empowering
developers to build more interesting applications. Recent mobile money
outages such as seen with MTN Uganda will not be tolerated and steps
will be taken to further regulate as billions is put at risk within
these systems which are the digital financial future economy of many
African countries.

3) Mobile Commerce & Payment Wars Intensify: We are in the early
stages of an amazing change in how electronic payments are done on the
continent. Africans will begin to gain more trust from mobile online
commerce as trusted global brands including VISA, MasterCard and
Paypal enter and compete to play in the ecosystem they previously
ignored. We may see new unexpected players such as Google and even
local banks (maybe another acquisition of a startup like Fundamo this
year?). Verticals that solve key problems in ecommerce will take off
first, these include remittance, travel, education and healthcare. We
will also see many hybrid models bridge the mobile money world to
conventional payment, banking options as was evident with
Mastercard/Airtel/Standard Chartered’s Pay Online solution.

4) Mobile broadband Internet Access and the 3G Divide: Mobile
broadband rollout will start going more rural, but the urban story
will continue to grow strong. The Urban/Rural “internet digital
divide” will be a topic of conversation as much as the feature phone
vs smartphone debate. Otherwise why should a low income African living
in rural areas buy a smartphone if 3G coverage is spotty in their
area? Smartphone adoption and mobile broadband rollout are obviously
positively correlated- the faster 3G spreads, smartphone demand will

5) Mobile Health coming of Age but still not mature: MHealth projects
will begin to move from pilot to scale and impact investors will
salivate at the results. We have seen this with Praekelt Foundation in
South Africa and expanding into Tanzania, and the successful launch of
MedAfrica in Kenya. However business model sustainability will remain
a challenge for startups that don’t achieve broad scale to survive
longer than 1-2 years.

6) Media disruption takes root: Social media, led by Facebook growth
will continue – we will begin to see Facebook API used in more apps.
>From social gaming niches to media. Africa’s advertisers might even
leapfrog into more effective social media marketing bypassing
traditional banner/display ad networks- with exception of mobile
(Inmobi is a clear leader here). Twitter will continue to break the
news faster than traditional African press can keep up with- new
opportunities for new media will be exploited to take advantage of
this disruption. We might see the chaos of Arab spring fueled by
social media head south as African citizens demand more from their

7) Rush and stumble to Invest in Africa Tech: New investor interest
thanks to continuing coverage of Africa economic growth potential vs
other markets- especially in the attractive mobile segment (700M
subscribers barrier will definitely be crossed in 2012). But most new
investors will be spending the year “getting to know” Africa and be
largely risk averse. They will realize that Africa is a “negotiated
market” coined by Helios Investment Partners’ Tope Lawani-- no one
size fits all, rather searching out unique opportunities on the ground
vs relying on vanity macro-economic country metrics as a guide. Smart
investors will set up offices and presence on the ground at key hubs
and hire mix of foreign and local talent, while others will attempt
what I call “driveby investing” from abroad, many will not succeed in
adopting to the local culture fast enough. Private equity or late
stage investing will continue to focus on much needed infrastructure
to support growth and of course on those Tech parks.

8 ) Rise of Angel & Seed investing “Sea Turtles vs Residents”: There
will be more seed funding for African tech startups as investors
realize they need to take more risks to generate deal flow and more
tech savvy angel investors begin showing up in Africa to fill the
void. Domestic tech investing will start to take off as more capital
is mobilized from the Africa elite class and successful first
generation entrepreneurs realize the strategic value of investing in
Africa tech vs other areas. Returning Diaspora, similar to the “sea
turtles” of China (educated abroad and swimming home) in the first
wave of tech startups there, will lead the charge based on technical
and business skills, but resident Africans will learn fast and
outsmart diaspora/sea turtles with their unique understanding of the
local market- teams that combine a smart mix of both local, foreign
and diaspora talent are poised to win. Events such as Pivot25 and
Convergence will be the primary go-to areas to find investments, but
smart investors will look harder in unexpected places.

9) Impact Investors figure out what “impact” actually means in Africa
and add Tech to their portfolio: Impact investors (a growing movement
and a confused asset class) will realize software is eating up the
world and that includes Africa, but many investors will move on to the
“next big thing” (first it was microfinance, then health, education
and energy) but balance it with investing more on livelihood via job
creation for real impact as they realize jobs for Africa’s youth is
the continent’s biggest challenge for stability. Others of course have
already figured this out- such as Omidyar Network.

10) New Africa Tech Hub Challengers emerge: Nigeria will emerge
(“Silicon Lagoon”?) as a region to challenge Kenya’s “Silicon
Savannah” but Kenya will still lead based on strategic position,
business culture, welcoming policies and hungry talent- this will
accelerate post 2012 election. Silicon Cape in South Africa will also
continue to exert influence with the launch of Umbono accelerator.

11) China lays down infrastructure, India and West builds services:
Increasing multinational corporate interest in Africa, led by mobile,
business process outsourcing, cloud computing vendors and hardware.
China and India based firms will lead the charge in new firms
operating in the region with their respective strengths. China will
continue to exert their influence by providing cheap hardware,
networking equipment and infrastructure- India and the West focus on
services and software development.

12) Africa Tech Talent and Skills shortage is real. Steps to
strengthen continue: A continued focus on education and incubation as
a key pillar in building an African entrepreneurial tech community.
Kenya ICT board showed this in their Julisha Report. Diaspora talent
will begin to help out more in building tech communities at every
level from technical capacity to finance. Government incubators will
begin to show their weakness- a realization that technology
excellence, passion and fostering of strong “hacker” communities are
key to succeeding. World Class Universities will begin to build
partnerships with African educational institutions to strengthen a
tech ready talent pool as we saw with Carnegie Mellon and Rwanda. And
if you missed it, Bob King who made a fortune investing in Chinese
search engine Baidu, donated $150M to Stanford University to explore,
research and support emerging market entrepreneurs- Africa is clearly
in sight. Corporates such as Samsung will further roll out training
programs, others will follow in their lead.

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