The power of connections: Strengthening African tech ecosystems

Technology Policy

The power of connections: Strengthening African tech ecosystems

Commentary
Posted on: 14th February 2022
Belinda Baah
Policy Lead, Tech for Development

As part of a key input to ongoing work on fostering tech ecosystems in Africa, the Tony Blair Institute for Global Change held a workshop to assess how robust networks can strengthen tech ecosystems:  addressing information asymmetries, poor perceptions, and knowledge gaps. The workshop brought together key stakeholders, from entrepreneurs to venture capitalists, to explore what quality connections and networks look like in the African context and what policymakers can do to help support them.

“Startups thrive on relationships and the exchange of ideas — with customers, investors, corporations, and, especially, other startups…the broader those relationships are, the better the growth outcomes will be for startups and their ecosystems.”

The technological revolution is driving economic growth and enabling socioeconomic transformation across the globe. Africa has the potential to become a tech startup giant, but cumbersome regulations, limited funding and highly fragmented markets hold startups back. Africa currently hosts just 0.2% of the global start-up ecosystem value despite tripling the amount of funds raised in 2021 when compared with 2020, to reach a record high of $4.9 billion. Key industry players and policymakers are recognising that priorities need to shift for Africa to capitalise on its thriving entrepreneurial population and capitalise on the estimated 300 billion dollars the digital economy is expected to contribute to Africa’s GDP by 2025 and beyond. A healthy African startup ecosystem and an environment that fosters innovation is a fundamental part of achieving this.

Well-connected tech ecosystems tap into a worldwide circulation of ideas, knowledge, talent, and capital. A high level of connectedness has proven to be strongly associated with strong startup performance. Africa finds itself in a position of relatively weak connections and networks, driven partly by misinformation, poor perception, partial understanding and a lack of awareness of the vast opportunities in the African tech ecosystem. For the African tech startup ecosystem to flourish, strengthening  connections between startups, funders, and other key stakeholders must be prioritised alongside an enabling business environment and improved access to funding.

Making the right connections: The what, the who and the how

Discussions at the workshop focused on what connectedness means in an African context, understanding what connections need to be made and how, what information needs to flow between key actors and importantly, how policymakers can help support the African tech ecosystem reach its full potential. We share four key takeaways:

  1. Access, access, and more access: reducing information asymmetries through robust connections

Better access - to information, to resources, to people and talent, to markets and more - emerged as the key need. This speaks directly to what is lost or missing when information asymmetries and gaps in knowledge are present. Without multiple, diverse connections, tech startups are limited by the information and services available to them. With more knowledge comes more choice and likelihood of finding solutions to challenges faced and understanding of what needs to be done to get to the next level.

  1. It takes a village: Startup Support Organisations (SSOs) require assistance to ensure they are better placed to support entrepreneurs

Tech hubs – such as incubators and accelerators, are a core component of the various startup support organisations (SSOs) that enable tech ecosystems to flourish. Given the relatively nascent nature of the African tech ecosystem, SSOs are often best placed to provide entrepreneurs and startups with the support required to move from an idea to a minimum viable product and beyond. Workshop participants agreed and felt policymaker’s role is to support these institutions – through tax incentives, subsidies and any mechanisms that support diversifying tech hub operating models and improves their sustainability – often cited as a core reason why tech hubs have yet to reach their full potential.

  1. Increasing visibility to reduce the fear of the unknown: Policymakers – and the media – as signallers and champions of the sector

Participants acknowledged that beyond direct monetary support, one of the most important roles a policymaker can play is to improve the visibility of the tech sector. This can be done through various mechanisms – two of which came out prominently. Firstly, through convening key ecosystem players to co-create solutions to the tech sector’s most pertinent issues. Through co-signing and sponsoring conferences such as Tech in Ghana, who hosted this workshop, but also to promote dialogue amongst key stakeholders across the continent making efforts to collaborate for the benefit of the sector. Secondly, through targeted campaigns to raise startups’ profiles and to promote any support mechanisms available to them and other SSOs.

African startups do not receive as much attention from global media outlets, contributing to a lack of awareness of the opportunities available on the continent. The media should be a key player in amplifying the voice of African startups and demonstrating the opportunities within the African tech ecosystem. This will not only raise the profile of successful startups but will contribute to closing the awareness gap and drive investment to the sector.

  1. Different connections matter at different stages

Connections are important at every stage of the startup cycle, from ideation through to exit. It is the depth and reach of these connections that must grow alongside the startup to trigger exponential growth. The scale of connections is complex, driven by context and specific to each stakeholder’s aims. For startups, the importance of connections will also be dependent on maturity. For instance, it is more necessary for an early-stage startup to connect with other startups and tech hubs than it is for a growth-stage startup given the level of maturity the latter and the guidance that is required at this stage.

Image showing the importance of different connections depending on a tech startups maturity

 Source: TBI workshop: The Power of Connections - Strengthening African Tech Startup Networks

Your network is your net worth: Get seen. Get connected. Get funded.

“With its large numbers of imaginative and creative youth, Africa should become the startup continent.”

Connections play an important role in the ease with which we navigate and engage in the world, and this is no different in the tech startup world. A well-connected tech ecosystem is one of many factors that can help propel Africa to become the tech startup superpower its entrepreneurial population deserves. Our roadmap for governments on fostering African tech ecosystems outlining what needs to be done to achieve this, will launch in February.

Find out more
institute.global