Innovation hubs have become a mainstay of Africa’s emerging technology ecosystem. Scratch the surface of the continent’s information and communication building blocks and you’ll likely find connections to a tech space.
More than 150 startups have launched out of Kenya’s iHub. MEST’s Incubator seed fund program formed out of Ghana’s Meltwater IT academy. Africa’s tech leaders are receiving Google for Entrepreneurs guidance through Nigeria’s Co-Creation Hub (CcHub).
Over the last five years, Africa has seen its innovation spaces grow from a handful to hundreds, with large variations in focus and funding. Now many of these tech hubs are searching for sustainable operating models in the continent’s fast evolving ICT landscape.
“There was a lot of excitement in this first big wave of hubs, but much of that has worn off. The next phase is about viability and digging in for the long-term,” said Neal Hansch, a board member and former director of the MEST incubator. “ ‘How do we generate revenue, cover our operating costs, produce real IT success stories?’ These are the challenges for Africa’s tech hubs today.”
Before the question of sustainability, several organizations have taken on the challenge of quantifying the continent’s tech hubs. How many are there? In 2012, AfriLabs (an association of African innovation spaces), estimated around 70. A 2014 collaboration between Zambia’s BongoHive and the Boston-based Fab Foundation tracked 170. The World Bank’s ongoing African tech hub mapping project tallies 173. And GMSA’s July 2016 study estimated 314.
The difference in the latter two estimates derives largely from classification. The World Bank uses a narrower definition of tech hubs and tech incubators for its count. GMSA mapped active “physical spaces that fall under the broad term of tech hubs: incubators, accelerators, co-working spaces, fab labs, makerspaces, hackerspaces and other innovation spaces.”
Focus and funding
While it’s impossible to classify all several hundred — and TechCrunch was unable to find a comprehensive financing survey — some general classifications have emerged. Many of Africa’s tech hubs hereto have been grant funded (either by governments, foundations, or both) and co-working space oriented. Some, such as Jokkoklabs, are more social venture focused. Others have been shifting toward for-profit, self-funding and/or startup accelerator models.
One of Africa’s most visible tech hubs, Kenya’s iHub, has been moving in this direction. Based in Nairobi, iHub is credited with inspiring the upsurge in innovation spaces across the continent. Founded in 2010, the center was largely the vision of Erik Hersman who identified a need in Africa “to create a nexus point for technologists, investors and tech companies.”
Originally financed by grants, iHub has diversified its scope — now a mix of community tech space, co-working space and accelerator — and grown its funding from operations (consulting, events and corporate partnerships) to 70 percent. In early 2016 the IT hub announced its strategy to become 100 percent self-financed through investors and operating revenue.
iHub isn’t the only African tech space transitioning to making money and investments. BongoHive, a Zambian innovation hub founded in 2011 almost entirely by grants, has been “moving towards cost/market-based prices for services” and is establishing a startup investment fund, founder Lukonga Lindunda told TechCrunch.
In 2016, Nigeria’s CcHub launched its Next Economy accelerator program and Growth Capital fund, both of which take equity in early-stage startups while offering business support.
Importance to ecosystem, finding sustainability
As the continent’s innovation hubs evolve, experts see their significance to African tech increasing. “The most important…role is that of catalysts. Ecosystems developing around technology need a catalyst,” said iHub co-founder Erik Hersman. “The government can’t do it by itself, the private sector plays a big role but it’s hard for actors to be completely neutral. You need somewhat neutral entities to connect and push the ecosystem forward.”
Technology consultant Tayo Akinyemi views hubs as structural pillars in Africa’s fragile IT landscape. “There are fundamental gaps in infrastructure that impact digital entrepreneurship, connectivity, technology development, and innovation. Hubs are providing that enabling infrastructure,” said Akinyemi, who served as the first Executive Director of AfriLabs. She also points to the continent’s demand for IT training. “Hubs are trying to fill those skills gaps,” she said.
On sustainable models for Africa’s tech hubs, Akinyemi underscores the importance of location for those taking on more of a for-profit and investment focus. “There are certain countries and cities with more enabling ICT policies for tech spaces and startups,” she said. “There needs to be a surrounding ecosystem mature enough to support viable startup, incubation, and accelerator activities.”
iHub’s Erik Hersman also names location as a major factor. “If you are in a primary city that has enough critical mass of all the right things, money, universities, international tech companies, media, entrepreneurs, etc., that’s a natural place to build successful tech hubs,” he said. “But if you are trying to build the same thing in the less connected, secondary cities of Africa, it becomes much more complex.”
When it comes to sustainable funding, whether grant or revenue based, Hersman suggests African tech hubs focus on service models that solve problems and support specific needs of an ecosystem. “When you look at examples, demand-driven models tend to find a way to exist. Identify something someone’s willing to pay for,” he said.
Neal Hansch links the future of Africa’s tech hubs squarely to successful companies.
“Of all the different approaches, the question will be which ones prove they are sustainable and have the biggest impact. The answer to that question will be which hubs launch and grow the most successful startups.”