kenya was known as the silicon savannah
name coming from the silicon valley
a lot of early adopters in the tech
space started creating a community and
building products that has now led to
the creation of the african tech space
after over a decade of development
africa's startup scene is booming
last year the tech sector attracted a
record five billion dollars more than
the total amount raised in the previous
three years combined
it's actually
kind of mind-blowing in many ways the
pace of growth in the last couple years
is incredible in terms of amount of
funding coming into the continent
and that is particularly because there
was a lot of interest and excitement
from u.s investors
we saw some really scaling up their
investments
the continent also saw the creation of a
record number of five unicorns private
companies valued over one billion
dollars
and this year looks even more promising
this creation of unicorns that has more
or less proved to investors that you can
make african tech companies into
multi-billion dollar companies that are
profitable on the continent it's a
vibrant place to be we've got great
innovators and we're beginning to see
that evolve quickly
but africa's startup scene is still much
smaller compared to the rest of the
world
with regulation differences and income
disparities across the continent can
african startups keep growing
[Music]
when you talk of the genesis of tech in
africa you'd have to go back
when government started promoting the
internet and the use of the internet
we started seeing a pipeline of software
engineers that came out and some of the
things that they started doing was
really making applications for instance
hr management applications
for universities for hospitals for you
know large stores and factories
also in the 1990s big tech companies
brought cell phones to the continent
laying foundations for africa's mobile
internet age
kenya has been one of the hubs leading
africa's tech innovation since the 2000s
yeah you can argue that nairobi is where
africa's tech started
so in the late 2000s with the advent of
the sea cables coming onto the coast of
kenya and with the availability of
well-educated young people a community
was created in nairobi and ihab was one
of the first community spaces on the
continent that brought innovation groups
together
founded back in 2010 by a group of
like-minded techies i have provided a
much needed space for entrepreneurs in
nairobi to meet share ideas and develop
products
the first three years of iheb was
amazing there was this
energy that
was on another level of people to
actually chat with each other
people to build prototypes people having
hackathons like hackathon after week
after week just to kind of like see who
could develop the best app trainings
happening people giving their time to
actually like train the young developers
so it was really intense of how amazing
the community was from all levels
academia from corporate from government
to
tax community itself
we've had like hundreds of startups that
came out of the ihop ecosystem some have
actually been very successful
since its inception ihub has helped
create 150 startups and created more
than 2500 jobs achieving what the kenyan
government tried to but couldn't do
uc world-class office space we see
launch pads to extraordinary startups
and profitable organizations
in 2008 two years before ihub was born
the state proposed a plan to build a
tech hub called kanza technopolis about
60 kilometers southeast of nairobi
but over a decade later the project is
still a work in progress
you cannot force innovation to happen
it's not just the space that you need
it's the people that come with it it's a
talent that needs to build this this
tech space
[Music]
another milestone in kenya's tech
history was the birth of m pesa a mobile
phone-based money transfer service
it was launched in 2007 by safaricom
kenya's biggest telecom company partly
owned by the uk firm vodafone
like many african countries kenya's
banking system was underdeveloped and a
huge majority of the population didn't
have a bank account that meant
transferring money was difficult you
start with a send money home proposition
because kenya has a rule to urban
migration and everyone in the urban
areas was sending money to rural areas
and that meant taking time off wako or
over the weekend to go see your parents
and give them money i remember in 2007 i
used to travel almost 500 kilometers
from nairobi to go give my mom money
just to the advent of the send money
home proposition that changed how we
send money in kenya dramatically
but smartphones hadn't arrived yet in
kenya and so the empeza team relied on
ussd and sim toolkit the same technology
used for sending an sms
users registered for an mpisa account
with their sim cards put cash into the
account through an empisa agent and then
sent the money by phone
recipients could also cash out through
an agent
the transaction fee for sending money
was 30 kenyan shillings about 26 cents
it went on and you know was developed
into
a complex payment system where people
can not only just transfer money but can
also
pay bills
borrow
and they are now even investment
products that are on m-pesa in fact even
the kenyan government used uh the system
to to sell bonds at one time
now we have 30 million
active customers on the m-pesa kenya
ecosystem
today well over 50 percent of the gdp of
kenya is actually flowing through it
the success of m-pesa ushered in mobile
money across the continent spawning the
birth of other startups trying to solve
everyday problems in africa
among them cindy a nairobi-based digital
logistics company facilitating
door-to-door deliveries between
individuals and businesses
logistics in africa is quite fragmented
and quite costly and if you have an item
on the shelf about ten dollars about
four to six dollars of that is we can
attribute that to logistics over forty
to sixty percent of that and that's a
problem we sought out to solve to reduce
that to a single digit from and
technology has allowed companies like
cindy to aggregate the informal
logistics sector uh into a more
homogeneous uh kind of
play that all these businesses can
actually trade
when we talk about shipping uh you have
to also talk about payments we started
in kenya because we kind of saw how the
digital economy was growing in kenya and
the penetration we had seen in mobile
money in this market enabled us to move
quite fast on that
[Music]
2021 was a breakout year for startups
like cindy
with the coven 19 pandemic many
consumers turn to online services for
grocery deliveries tutoring and health
care
african startups raised a record 5
billion last year and nearly two-thirds
of the top 20 largest disclosed deals
involved investors from the us
in 2016 mark zuckerberg visited kenya
and he interacted with the tech space in
2019 jacques dorsey was also toured
three four countries on the continent
was also planning on actually living in
africa for six months
the interest has been there what changed
was
that companies proved that
one that investors can exit and you know
make money for the investment but
secondly that you're able to scale on
the continent
the money pouring into africa's tech
sector minted five unicorns last year a
huge number for the ecosystem given the
continent only has six unicorns so far
and four of those are nigeria-based
as far as monetization of tech and
startups is concerned
nigeria came in a little bit later but
has had
the hugest success in in terms of
monetization the african unicorns that
we have now are mainly in nigeria
because there's money and economy to be
to be mobilized there
one of those unicorns is flutterwave a
fintech startup facilitating
cross-border payments africa
specifically was a very complicated
market from a digital payments
perspective
it was a very fragmented market in the
sense that we had over 50 countries we
have two dates
about 40 currencies in circulation and
over 300 types of digital payments and
so what flutter wave does is pull all of
those different payment types across the
countries across currencies onto one
platform so that as an individual or as
a business it becomes much more easier
for you to reach your customers or for
you to send peer-to-peer transfers to
family members friends in other
geographies plata wave caused
a lot of excitement in in 2021 it did
not just become a unicorn but it became
a unicorn in five years which was uh
quite a short period of time and it's
found
at bola really became you know i got to
pass on on
how to do it you know in in africa we
are focused on building new products
that will make a very positive impact on
the lives of everyone that comes across
those products in fact
that's what fintech means to us
today over 900 000 businesses use
flutter wave and over 200 million
individual transactions have been
processed on the platform
nigeria is the company's biggest market
but it has ambitions to expand in africa
and even go global
we're starting with egypt and morocco
and beyond that we're also looking to
build a base outside of africa we're
looking at europe we're looking at the
u.s
eventually we'll have our eyes on canada
as well so it's really exciting
times for us
[Music]
but compared with the rest of the world
african startups are still much smaller
in size
and while money piles into the
continent's four big tech hubs startups
in smaller markets including those run
by women are still struggling to secure
funding
even with a lot of capital coming in
again it's chasing very specific
industries certain markets so if you're
kind of not in those industries markets
or necessarily the networks which is one
of the challenges a lot of women have
there's you know significant difference
between how much money is going to all
male founders versus teams that have
women founders or all women we're really
talking about single digits we're
talking about single digits of all that
investment actually going to
women-led and women-owned businesses
we are in a continent where
our digital destiny is like what we're
focused on and so how do you really
think about
adjusting and showing this more
equitable distribution of the economic
gains that we made from this
lack of basic infrastructure and
regulations also create problems for
african startups those that are looking
to develop their business and scale up
across the continent
the basics
still need work for example in nigeria
the need to have access to energy is
something that the government needs to
to help facilitate
similarly in terms of road and railway
in in majority of the the continent are
huge investments that still need to be
done so that startups that are working
say in logistics are able to kind of
plug in into that system
regulation is different across these
markets the regulation in kenya is quite
different in regulation with other
countries that are dealing and having to
deal with that is quite quite painful
for a business business like us
some of the fintechs
innovate and then go to the regulator or
innovate and are not aware of the laws
you're seeing some of the countries
rolling up tax laws that are targeting
such an emerging industry whether it's
e-commerce
and so on in the nasa stages of growth
when you attack that that could limit
the potential of it
while the continent is large and we have
a lot of people on mobile you have more
people using the internet the reality is
that it can be hard to
get a good grasp of the size of the
consumer base that you can really
monetize
we certainly are in a market with a lot
of inequity and don't have necessarily
the purchasing power at an average
consumer base than some other markets
have
but starting up in africa still has its
advantages
the continent has the youngest
population in the world with 70 percent
of sub-saharan africa under the age of
30.
young africans provide the continent
with a rich talent pool
africa also benefits from a vast
diaspora an estimated 40 million people
in north america alone
as someone who was educated in the us
and the first wave i would say when i
came back and many diaspora before me
was
coming back to the continent and
physically being here starting companies
or working at places like google where i
worked you know the tech companies that
were setting up on the continent
and i think over some time what we're
starting to see as a shift is that
there's a lot of opportunities for the
diaspora to not move back but to
play a role in different ways
sergio for investing in tech companies
some of our advising tech companies and
i think opens up more opportunity for
this collaboration of diaspora with
those on the continent the potential in
africa we're just still scratching the
surface and we'll be seeing a lot more
growth in the next five to ten years
we're going to have more companies that
are valued at 2 billion 4 billion 5
billion
10 billion and even more we're going to
see you know some
initial public offerings from from some
of these companies
tech startups are already playing a big
role on the continent they're creating
employment they're creating solutions to
problems that are faced by the regular
citizenry they're providing innovation
that is making ability to do business
easier cheaper and more efficient in the
next few years just going to get better
and easier to do business on the
continent