Digital Transformation

Inside Africa’s Flourishing Tech Scene

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An interesting prediction by investment bank Natixis is worth considering when envisaging the global economy of the future

It predicts that in 2050, based on demographic statistics the most widely-spoken language will not be English, Mandarin, or even Spanish, but French (currently the 6th most widely spoken). The driving force behind this change? The unstoppable growth of Africa.

Still by far the most underdeveloped region of the world, Africa has high birth rates, an underdeveloped use of resources, as well as a low population density compared to East Asia, anywhere is Europe, or North America. And this potential has not been overlooked by tech leaders the world over, who see Africa as the next hub of tech business activity and growth.

This is also occurring at a fortuitous time for the continent. Africa’s growth phase will be able to leverage technology that is already advanced, modularised, and borderless, and the relatively peaceful international landscape means that war is unlikely to interrupt the process of modernisation and enrichment of the world’s poorest continent.

Why is the tech scene in Africa about to boom?

Africa is going through the same modernisation boom that all other economies have seen at some stage: the West post WW2, the “Asian Tigers” in the 60’s and 70’s, and India since the 90’s. Political systems are becoming liberalised and stabilised, conflict is becoming rarer (believe it or not), population is booming and providing ample workforce, national resources are being exploited more efficiently, and more of the population are starting to work in value-driven knowledge work.

Inside Africa's Flourishing Tech Scene TechNative
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The fastest growing economies of the next 10 years will be nearly all African, with many places like Uganda set to post 6-7% economic growth each year for the coming decade.

There are other factors which add to Africa’s potential as a tech hub: entrepreneurialism, attitudes to technology, infrastructure. Africa has some of the highest smartphone penetration rates, mobile internet networks that are ahead of their economic development, and a tradition of small-business and cross-border commerce (with a high Total Entrepreneurial Activity index). This combination of a young and entrepreneurial tech-minded workforce surrounded by economic growth is an ideal mix for technological initiatives.

What kind of tech is going to boom in Africa?

The presence of a growing telecommunications sectors suggests that many African startups will focus on connectivity and communication projects which are important in a region criss-crossed with borders due to the amount of small countries contained within the continent. Another interesting development is the interest in Decentralised Ledger Technology/Blockchain possibilities in the region, with startups like Azteco and Project UBU making progress in the space. The former also touches on another trend in African tech entrepreneurship, addressing the needs of impoverished and underserved demographics.

This mix of new technologies, a focus on communication projects, and a social dynamic is evident in other upcoming and previously successful African startups. The Sun Exchange is crowdfunding platform for solar energy installations. Sky.Garden is a SaaS offering that allows merchants to onboard payment methods easily without the need for a developer budget. And Sokowatch is a platform that allows users to order online from major suppliers by SMS.

Sliide Airtime is an innovative app that allows users to earn credits for their mobile phone bill in exchange for watching ads on their phone lock screen. Andela is another successful African tech story, which is a platform that trains and connects developers in less-well known regions with clients in developed countries.

Unlike Israel for example, where tech startups usually create solutions for corporations, governments, and the military, there is a distinctly B2C focus in African tech which could serve them well given the exploding population of tech-minded customers.

How is this movement going to take shape?

There is US VC money pouring into the African tech scene, as well as China’s wholehearted investment in African infrastructure projects but this is not the only source of funds available. There are an abundance of incubators like iHub in Nairobi and CcHUB in Lagos. Aside from this, there are ample funds and grants being made available to startups by their governments.

This could mean that the tech scene in Africa takes on a more democratic nature than the VC driven paradigm of America and Europe. The rise of crowdfunded ICOs will also bolster this. The point being that the growth of tech in Africa could take on a very different form than how the respective industries developed in the West. 


About the Author

Inside Africa's Flourishing Tech Scene TechNativeEoghan Gannon is senior writer at TechNative, a cryptocurrency researcher and entrepreneur. His interests lie in how blockchain technology is changing business.

Eight Tech Predictions For 2018

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Each year that passes sees trends come and go

But in the digital age the sheer volume of trends reshaping business models and transforming entire industries means even the largest organisations cannot afford to skip the tide for fear of a start up stealing their march. If there’s one company with their finger firmly on the pulse of the start up scene it’s Silicon Valley Bank. Their Head of EMEA Phil Cox gives us his top predictions for the year ahead.

Drones

The number of commercial uses for unmanned aerial vehicles (UAVs) will continue to increase in 2018. With their lower costs, minimal intrusion and reduced safety risks, drones are increasingly being utilised to inspect and survey, from damage to wind turbines and safety checks on oil rigs to detecting leaks in oil and gas pipelines. Canard’s drones with powerful sensors and cameras inspect runways for damage, eliminating the need to shut down airports for entire days to allow one-man planes to carry out flight inspections at dangerously low altitudes.

The UK government has launched several initiatives to explore the regulatory regime required to make use of remotely piloted and autonomous air vehicles more widely accepted. 3D interactive mapping service, Sensat, is one startup in the government’s UAV Pathfinder Programme to prove the viability of UAV operations in daily life. As technological developments continue to combine with regulatory and licensing advances and the UAV industry spawns and boosts subsectors such as geo-fencing, this airspace will become increasingly busy.

Eight Tech Predictions For 2018 TechNative
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 AI and machine learning

AI and its various subfields will continue to advance apace and permeate other tech sectors in an impactful way in the coming year. Gartner analysts predict that AI technologies will be pervasive in almost every new software product and service by 2020 and the UK Prime Minister, Theresa May, just announced a new fund to help public services use expertise in tech services like AI.

Three interesting uses of AI that we saw at Silicon Valley Bank this year were combatting fake news, with startups such as London-based Factmata springing up, keeping finances in order with Cleo and preventing fraud with Ravelin.

RegTech

We’ve been talking about regtech for years, but it really will be huge in 2018. As both PSD2 and GDPR regulations come into force, the market for solutions to aid open banking and data protection regulation compliance will boom. UK identity-verification startup, Onfido, in September raised a further £22m from investors, including Salesforce and Microsoft. PSD2 will allow banks to bring in new services more quickly but will also present opportunities for fintech innovators.

Demand for tech solutions to fast-track Know Your Customer (KYC) regulatory compliance will further increase as more players enter the banking and payments arenas. Also expect to see cybersecurity growing as a specialist subsector, with new innovations to address protections for cars or devices in homes, for example, rising with the proliferation of the IoT.

Digital Health

The coming year will build on the significant advances made by the digital health arena in 2017, aided by IoT. Babylon Health’s landmark deal with the NHS offers patients the alternative to switch to its ‘GP at hand’ service as their local NHS practice and speak to a GP within minutes.

Manchester-based Push Doctor’s pay-for GP service is now Europe’s largest digital healthcare provider, backed by ADV since a £20.2m Series B round in May. With an additional £50m raised by Babylon Health last April to develop its AI capabilities, industry inroads and growth look healthy for 2018.

 Marketplaces moving in

More marketplaces will join Amazon in its expansion into different industries and services. This was an interesting trend in 2017 that looks set to continue. On its quest to become a super-brand of travel, Airbnb launched Trips in key cities to facilitate tours and activities and in the autumn announced Places, a highly curated recommendation service.

In London, Citymapper stepped into transportation provision in September after being awarded a licence for its first commercial bus route, having seen gaps in TFL’s existing coverage. Partnering with Tower Transit’s Impact Group, the new CM2 – Night Rider service delivers a night bus service on weekends in East London.

Eight Tech Predictions For 2018 TechNative
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 Impact investing

2018 will see further new models invented for commercial enterprises that also exist to solve pressing social and environmental issues. Zinc.vc launched Mission 1 in London late in 2017, as it begins to build new tech companies to solve the developed world’s toughest social issues. The first challenge is improving mental health in women and girls.

Just this month, Sustainable Technology Investors and the Nobel Sustainability Trust announced their partnership to create a new VC fund, Nobel Sustainability Growth Fund, to promote sustainable technologies in the UK. Earth Capital Partners has developed a new system, The Earth Dividend™, to provide a measure of the sustainable development impact which an ECP Fund’s operating assets have.

As an ancillary, it’s interesting to note that Airbnb also partnered with some non-profit organisations for Trips, to provide unique Social Impact Experiences for guests.

 Supply Chain Disruption

Disruption will continue apace as startups ramp up removing middle men and reducing waste. Amsterdam-founded flower delivery service, Bloomon, has steadily been expanding Europe-wide since 2014, delivering direct from growers to the home via a stylist. Similarly, London-based startup, Farmdrop, expanded its farm-to-table service into Bristol and Bath in 2017, with total funding reaching £11m since it launched three years ago and plans for further raises in 2018.

Freshness and waste will also keep being addressed by agtech. Softbank led the largest ever agtech investment into US indoor vertical farming startup, Plenty, over the summer, further validating the sector. German vertical farming startup, Infarm, lets supermarket customers to pick their own lettuces and herbs, grown in-store, for themselves, also eliminating supply transportation emissions. Fresh herbs usually have zero margin due to the high level of waste.

Regional growth

The value and success of regional clusters of tech hubs and investment has been recognised in recent years and the numbers will continue their upward trend through 2018. ADV and BGF are both actively looking to work with more businesses outside London. Here at SVB, we’re supporting the Turing Festival in Edinburgh – it’s refreshing to see so many VCs venture outside the M25 to meet with potential investee businesses.

The 2017 Tech Nation report highlighted the importance of regional clusters with 68% of total UK tech investment occurring outside of London. Expect more activity in Edinburgh, Cambridge, Bristol and Bath, Manchester and Sheffield, and beyond in 2018.

How India’s IT Growth is Fueling A Digital Revolution

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Technology is having a massive impact in India

It’s a trend that will continue to grow at a substantial pace throughout 2018, according to research from Gartner. While many in North America and Europe view India’s growth in terms of outsourced technology, internal growth will continue at a rapid pace, which, when paired with India’s growing economy, will make it a major player on the international IT stage and a leader in certain fields.

According to Gartner’s research, spending on software and IT services will rise by 8.9 percent in 2018, growing from $7.8 billion dollars in 2017 to $8.5 billion. Software spending saw an especially large increase through 2017, growing by 15.6 percent, and 2018 will see similar growth at 15.1 percent; by 2018, total spending in this field will reach $1.2 billion. Spending on IT services by the end of 2017 is expected to rise by 15.3 percent to reach a total of $2 billion. In 2018, spending will grow by 13.8 percent, reaching $2.3 billion.

Playing an integral role in the country’s IT growth are government start-up initiatives, including Skill India, Start-up India, and Make in India. Various new policies covering a range of fields, including new data security and protection policies, software product policies, and electronic policies, are expected to contribute to better IT growth going forward. The chief policy expected to have an impact, according to the Indian government and Gartner, will be the Digital India program, which is designed to further India’s transition to a knowledge and digitally empowered society.

How India's IT Growth is Fueling A Digital Revolution TechNative
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These policies, and spending by both the government and private companies, are coming together to create a never-before-seen transformation. Changing Indian society is no small task, as the country’s relatively small economy and huge population base of more than 1.3 billion people mean change is more difficult than in smaller and wealthier countries. Despite these challenges, the Indian government, in November of 2016, aimed to eliminate 86 percent of the nation’s currency notes as a means of effectively relaunching both the nation’s monetary and fiscal policy.

Harvard Business Review notes that some have viewed the sudden change as poorly implemented. Many others, however, point to positive signs, especially in terms of digital growth. India features a government payment system designed for a cash-less society, and use of the system grew from approximately 100,000 transactions per month immediately before the change to 76 million transactions in October of 2017.

India Stack

In tandem with the move to cash-less operations, India is also spearheading efforts with its new identification system, called Aandhaar. Instead of being used as a self-contained change to Indian society, the Aandhaar process is being used as a base of the so-called “Indian Stack,” which aims to serve as a foundation for Indian’s ongoing financial revolution. Biometric identification capabilities make Aandhaar uniquely suited to serving as this foundation, and the fact that it was launched from a public source, instead of private entities, make Aandhaar a powerful tool for leading this innovation. The program, launched in 2009, has proven to be a tremendous success and already serves more than one billion individuals.
The name “India Stack” is also revealing. While the tech world often appropriates terms from real-life concepts, India’s use of the word “Stack” derives from its use in the digital age. Identification and strong encryption serve as a solid foundation upon which additional layers can be built, much like low-level programming enables more abstract software development. This new paradigm, which will affect the daily lives of everyone living in India, is a cornerstone of Prime Minister Modi’s agenda.

How India's IT Growth is Fueling A Digital Revolution TechNative
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One of the difficulties companies around the world have is dealing with incompatible and cumbersome interfaces. Banks use their own methods of identification, as do other businesses that need to verify users’ identities. The India Stack provides a graceful solution, and the government itself is providing application programming interfaces and other tools that allow safe access to the India Stack’s capabilities. Among its advantages include easier paperless access to information, which is possible due to strong security. All of India’s banks are slated to work with the stack, making cash-less operations even easier. Data privacy and consent, a major issue throughout Europe and the rest of the developed world, will be far easier to manage when integrated within the India Stack.

Mobile Payment Initiatives

Building on these services, India is also poised to provide the breakthrough mobile payment interface many countries have been seeking. The vast majority of Indians lack the buying power of their counterparts in more developed regions. Low-cost mobile phones, however, provide a gateway to the internet. At a relatively small price, mobile phones combined with India Stack is poised to make mobile phones powerful financial tools, empowering workers and entrepreneurs at all income levels.

Mobile payment programs also seek to cut back on two problems common in Indian society: Corruption and expensive travel. As the Harvard Business Review points out, Indians entitled to payment from the government might have to travel to a government building, where they’ll have to spend a portion of the check to receive it due to corruption. This follows with a trip to the bank, and travel can be challenging, especially in remote parts of India. With Aadhaar used as identification and digital banking capabilities, no travel would be needed, and corruption could be eliminated.

India is growing at a rapid pace, but it will be some time yet before it catches up with the developed world. Furthermore, China’s continuing growth is presenting it with a natural competitor. Innovation can go a long way toward closing gaps, and through the convenience of technology, combined with the substantial cost-savings it can provide, India is poised to reap the rewards of innovation and even gain an advantage over the rest of the world in certain fields.