New ITC report explores impact of and challenges for African technology hubs, and looks at ways for them to remain financially viable.
Across Africa, technology hubs are increasingly creating a snowball effect that underpins the continent’s digital transformation by building fledgling entrepreneurial ecosystems and supporting start-ups. But tech hubs struggle to earn revenue and become financially sustainable.
Tech hubs in Africa: How can they support start-ups across the continent? explores what the hubs do, why they emerge and how they make an impact. It also focuses on what steps hubs can take to ensure their own financial viability so they can provide sustainable support to African entrepreneurs.
‘The study provides other hubs and ecosystem leaders with insights on how to better design their own business models and overcome challenges to financial sustainability,’ said Christian Jekinnou, executive manager of Afric’innov, one of ITC’s research partners. ‘It also offers information on how tech hubs function in West Africa and suggests ways to assist them.’
The report is based on interviews with dozens of hubs across Africa that share best practices on their operations and business models. It illustrates how hub practitioners view their ability to help early-stage technology innovators thrive and build networks with other like-minded individuals and enterprises.
‘We are at the heart of an interconnected network of investors, public, private, development, entrepreneurs and academia working to deepen the application of technology in solving challenges or driving social benefit,’ said CK Japheth, founder of Innovation Village, a Ugandan tech hub.
Hubs must be flexible
Keeping this network relevant often requires adaptability. For instance, Concree, Senegal’s first virtual incubator, was created as an online platform to connect entrepreneurs with cofounders, and mentor them during their entrepreneurial journey. The hub later added resources to help these entrepreneurs work on their business models and find funding, according to Babacar Birane, chief executive and cofounder of Concree.
Entrepreneurship – particularly tech-enabled, high-growth entrepreneurship – is often cited as a key to African economic growth and development.
Community is a central element for the Impact Hub Network, another ITC partner on the study, said Growth Lead Beate Weinzinger. ‘We are home to the innovators, change-makers and the entrepreneurs who are creating tangible solutions to the world’s most pressing issues.’
‘This is achieved by building ecosystems to drive collaboration and entrepreneurial innovation around the Global Sustainable Development Goals through our locally rooted Impact Hubs, as well as partners and allied networks,’ she said.
Insights for hubs and policymakers
The ITC report supplements research showing that hubs can help improve the survival rate of start-ups, which usher in disruptive business models and innovation ‘made in Africa, for Africa’. It discusses whether supporting start-ups is financially viable and details the best-performing services. The report also identifies gaps and opportunities for support from governments and the development community, including capacity building for hubs to fulfil their mission.
This new publication provides ‘useful insights and advice to both tech hub founders and managers, as well as to government officials looking for efficient and effective ways to invest in trade and investment support organizations of a new kind, to the benefit of their entrepreneurial ecosystems,’ said ITC Executive Director Arancha González.
The quality of the operating environment matters to start-ups. They draw important resources and support from institutions and actors within their ecosystem, the condition of which can determine how well entrepreneurs manage their relationships with customers and suppliers.
The ecosystem also matters to tech hubs, which need to understand its strengths, weaknesses and opportunities. Hubs must address ecosystem needs frequently and tackle weaknesses to achieve their missions, the ITC report recommends.
Organizations that support hubs should realize that they need to ‘play the long game’, the report says. They should join forces when possible and have flexible expectations, it adds.