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Africa

Towards A Business Model For Funding African Startups

Note: This blog post is adapted from a much longer discussion by the author under the same title that was published at Tekedia on January 7, 2013. You can read that blog post here. Small sections of this article are identical to segments of the original article.Africa's entrepreneurs are teeming with ideas for innovative startups. But where can they get the funding?

The problem in brief
Africa is experiencing a boom in entrepreneurship due to proliferating Internet and mobile computing technologies. Simultaneously African startups face the often life-threatening impediment of inadequate access to seed and early stage venture capital. Fortunately, a number of developments in other parts of the world point to the contours of an approach to solving that problem in a manner that necessarily starts out small, but that can eventually be scaled in a meaningful way.

How can we cut the high costs of remittances to Africa?

Massimo Cirasino's picture

Read it in French, Spanish or Mandarin.

Migrant workers, earning money in jobs far from home, sent more than $400 billion to their families back home in 2012. Such remittances remain a vital source of income for millions of people in developing countries: Food, housing, education, health care and more are paid for every day by workers who earn money abroad. Through a simple and repetitive transaction – sending money home – those workers are really sending heart-warming feelings like hope for a better future and love of family.

Unlocking the Potential of the Private Health Sector

The poor cannot afford to pay money for health care so they use mainly free government-run health services. Isn't that what you were always told? So if donors want to help the poor they should give their money to governments that provide such services for the poor. I am sure you have read that in many books and articles.

Wait, let’s run that scene once more in real time. What actually happens out there in the real world? Often the government clinics described above have difficulty hiring staff, especially in poor rural areas. The majority of young health workers prefer to live in urban areas where they feel safer and can bring up their children with good schools, near family and friends. Long wait times and lack of medicines at government-run health facilities make the private health sector more attractive to consumers.

Greening the Silicon Savannah

Palo Alto and Bangalore may soon have to make room for Nairobi at the top of the tech startup world. Kenya, the setting for such success stories as M-PESA, is making a name for itself as the center of the “Silicon SavannahWanted: entrepreneurs who are primed to make waves in climate tech. (Credit: International Rivers, Flickr Creative Commons)”. This growth is supported by incubators, investment and policy – an ecosystem of actors committed to capturing opportunities in a promising field.

Today, the Climate Innovation Center (CIC), the first of its kind in the world, opens its doors to Kenyan startups hoping to also make waves in climate technology sectors. infoDev’s feasibility studies estimate that such companies can create up to 4,600 direct and indirect jobs over 5 years and over 24,000 within 10 years, but they require substantial support to realize this potential. To this end, the World Bank’s infoDev, in partnership with the governments of Denmark and the UK, engaged with Kenyan entrepreneurs, policymakers and financiers to determine what climate technology ventures need in order to flourish as their counterparts in other industries have done. In short, they seem to be: financing, business advisory services , networks and policies that support innovative entrepreneurship.

Some lessons from privatizing national airlines

David Lawrence's picture

As a boy growing up in Africa, I always assumed that every country had its own airline. To me, a national airline was just another way a country defined itself, along with its flag, national anthem, and currency. Ghana Airways, which my family often flew (we lived in Kumasi), was a perfect example, with the red, gold and green colors of its national flag painted on every plane. They looked proud and elegant, a perfect symbol of statehood.Does privatization help keep airlines in the sky? (Credit: Matt Hintsa)

Need to buy Treasury Bills and Bonds? There's an app for that!

OK, not exactly an App, but investors in Kenya will soon be able to buy T-bills and bonds offered by the Central Bank of Kenya (CBK), as agents of the Treasury, through their mobile phones (with or without a bank account)!

Buying T-bills and bonds through your mobile phone? It's possible! (Credit: kiwanja, Flickr Creative Commons)

This innovative project, led by CBK, with the support of the World Bank, is known as Treasury Mobile Direct. It will aim to extend the use of mobile technology beyond money transfers and broaden the choice of savings products for retail investors. Potential investors will only need a mobile phone line and a subscription to a mobile money service, which will enable telecoms operators open an electronic account with the Central Securities Depository (CDSC) or CBK on their behalf. These accounts are a requirement if you wish to invest in Government debt. The service will include purchase, interest payment and redemption of securities (short-term paper and bonds) through the mobile platform.

Bringing together earth-friendly products and South Africa's poor

Forget about flying cars and wristwatch phones—innovators Will green innovations such as solar cookers be embraced? And by whom? (Credit: infoDev)today are more likely to be tackling solar lamps, cleaner cookstoves, energy-efficient housing and water filters. Such products promise the tantalizing combination of steady jobs, better lifestyles, and a cleaner planet…but for whom, exactly?

The big challenge is making sure that those opportunities reach the more than a billion people living in poverty. Recently infoDev teamed up with the Innovation, Technology and Entrepreneurship global practice, the World Bank Country Office in Pretoria, and the Gauteng government’s The Innovation Hub to run four workshops on low-income communities’ needs, attitudes and perceptions about climate technology products.

Roadmapping for Entrepreneurs in Africa

African innovators exchange ideas at OIAS. Credit: Heidi Humala)One  could feel the ‘buzz’ at the Open Innovation Africa Summit² in Nairobi. Enthusiasm was teeming, lots of energy displayed in animated discussions and business cards eagerly switched hands at the event, organized by the World Bank’s infoDev and Nokia, which brought together more than 150 inspirational people from across the continent.  Sleepy summits come and go, but these three days of sharing, debating and mapping out action plans across four discussion streams all dealing with entrepreneurship gave everyone something tangible to go home with; tools and networks that can create and grow better companies, foster better business environments, and link entrepreneurs to capital.

Why doesn’t every Kenyan business have a mobile money account?

Ignacio Mas's picture

M-PESA signs are a common sight all over Kenya. (Credit: Global.finland.fi, Flickr Creative Commons)The most striking thing about mobile money in Kenya is how visible it is: the proliferation of store signage with M-PESA (and, increasingly, other mobile money and banking logos) leaves no one with any doubt that something big is happening in the Kenyan payment space.

It is estimated that four out of five adult Kenyans have access to a mobile money account. This means that most people that any business touches –whether they are consumers, employees, business partners or retail staff— are connected to a real-time electronic payment network. That’s unprecedented in the developing world.

And yet few formal businesses have a dedicated mobile money account to conduct their financial transactions electronically, and among those who have one most do not appear to promote its use by their customers and suppliers particularly aggressively. Cheques remain the preferred payment mode for suppliers, or cash for smaller payments. M-PESA payments might be taken from customers if they insist and M-PESA might be used to pay field staff in exceptional or emergency situations, but then staff’s personal mobile phones are most likely to be used. Few enterprises have any vision about how they can use mobile money to re-engineer how they do operate, taking cash out of their business. The tidal wave of M-PESA is but a mere ripple for most businesses.

Enabling a Population, One Woman at a Time: Gender Reforms in Kenya

Yasmin Bin-Humam's picture

Imagine things are looking up for you. You are running your own business transporting and selling charcoal to retailers in the area, your husband has a steady job, and together you own real estate which you rent out. Then, your husband dies – your in-laws and your husband’s kinsmen take all of the assets and are entitled to do so under law. You are left with nothing to rebuild your life and provide for your child.  This is what happened to Anna in Kenya.  Her story is not uncommon. Women’s rights groups in Kenya have been pushing for change and finally, with the institution of a new Constitution in August of 2010, their rights will be protected. This Constitution, the main purpose of which was to limit the powers of the executive, has risen from the ashes of ethnic violence following elections in 2007 in which over 1,100 people are believed to have been killed. 

In terms of broad legal principles relating to women’s rights, Kenya’s new Constitution has Legal reforms in Kenya are making things better for Kenyan women.two reforms. The first, is that customary law, still recognized in Kenya alongside codified law and common law, is no longer exempt from constitutional provisions prohibiting discrimination based on gender. As a result, discriminatory inheritance practices such as those that disinherited Anna will come under increased legal scrutiny. The second, is that in addition to gender being a prohibited ground for discrimination, protections were strengthened with a clause mandating equality based on gender, and a clause providing that parties to a marriage are entitled to equal rights at the time of marriage, during marriage and at the dissolution of marriage. In addition, Kenya has instituted specific provisions, so that Kenyan women can now pass citizenship to their spouses and children on equal footing with Kenyan men. The latter, a huge achievement as it empowers the other half of the population with the same right, is something many countries still continue to prohibit wives and mothers to do.

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