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Can urban innovation ecosystems be developed with little broadband infrastructure?

Victor Mulas's picture
We are witnesses to the surge of tech startup ecosystems in cities around the world, in both developed and developing countries.

In my previous blog post, I showed this trend and the studies that confirm it. Among the questions we are researching to map urban innovation ecosystems is whether there is a minimum set of requirements for these ecosystems to emerge — for example, in relation to infrastructure or the population's technical skills. What we are encountering is that, although you need a minimum level of infrastructure (e.g., at least some broadband connectivity and mobile phone networks), this level is much lower than many people expect. 

A city does not need to have 4G mobile broadband or widespread fiber-optic fixed broadband widespread. It is enough to have broadband connection in some key points (particularly hubs and collaboration spaces) and basic mobile phone coverage and use (such as 2G mobile phone service). A similar conclusion is applicable to the skill level of the population. The results of the study of New York tech ecosystem shows that almost half of the employment created by the ecosystem does not require a bachelor’s degree.

In this blog post, I present the case of Nairobi and the tech start-up ecosystems emerging in Africa. I'll also explore how these ecosystems can not only surge, but also compete internationally despite having limited broadband connectivity (both mobile and fixed). 
 
Map of Accelerators and Collaboration Spaces in Nairobi. Source: Manske, Julia. 2014. Innovations Out of Africa. The Emergence, Challenges and Potential of the Kenyan Tech Ecosystem.

The development of technology innovation ecosystems in Africa despite limited infrastructure
Technology start-up communities have surged in many countries in Africa. South Africa, Ghana, Nigeria, Kenya and Tanzania are some of the countries where technology start-ups have been emerging, forming communities of entrepreneurs as a result. This transformation has occurred despite the level of available broadband and connectivity, which differs substantially from that of European countries or the United States, for instance. In many of these African countries, there is no abundance of broadband, quality is low and Internet access is expensive relative to what developed countries pay.

One of the most successful examples of technology innovation ecosystems in Africa is Nairobi, which has grown into one of the largest and most active ecosystems in Africa, with more than 200 active start-ups, 14 accelerators and incubators, three collaboration/community management spaces, and several tech-community regional events. Although Nairobi has enjoyed a substantial increase in international capacity through submarine cables, which have provided a base for broadband availability through mobile (99 percent of Internet subscribers access the Internet through mobile devices), 80 percent of mobile subscriptions are second generation (2G) with no Internet access. This limits possible technology innovations; however, it also presents opportunities to address markets that have been ignored by other entrepreneurs and multinationals because they are based on 2G technologies, using SMS and USSD apps, as well as address other cases and scenarios than those from developed countries

These markets today are not only restricted to Africa, but also exist in many other countries in South Asia, East Asia, and Latin America. It is not by chance that two of the most innovative platforms used in 2G environments come from Nairobi: M-PESA, the world’s largest platform of mobile payments, and Usahidi, which serves to crowdsource data from users to monitor election processes and help disaster recovery. This has led to multinational companies, such as Facebook, setting labs in developing countries to emulate the technology conditions of countries like Kenya in order to adapt their products to these markets.

Comments

Submitted by Adeel Zafar on

Very informative article indeed. You have raised a very interesting question on whether the innovation ecosystems can be developed with minimal broadband infrastructure or not?

Yes it can, but the applications will be limited to what these technologies can offer. As stated in your article, the SMS and USSD technologies are being used in various African countries in rural areas with limited to no-internet connectivity. I believe the growth of the Kenyan technology industry has been boosted by the availability of the broadband backbone and the vision that drives it. MPESA and Usahidi are great examples and are being replicated in other countries such as Uganda and Rwanda. However to really empower the urban and rural areas a strong commitment and vision is required to provide broadband and mobile access to these developing economies which would make a tenfold difference in success. Governments are reluctant or facing hurdles to invest in fibre optics and there is still some resistance to broadband from the mobile operators and ISPs so that the costs can be kept high. Obviously this strategy won’t work in the longer run and the telcos need to understand the vast services they can provide through the fibre optics network and the reduction of costs would infact increase their consumer base.

To conclude I would say that governments in developing countries need to invest in acquiring good bandwidth and help telcos with the regulation stuff to increase their coverage to really make a difference.

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