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What Business Models Work in Africa? Part 1
July 7, 2015

Amrote Abdella (Courtesy of Amrote Abdella)
Amrote Abdella (Courtesy of Amrote Abdella)

We asked Amrote Abdella, director of Startup Engagement & Partnerships, Africa Initiatives at Microsoft, to tell YALI Network members about business models in Africa.


What are the top four business models that work in Africa?


 1. Collaboration with innovation hubs and accelerators: Most technology companies (Microsoft, Google, IBM, etc.) connect startups to innovation hubs and accelerators from across Africa. [These] are instrumental in connecting developers and startups with the right partners to get the resources and support they need to get their ideas to the market.

Example:  AfriLabs is a pan-African network of technology innovation hubs. It was founded in 2011 to build a community around rapidly emerging tech hubs ― spaces that serve as physical nexus points for developers, entrepreneurs and investors. AfriLabs is working through these spaces to build an innovation infrastructure that will encourage the growth of Africa’s knowledge economy by supporting the development of startups, technology and innovation.

2. Innovation grants/funding for startups: Based on the uniqueness and scalability of the solutions, the startups are reviewed and by merit selected to receive the innovation grant. The funds enable local entrepreneurs who want to develop new innovative technology to solve Africa’s and the world’s challenges.

Example: AGIN, a Microsoft 4Afrika innovation grant recipient. AGIN’s solution uses feature phones to provide valuable, relevant information to farmers while at the same time capturing vital data about the smallholder farmer, for example, size of farm, GPS location, soil composition, weather information, crops grown, previous yield, and so on, and uses this data to establish a credit profile for the farmer. This profile is then made available to key service providers like banks, insurance providers, agricultural input providers and buyers to gain visibility into the financial status of the farmer. Over 135K farmers are profiled through AGIN and actively consuming services on Azure and Hosted Exchange on feature phones.

3. Public-private partnerships: Multinationals and government bodies working together to provide an enabling environment and policies for entrepreneurs to thrive.

Example:   M-KOPA is an SME [small/medium-sized enterprise] that provides “pay-as-you-go” renewable energy for off-grid households in Kenya, Uganda and Tanzania. The East African governments offer VAT [value-added tax] exemption on all solar products, which is a big saving for small companies like M-KOPA.

4. Online platforms for entrepreneurs: These provide essential services and a platform for intra-Africa trade.

Example: Biz4Afrika is a growing Africa-wide network of SMEs designed to enable a sustainable and connected community of entrepreneurs that will have a meaningful impact on job creation, global competitiveness and wealth creation in the long run. In the past year alone, we’ve seen 140,000 SMEs go online across Africa — to offer and to consume services enabled by technology.