We asked Amrote Abdella, director of Startup Engagement & Partnerships, Africa Initiatives at Microsoft, to tell YALI Network members about business models that work in Africa.
Question:
How have the various business models developed in Africa over recent years?
Abdella:
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Collaboration with innovation hubs. The last two years have seen a proliferation of technology hubs, incubators and accelerators that have been used as mechanisms to engage the community of a new generation of young Africans trying new ideas. The World Bank estimates the existence of about 90 innovation hubs in over 30 countries in Africa. AfriLabs, a pan-African network of technology and innovation hubs, makes up 35 of these. Two of these hubs, the Co-Creation hub in Nigeria and the iHub in Kenya, have been recognised as best-performing models. The iHub has launched 152 successful local startups to date, encouraging the local Kenyan government to commit to establishing a tech hub in each of its 47 counties.
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Startup funding. According to 4Afrika, startups at different phases require different types of financing. In Africa, over the years it has moved from savings and loans from family and friends to a more formal form of funding, including seed funding from competitions and equity financing, among others.
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Public-private partnerships. The informal sector contributes about 55 percent of sub-Saharan Africa’s GDP, while SMEs [small and medium-sized businesses] make up 95 percent of African businesses. Though there’s been mostly some separate efforts from both the public and the private sector, there’s still a partnership opportunity to create an enabling environment for entrepreneurship to thrive in areas of skills transfer, financing, incentives and tendering process that promotes small business.
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Online platforms. There’s an emergency of online platforms for entrepreneurs in Africa providing resources, such as Biz4Afrika, She Leads Africa and online retailing platforms such as Fashpa.com and Skrill. The platforms need to grow from being a resource center to an avenue that creates meaningful contacts for intra-African and international trade, hence enabling the entrepreneurs to monetize.
Question:
How do you define a successful business in Africa?
Abdella:
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Sustainable monetization.
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Ability to scale the solutions.
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Ability to create job opportunities.