By Abdihakim Ainte (2 November 2021)
There’s a burgeoning tech hub scene across Africa with a footprint that stretches from South Africa to Somalia. In part, this is because tech hubs are seen as a new trend that is disrupting traditional ways of doing business. According to GSMA, there are 618 active tech hubs in Africa, while a joint analysis by Briter Bridges and AfriLabs estimates the number at 643. Regardless, this number is rising. Growth in the tech start-up scene is related, among other things, to venture funds and investment from financial institutions such as the IFC, World Bank, ECB, AfDB and other private banks. Optimism about tech hubs is also related to wider digital growth and expanding connectivity across Africa to internet-enabled devices. In many instances digital technologies seem to be augmenting economic growth and improving the efficiency of service delivery. Tech hubs appear to be part of these developments, by creating scope for new forms of inclusion, efficiency and innovation in doing business. As part of the Datafication and Digital Rights in East Africa research network blog series, this post presents the experience of iRise – Somalia’s first tech hub – in order to show the challenges, successes and prospects of digital innovation in this particular Horn of Africa context. The blog argues that tech hubs have great potential in Somalia but still face a number of challenges, such as weak connectivity, dilapidated infrastructure, the absence of a legislative enabling environment, and lack of access to external finance.
What do tech hubs do?
While there are many components to a strong economy, there is widespread consensus about the importance of fostering innovation and collaboration. Ideas need spaces where they can be welcomed and nurtured, and where invention and creativity can be converted into economic activity and actual outcomes. ‘Tech hubs’ embody this development and aim to create space for entrepreneurs, innovators, and changemakers to play a critical role in fostering economic growth. Tech hubs aim to assist tech start-ups from conception to investor readiness, by instilling technical and vocational skills that are essential for entrepreneurship but are rarely taught in regular educational settings. This is particularly true in Somalia, where traditional educational institutions are still in the process of post-conflict reconstruction and where the quality of teaching curriculums are not up to the standard required for higher education.
Tech hubs are also places where established companies in an industry can connect with new ventures, sharing insights and collaborating as established companies undergo their own digital transformations and start-ups are formed. This results in a channel of ideas and enterprises from which new and sometimes successful businesses emerge. Tech hubs often use a deliberate multi-stakeholder strategy that allows them to make an impact across the public and private sectors.
In contrast to universities, which typically create job searchers by building people’s knowledge and capacity, hubs aim to create jobs for people. They equip people with innovative abilities and entrepreneurial skills that can be immediately applied to creating jobs. Tech hubs also foster a network of entrepreneurs who can share ideas, learn from one another, and offer mutual support as they pursue their entrepreneurial goals. The community support that tech hubs seek to provide is perhaps the most important role they play in fostering start-up creation and success, as they can be a gathering point for diverse players in the digital ecosystem.
iRise: responding to Somalia’s digital challenges and opportunities
The ICT sector in Somalia is one of the country’s fastest growing industries and mobile communications is already having a significant impact on the broader economy. Somalia has increasingly high mobile penetration rates and has lower mobile data pricing than other African countries. Historically this has been related to the lack of state taxation of the telecom market through the period of the 30-year civil war since the 1990s. Many private, unlicensed mobile firms sprung up to address the huge demand for communications, particularly among the large Somali diaspora.
However, there are some aspects of Somalia’s IT landscape that remain brittle. There is limited public access to broadband internet, and these are compounded by issues with electricity supply. There are gaps in public digital literacy and few specific training opportunities for budding entrepreneurs. Overcoming the limitations of the country’s technological and data infrastructure, which is still in its infancy, is one of the toughest challenges that the country faces. Digital entrepreneurship, digital connectivity, technology development, and innovation are all hampered by the infrastructure shortages within the country.
Technological clusters across the country are one approach to mitigating the effects of infrastructure shortages. They can serve as venues to collaborate and foster innovation, in turn creating opportunities for entrepreneurs to grow and expand in a country with intellectual potential, but continued infrastructure constraints. Hubs can act as structural pillars supplying the necessary infrastructure and demand for IT training to close the skills gap between industry and educational institutions. The survival rate of start-ups, which usher in disruptive business models and innovation, could be improved through hubs. As a result, tech hubs, encompassing tech incubators, accelerators and collaborative spaces, can be a key support for entrepreneurs within the wider digital ecosystem.
iRise Hub was founded in 2017 by group of likeminded individuals (including this author) with aim of leveraging technology and innovation to drive sustainable social impact solutions and navigate the role of technology in a post-conflict context. Since our inception, we have supported various startups from their inception. Through our incubation program called Kobciye, we have been held a number of human-design bootcamps that have enabled local youth to come up ideas and translate them into reality. These have included Maan Ifiye, a thriving startup that offers graphic and logo design. Sara Event Management is another growing startup that manages and runs events through a curated decorations and design. Bulsho Bille is a startup enterprise that offers a portable solar that lights up to low-income people, specifically internally displaced people and refugees.
Our experience with iRise Hub in Somalia has also drawn attention to some key challenges in founding and building thriving tech hubs in the country. Tech hubs in Somalia face a substantial barrier to recruiting outside investments and firms because of their location. It is difficult for Somali businesses to gain new consumers as the country faces challenges in attracting large corporations to open headquarters there. Hubs like iRise, on the other hand, are actively seeking to turn these obstacles into assets by leveraging the presence of various Somali telecommunication companies already present in the country and contributing to the growth of internet connectivity.
Hubs in Somalia, and across Africa in general, have great potential for aiding growth and establishing collaborations across the entrepreneurial ecosystem, but they, like the SMEs, start-ups and companies they assist, require a favorable environment in order to prosper. Financial viability has been a key roadblock for tech hubs as well as start-ups. Many start-ups shut down operations due to either lack of funding or bankruptcy. Despite the potential to play a critical role in facilitating and supporting start-ups, hubs remain reliant on external funding because entrepreneurs they support are usually unable to pay for the services they provide. To tackle these issues, tech hubs are pushed to act like businesses in order to generate revenue for sustainability and move away from relying on donations. iRise has tried to do this by renting co-working spaces, introducing incubation fees, renting training spaces, and through events management.
The Government’s role in future tech hub development
Now more than ever, there is a need to create an environment that is efficient and innovative, which can also encourage flexible engagement for tech hubs to thrive. This requires a more expansive look at building up a supportive innovation environment, as the challenges facing tech hubs’ support for start-ups extend beyond the hubs themselves. Arguably, this involves looking to government and public sector bodies to help in prioritizing and strengthening digital literacy for individuals to utilize evolving technology, and also sufficient infrastructure to support current and future innovative activities. Laws and regulations must be appropriate, and properly enforced.
The Somali government has a key role to play in creating a supportive legislative framework for local start ups. Without a clear legal framework, it can be difficult to attract foreign investment into these earlier-stage companies. As iRise Hub, we are working closely with other startups to lobby and campaign for the government to draft this manifesto for startups. Other governments in the region, such as Ethiopia and Kenya, are in the process of passing ‘Start-up bills’. These legislative acts bring together a range of policies that aim to increase incentives for young people to embark on new enterprises, encourage investors to put their money into emerging businesses with potential, and enable other actors to support a tech ecosystem. Legislation of this kind in Somalia could be a huge boost for tech entrepreneurs and could generate increased investor confidence needed to attract investment.
Similarly, there is a potential role for government in investing directly in local ideas through different schemes. The Ministry of Trade and Commerce would be best placed to spearhead these initiatives. Unfortunately, the delayed political transition of the current government and uncertainties around the openness and transparency of the postponed electoral processes have further affected the legislative activities of the Somali parliament. After this delayed transition has taken place – hopefully before the end of 2021 – legislation to support innovation in Somalia should be a priority for the incoming government.
Tech hubs present a growing opportunity to contribute to transforming the country’s economy, by enabling young entrepreneurs to create and nurture their ideas in an encouraging environment. Nonetheless, navigating how to best support entrepreneurs remains an ongoing area for exploration, and one that is bound up with wider contextual factors, including the political environment and infrastructural development.
Abdihakim Ainte is a researcher, former advisor to the Somali government, and the co-founder and CEO of iRise, Somalia’s first innovation and technology hub.