Fintech is important, but Africa needs other solutions to improve lives – Ekeledo

Investments in start-ups and innovation in Africa continue to increase, but there are opportunities to do more. ANNA EKELEDO, the executive director, AfriLabs, was one of the speakers at GITEX Africa in Marrakech, where she had this interview with CALEB OJEWALE. She speaks about areas of innovation/start-ups that require more attention in order to create wealth and improve lives across Africa. Excerpts:

Leaders in technology across the world have come together for the first ever GITEX Africa. As a representative of an organisation that has been in this space for over a decade, does this signal anything about the future of innovation and tech in Africa?

This event happening for the first time – Gitex Africa – on the continent really shows that there’s a lot of potential in the African tech and entrepreneurship ecosystem. And there have been exciting things that have been happening over the past decade around Tech.

When we are talking tech, we’re talking about not just the technology in itself. Technology at the end of the day, is a means to an end towards improving life, developing the African continent and sectors that will create wealth and make people’s lives better. So when we talk about healthcare, education, or agriculture, there are many challenges across the African continent.

There is the fact that Africa has the largest arable land, yet African farmers are still the poorest around the world and we also still don’t have food security on the continent. When we talk about healthcare, millions of Africans don’t have access to affordable and accessible health care. Same with education; quality, affordable and accessible education is a problem.

And then we saw this even more pronounced during the COVID pandemic when schools were shut down. And then we had students that could afford the technology to access education, but then we also had those without access. So because of all of these challenges, it has turned into opportunities for African start-ups to solve and innovate across these challenges.

As you’ve mentioned, COVID highlighted inequalities in access to technology, so, how can we create more inclusive technologies that would meet the peculiarities of Africa; solving problems by reaching those for whom they are intended?

Firstly, I would say we have to be very deliberate about it, and it starts with infrastructure. We have to ensure that there is affordable and accessible connectivity across Africa, because at the end of the day, as we innovate and as we’re building all these solutions, citizens all over, whether they’re in the villages or cities, need to be able to access them.
Second is digital skills and education.

Last year at Afrilabs, we launched what we call our policy pathways, where we identified ten areas for governments to ensure that they develop in order to build a thriving innovation ecosystem, one of which is digital skilling.

Citizens have to be educated in terms of even using basic technologies and basic mobile phones for mobile money and things like that. Education has to be inclusive across the board.

Then third, I would say invest in innovation hubs. What we’re seeing across the continent is more and more innovation hubs setting up spaces in rural areas. By setting up the spaces in rural areas, they’re bringing investment and funding, they’re bringing in the education and they’re supporting innovators in these areas, to build solutions that fit the local market.

They don’t necessarily have to be hi-tech solutions. For example, they could leverage USSD, instead of mobile apps. Working with that infrastructure on the ground and also supporting them, is quite important.

One innovation that seems to be prevalent in Africa is Fintech (in one way or the other). For a poor continent, don’t people need innovations to help them earn money first before they can spend it?

Yes, there’s a lot of focus on Fintech and there needs to be a focus on other sectors as well. However, there is still a gap even within the Fintech sector, because we still have millions of Africans that are unbanked and you cannot make money if you cannot access banking services. You can’t access credit facilities, insurance, and things like that.

As you said, we’re poor so we need to create wealth. If for example, we take a farmer who invests N500,000 to farm, what method are they going to use to sell their products? They can go to the market to sell, however, what happens a lot of times is if they don’t sell all the goods they become wasted. And then what happens? They remain poor (due to these postharvest losses and not selling quickly). They would have suffered a loss and were unable to recover their money.

There is a clear correlation between solutions such as agritech and wealth creation in communities, but also solving climate problems like soil erosion and others that lead to poverty

But if we create a system where solutions like eCommerce and marketplaces come in, these provide them access to the market, then they’ll be able to sell their products outside their village. But they will then need a facility or payment solution to actually receive the payments so as to reinvest back to the farm, feed their families and create wealth.
Fintech is important but in itself, it’s not enough. We need e-commerce solutions, healthcare, energy, and others.

Through our work with the Global Centre for Adaptation at the African Development Bank, we have found there is a clear correlation between solutions such as agritech and wealth creation in communities, but also solving climate problems like soil erosion and others that lead to poverty.

So we definitely need to look at other sectors when it comes to wealth creation and Fintech shouldn’t be a standalone. It should complement other sectors that are being developed as a means to expand markets, and facilitate transactions and trade.

Because if we’re talking about wealth creation on the continent, we have to talk about the ability to trade across borders. On its own, Fintech is not enough, because what goods and services will be traded? Those sectors need to be developed because if they are not, the Fintechs are not going to be able to do anything.

Which two or three sectors really need focus in terms of innovation and funding?
One is education. We need to educate people even before talking about creating wealth, building businesses, etc. We need an educated workforce to create wealth and right now there is a talent shortage on the continent.

One way is to identify innovations that increase access to education, even in rural areas and in a diverse manner. Then another area is healthcare, which is quite important. Also, climate and access to affordable clean energy sources. And of course, agri tech.

I should also say that it is very important to identify local funding mechanisms on the African continent that work for our ecosystem. On our part, we have developed Catalytic Africa, with the Africa Business Angel Network, it’s a matching fund for African start-ups. What we do is co-invest with Angel investors on the continent.

Once we connect the start-ups within our hubs with local investors, we then provide a matching fund. So far, we’ve invested in 13 start-ups across 11 African countries.

We got our first funding from the French AFD, to contribute to the matching pool. And then we are inviting other partners to also do so. Another pool of funds we have in the catalytic pool is specific for women.

This is under the Revup Women programme, under which we have a plan to impact through business training, mentorship, and funding, up to 50,000 women businesses and SMEs over the next three years.

We have the first pool of funding from Visa Foundation who has supported us with $500,000 for the next one year to test out the model, and then we scale out through various partners.

An important question for us is how to support small businesses that only operate in a limited way, to improve their business processes, to look at global markets, and see how they can integrate technology to scale their businesses.

Last year, of all the funding that was raised, over $3 billion, or $4 billion depending on who you speak to, less than 4% of the funding went to women-led start-ups and that’s almost insignificant. What we want to do as a result of our Revup programme is advocate and speak to funders to ensure there’s a minimum percentage of the portfolio that goes to women-led start-ups.

The companies funded under Catalytic, how much funding has gone to them?
1.2 million euros into the start-ups in terms of a matching fund but 1.5 million euros for the entire programme, because there’s a programme management component.

Afrilabs has now been in existence for 12 years, how would you describe your impact so far?
The journey has been interesting. We started with five members across four African countries, and now we are over 419 members across 52 African countries and over 200 African cities.

So far with our interventions, we’ve impacted thousands of hub managers through different programmes. Right now we’re rounding up a three-year programme, in which we built a full hub management curriculum and run a series of physical and virtual workshops.

We’ve upskilled the staff and talent of hub innovators, and this has enabled hubs to be better run and sustainably too, because there’s a challenge of sustainability in the ecosystem.

A lot of them were set up as nonprofits funded by foreign organisations, governments, or academia.

But what happens when the funding runs out?
Through our intervention, hubs have been able to improve their business models and now generate hundreds of thousands of dollars yearly to support their programmes.

We are also seeing a lot more intra-Africa collaboration. We have hubs that collectively have supported over a million entrepreneurs and innovators just by working together.