Akinwumi Adesina is clear. The president of the African Development Bank, one of the continent’s most respected economic thinkers, believes it’s time for the continent to start building Googles and Facebooks of its own. Speaking in Rwandan capital Kigali earlier this month, Adesina warned that Africa will face 100 million jobless citizens by 2050 if it doesn’t invest in the sort of high-tech entrepreneurship which has made Palo Alto a global landmark.
Adesina’s remarks come as the region is already in the grip of a startup boom. Hordes of talented young professionals, frustrated by a lack of opportunities in Europe and the U.S., are returning to their home countries in a trend dubbed ‘the brain gain’, and they’ve helped create over 400 innovation hubs from Marrakesh to Dakar.
With the backing of investment funds such as Africa50, which has created a risk capital fund worth $870 million specifically for early-stage startups, many commentators are speculating that Africa will soon have its own version of Silicon Valley. In Kigali, this excitement is reaching a fever pitch.
Kigali on the cutting-edge
A $2 billion tech colony known as Kigali Innovation City is soaring in the hills above the capital, backed by $400 million from Africa50. The hub will house technology firms, biotech companies and academic centres of excellence. The ultimate aim is to create over 50,000 jobs a year, as well as minting 30,000 graduates and securing a combined $450 million in exports and FDI.
It’s all part of Vision 2020, a policy blueprint launched by Rwandan President Paul Kagame when he was elected in 2000. Kagame, still in office nearly two decades on, has long dreamed of turning Rwanda into a middle-income state. As Vision 2020 makes clear, entrepreneurship is “the backbone” of this development, reducing Rwanda’s reliance on international funding.
To this end, Kagame has introduced a raft of ambitious policies for prospective entrepreneurs. His government has created the Doing Business Steering Committee, with a specific remit to slash red tape, and requirements for starting a business have been drastically simplified; in fact, the whole process now takes as little as three days. New investment laws, aimed partly at foreign firms, offer a string of tempting tax breaks, and recent insolvency legislation is designed to strengthen confidence while making it easier to access credit.
The reforms have certainly had an impact. The World Bank says Rwanda is now the 29th easiest country in the world to do business; it’s also been named the best place in Africa to get credit. Kagame has succeeded in wooing global blue-chips such as Visa, and he’s now he’s determined to cement Kigali’s reputation as a global hub through initiatives such as a recent summit, which drew over 100 youth leaders for entrepreneurship training.
Dakar on the rise
Rwanda is not the only African country determined to become a magnet for entrepreneurs. Senegal is rolling out a new $50 million fund for digital projects, specifically aimed at women and young people. Dakar aims to train 100,000 entrepreneurs and is in the process of streamlining the administrative procedure to start a business.
The latest measures to support entrepreneurs are part of Senegalese president Macky Sall’s pro-business economic masterplan. The Sall administration has also taken steps to curry foreign investment, promising international firms that they’ll get the same treatment as their domestic counterparts and their property will never be snatched away from them.
Sall’s courting of foreign investment marks a sharp contrast from former Senegalese leader Abdoulaye Wade’s regime, which was notorious for its treatment of foreign firms such as Millicom— ordered to pay a $200 million bribe by the president’s son. Sall’s election in 2012 provoked a sea change, as the new president made cracking down on corruption a top priority. Sall has tried to repair the damage done by Wade’s tenure with a brand-new anti-corruption body, which has helped the country rise steadily through Transparency International’s Corruption Perceptions Index. It now ranks as one of the least corrupt countries in Africa, providing solid backing for Sall’s pro-business drive.
Certain key sectors, such as agriculture, are particularly in the Sall administration’s sights. As the president explained at the recent Tony Elumelu entrepreneurship forum, “We must have the capacity to feed our continent and that means developing agricultural entrepreneurship—especially with young people in mind. Because if agriculture is modernized, we’ll have hundreds of millions of young people who could be entrepreneurs in the agricultural sector, prospering and developing businesses”.
If anything, the impact of these reforms has been even more dramatic than in Rwanda. Senegal now boasts the continent’s third-fastest-growing economy, with annual GDP growth of 7%. Not only that, but Dakar is becoming a tech hub to rival Kigali, with plans for 35,000 ICT jobs by 2025.
A new innovation centre is set to open in Dakar in 2021 to bolster the country’s SMEs, with 20,000 square metres of laboratories, offices and a business incubator. Just as Sall intended, Senegal is earning a particularly strong reputation for female entrepreneurship, with women developing everything from medical QR codes to apps that prevent domestic violence.
Senegal and Rwanda offer an encouraging blueprint for other African countries to follow, after early attempts to create a global technology hub on the continent fizzled out. Kenya rolled out lavish plans for a technopolis in the town of Konza way back in 2013; the complex has yet to materialize. At about the same time as Konza was being rolled out, Ghana’s then-president John Mahama was burying the ceremonial spade on Hope City, an ICT monolith which would create 50,000 jobs. Today, the project is effectively dead.
Rwanda and Senegal’s successes, however, are likely to resuscitate their neighbours’ digital entrepreneurship hopes. Uganda, for example, which is still battling Ebola and struggling to reverse chronic youth unemployment, is pushing people towards entrepreneurship — in the hope of realizing the sort of progress seen in Kigali and Dakar.