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The 5 Business Models of African Tech Hubs

The 5 Business Models of African Tech Hubs

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The 5 Business Models of African Tech Hubs

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By: Leah Ngari

Entrepreneurs in Africa often struggle to find capital or source expertise required to develop their idea into a thriving business. Tech hubs seek to fix these issues by providing co-working spaces, accelerator programs, and mentorship opportunities. As a result, tech-based startups can get the funding, training, and connections they need to transition from concept to implementation. Currently, over 600 tech hubs currently operate across Africa, fostering flourishing communities and robust networks that allow entrepreneurs to realize their vision and propel their business to the next level. 

Why are Tech Hubs Important? 

Tech hubs can help African entrepreneurs overcome the specific challenges they face in establishing successful tech companies on the continent. Africa’s connectivity gap can frustrate many innovators who rely on a stable internet connection for their work. The shortage of seed-stage funding can make it difficult for new founders to make the investments necessary to get their company off the ground. Lastly, the digital skill gap on the continent can inhibit innovators from sourcing the expertise needed to build a winning team. 

The Five Different Business Models for Tech Hubs 

There are many different types of tech hubs on the continent. Some hubs, such as Nigeria’s CcHub, focus on the local startup ecosystem, contributing to the tech industry’s growth in their country of operation. Other hubs, like pan-African MEST, consist of a network of hubs that facilitate communication and collaboration across the continent. According to the International Trade Center‘s report Supporting Startups: Tech Hubs in Africa, these are the five business models for tech hubs on the continent.

1) The Grantee

Tech hubs that intentionally choose to work with public organizations, foundations, and corporate social responsibility (CSR) departments of large multinational companies fall into the “grantee” model. Grantee tech hubs generally offer their services free of charge. They may provide mentoring, business connections, specialized training, networking opportunities, media attention, access to markets and capital, and technical tools and resources.

2) The Networker 

Networker tech hubs strive to create an ecosystem that gives entrepreneurs access to the network they need to grow their company. These hubs generally give their entrepreneurs access to a physical co-working space that enables connections to develop organically. Successful networker hubs manage to build an ecosystem of freelance talent, peer entrepreneurs, companies, investors, and other business development services. 

3) The Consultant

Most tech hubs interviewed for the report fell into this category. Tech hubs operating on the consultant model try to secure multiple revenue streams by offering their consulting services to public and private organizations. Consultant tech hubs aim to become profitable as quickly as possible while supporting entrepreneurs at little to no cost. These consulting services can be in the form of 

  • Providing digital solutions services
  • Granting access to data for government and development organizations
  • Giving training sessions on innovations 
  • Helping large corporations set up their startup accelerators 
  • Advising organizations, foundations, and multinational companies’ CSR programs on collaborating with entrepreneurs and startups to create jobs, foster inclusiveness, etc 

4) The Agent 

Agent tech hubs are usually acceleration-oriented. They focus on startups that are ready for funding by connecting them with investors. These hubs seek to generate revenue from exits, success fees, and fund management fees. Unfortunately, this model is challenging to develop in immature entrepreneurial ecosystems. As a result, the only surveyed hubs to generate revenue from exits were located in Ghana, Kenya, and Nigeria, which are all classified as mature ecosystems. 

5) The Builder

Unlike other incubators or VCs, the builder tech hubs’ main goal is to build startups from the ground up. Builder tech hubs function as startup studios that aim to generate revenue by creating multiple successful startups. They have the infrastructure necessary to support emerging startups by making available the technical tools, management, and multi-disciplinary team necessary to build a business. Instead of accepting applications from pre-existing companies or innovative entrepreneurs, these hubs supply business ideas and attract high-skilled, experienced people eager to implement them. 

Financial Viability 

According to the report, the consultant model and the builder model are the most financially viable, followed by the agent model, the grantee, and finally, the networker. 

The Future of Tech Hubs in Africa 

In recent years, tech hubs have become influential startup creators and tech community builders in Africa, contributing to the startup ecosystem’s growth on the continent. To keep playing this role, tech hubs must also thrive financially. The five business models listed above can help investors looking to fund the next big African accelerator choose a business model that can realize their vision while achieving financial sustainability.

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Diving Business in Africa – Virtual Networking and Panel Discussion on AfCFTA

The African Continental Free Trade Area

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Driving Business in Africa - Virtual Networking and Panel Discussion on AfCFTA

October 28, 2020

Virtual Event

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This media gallery will take you on the journey of an attendee registering and attending our virtual Driving Business in Africa event. We know that networking in the time of Covid-19 presents unique challenges, and we believe that attending our virtual networking event is a great solution for executives looking to identify potential business connections and forge valuable partnerships.

Attendee registering to the platform and setting up his profile details.

Welcome to the virtual event! When Participants log into the platform at the designated time, they are welcomed with a message from Empower Africa’s Founder & CEO, Ezi Rapaport. They can click below the video to become familiar with using the platform.

After watching the welcome video and getting familiar with the platform, the attendees can enter the event.

Participants enter the lobby and can navigate the floor plan by clicking on the different floors. Attendees sit at a table by clicking on an empty seat. Once an attendee sits at a table and opens his or her microphone and camera, the attendee can chat freely with the other attendees at the table.

Chat with participants on the general chat, the table chat or the private chat.

Lights! Camera! Action! The panel discussion is about to start.

Ms. Janet Levy Pahima, Partner at Herzog Fox & Neeman’s International Department, giving a presentation during the panel discussion.

During the presentation, attendees can submit their questions in the Q&A tab.

Attendees can be invited onstage to ask questions during the open discussion part of the presentation. In this image, Shira Aliza Petrack, Panel Moderator, Emery Rubagenga, Founder of Ishango Consulting, and event attendee Mark Karugarama engage in a face-to-face virtual interaction.

Image showcasing the live chat functionality.

CEO of Empower Africa Ezi Rapaport presents a music video produced in the Empower Africa supported music studio in Kono, Sierra Leone.

Shira Aliza Petrack, Panel Moderator, Emery Rubagenga, Founder of Ishango Consulting, Ezi Rapaort, founder and CEO of Empower Africa and Ms. Janet Pahima, Partner of Herzog Fox & Neeman’s International Department engaging in a face-to-face virtual interaction during the event.

Emile Niyonzima, Managing Director at Globl Group, Jesse Shiff, Marketing Director at Empower Africa, and Daneil Berchenkamp, Media Producer at ARC1 fostering networking opportunities while video chatting.

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Driving Business in Africa – Rwanda Dinner

Driving Business in Africa Dinner in Kigali, Rwand

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Driving Business in Africa - Rwanda Dinner

October 27, 2020

Kigali – Rwanda

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10 Fast Facts About the AfCFTA

10 Fast Facts About the AfCFTA

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10 Fast Facts about the Africa Continental Free Trade Area (AfCFTA)

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By: Shira Aliza Petrack

  1. The AfCFTA stands for the Africa Continental Free Trade Area.

  2. The main objectives of the AfCFTA are to create a single continental market for goods and services, with free movement of business persons and investments.

  3. The AfCFTA negotiations were originally launched as an AU project and are member-driven, so all AU members participate in the negotiations, including those members that have not ratified the Agreement.

  4. The AfCFTA will eventually comprise several legal instruments covering trade in goods, trade in services, dispute settlement, investment, competition policy and intellectual property rights.

  5. In terms of numbers of participating countries, the AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization.

  6. Eritrea is the only African country not to have signed the AfCFTA Agreement (yet).

  7. The African Continental Free Trade Area Agreement entered into force on 30 May 2019 for those countries that had deposited their instruments of ratification before this date.

  8. Schedules of preferential tariff concessions and preferential rules of origin are still being finalized.

  9. Trading under the AfCFTA Agreement was due to commence on 1 July 2020, but as a result of the COVID-19 global pandemic, this date was postponed. The new date for operationalisation has been set for 1 January 2021 – even though trading can’t commence without a decision on tariff concessions and preferential rules of origin.

  10. The institutions responsible for the implementation, facilitation, administration, monitoring and evaluation of the AfCFTA include the Assembly, the Council of Ministers, the Committee of Senior Trade Officials, the Secretariat and various technical committees.

    • The Assembly of the AfCFTA is the AU Assembly consisting of all AU Heads of State and Government. It provides oversight and guidance on the AfCFTA.

    • The Council of Ministers comprises Ministers for Trade of the State Parties. It will take decisions on all matters under the AfCFTA Agreement, and reports to the Assembly through the Executive Council of the AU.

    • The Committee of Senior Trade Officials comprises Permanent Secretaries or other officials designated by State Parties. It is responsible for the development of programmes and action plans for the implementation of the AfCFTA Agreement.

    • The Secretariat is the administrative organ to coordinate the implementation of the AfCFTA. It is expected to be functional by 31st March 2020. It will be based in Accra, Ghana.

Sources: 

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Increasing Women’s Access to Finance in Africa is Good for Business

Increasing Women's Access to Finance in Africa is Good for Business

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Increasing Women's Access to Finance in Africa is Good for Business

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By: Elenah Kimaru

There is an estimated USD 42 billion financing gap for women in Africa today. As a result, many female-owned businesses do not actualize their potential; and many investors miss profitable investment opportunities.  

Empowering women and girls also helps economic growth and development. Gender equality is one of the UN’s seventeen Sustainable Economic Goals (SDGs) that establish a blueprint to achieve a better and more sustainable future for all. Gender equality, SDG goal no. 5 is

"Not only a fundamental human right but a necessary foundation for a peaceful, prosperous, and sustainable world."


Although Africa has made significant progress in increasing gender equality over the past decade, progress has stalled in recent years – although some countries fare better than others. According to
McKinsey, South Africa has the highest gender parity score in the region; Mauritius, Niger, and Mali have the lowest. 

Increasing gender equality in the region would require a multi-pronged approach supported by all key stakeholders since discrimination against women takes on multiple shapes and forms. One significant way the private sector can get involved is by increasing women’s access to capital and credit. 

Financing Gap Between Men and Women 

Women in Africa today lack access to capital compared to men. This gap adversely affects women, their families, and their communities. It also means that investors overlook many potentially lucrative ventures.

Sub-saharan Africa is the only region in the world where more women than men become entrepreneurs. But when it comes to access to capital, the situation looks less rosy. On average, women in Africa own fewer assets than men, often due to discriminations encoded in property laws, and so they lack the collateral necessary to secure larger loans. And women are sometimes required to present more significant collateral for the same size loan, further inhibiting their access to capital. 

The higher-than-average interest rates throughout the continent also discourage women from applying for credit to grow their business. Since female decision-makers tend to be more risk-averse than their male counterparts, women are less likely to take a high-interest loan. A study conducted by the AfDB found that 13.1% of women compared with just 8.2% of men cited high interest rates as the reason they did not apply for a loan. 

The high collateral requirements and high interest rates hamper the women’s profit-making capacity since they cannot make the investments required to grow their business. But institutional obstacles are not the only issue. According to a survey conducted by the African Development Bank (AFDB) in 47 African countries, African women often self-select out of the credit market. This means that women perceive their credit-worthiness as lower than it is, so they do not even bother to apply. As a result, women turn to their informal networks for finance rather than rely on institutional investors. 

Supporting Female Entrepreneurs

Increasing women’s financial literacy on the continent could help close part of the financing gap. Roughly 35 million women in Africa today are not signed up for any financial service (such as a bank or mobile money account.) Banks and digital financial services can establish programs teaching basic financial literacy to their clients. Through these programs, financial service providers can grow their client base, create greater customer loyalty, and ensure more reliable returns. 

Another way to encourage female entrepreneurship is for investors and credit institutions to proactively seek out women entrepreneurs. The AfDB has set up a “Gender Equality Trust Fund” that will finance women-owned SMEs throughout the continent. The Bank has also established a risk-sharing mechanism that will de-risk investment in women-owned businesses to encourage more private-sector investment in women. 

Looking Ahead

Women form Africa’s economic backbone. Their full economic empowerment is “crucial to increase productivity levels, enhance economic efficiency, and improve overall development outcomes to achieve inclusive growth.” Supporting female entrepreneurs on the continent is not just good for women and investors: it is also crucial to Africa’s sustainable economic development. 

 

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Invest in Manufacturing to Meet Africa’s Booming Consumer Demand

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Invest in Manufacturing to Meet Africa's Booming Consumer Demand

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By: Leah Ngari

Africa’s manufacturing sector is slowly but surely growing. Thanks to increasing urbanization and access to electricity, the continent is gradually embracing manufacturing. Agriculture professionals are not alone in developing their processing operations. From car assembly to ceramics, textiles, and mattresses, industrial production is taking off.

Manufacturing is not only limited to the larger nations in Africa, like South Africa and Nigeria. Your Levi’s jeans and Reebok shoes, for example, might come from Lesotho!

Africa’s Consumer Market Biggest Draw for African Manufacturers 

It might seem that businesses setting up manufacturing facilities on the continent want to cut labor costs on products intended for consumers outside the region. But international companies building factories on the continent are often trying to meet the demand of Africa’s rapidly growing consumer market. Many African manufacturers got their start as trading companies that imported goods, before realizing it was more lucrative to build operations to manufacture those goods locally. 

Many businesspeople share the misconception that manufacturing in Africa is only profitable if they sell the manufactured products outside the continent. Those who understand the opportunity can thrive while contributing to Africa’s sustainable economic development. After visiting Nigeria to explore cheaper relocation alternatives for his Chinese manufacturing operations, one Chinese manufacturer recognized the local market’s potential. Despite his higher electricity costs, the ceramics manufacturing plant he established in Nigeria now enjoys a 2% increase in profit margins compared to what its Chinese counterpart. 

Volkswagen is another international company that has been setting up shops in strategic locations all over the continent. With vehicle assembly facilities in Ghana, Nigeria, Ethiopia, and Rwanda, Volkswagen is targeting areas where the local market for vehicles is growing steadily. And as locals’ purchasing power increases, local demand for products will continue to rise.  

Intra-African trade has been growing and is expected to increase further thanks to the passage of the African Continental Free Trade Agreement, which went into force last year. The AfCTA will give African manufacturers access to a sizable, readily available market. Although trading under the AfCTA was slated to begin July 1st, the date was postponed due to the COVID-19 pandemic. Nevertheless, once implemented, the agreement is expected to increase the market size for companies based in Africa and will propel the continent’s industrialization forward.

Ethiopia, the Upcoming Manufacturing Hub

While some manufacturing companies embrace the significant commercial opportunities created by the rising local demand, other manufacturing entrepreneurs focus on creating products for global consumers. International manufacturers have often favored Asian countries, where labor is cheap. Recently, however, the rising costs in China and India and social issues surrounding factory work in Bangladesh has made Africa look increasingly attractive. 

Ethiopia looks particularly promising as the next major manufacturing destination. The country has the closest labor costs to Bangladesh, and a stable government that has fostered a suitable environment for manufacturing, including tax breaks for specific industries. The country also boasts a growing road and rail transport system. Establishing production lines in the country creates employment and enables capacity building among the locals. Volkswagen has set up an entire transportation facilitation ecosystem in the country, with an assembly plant, training centers, and automated transport solutions, including car-sharing and app-based taxi services.  

Ethiopia’s flagship Hawassa’s Industrial Park has attracted some of the largest fashion brands in the world and makes use of renewable hydroelectric electricity and ecological waste management practices. While some of the business practices – most notably, the meager wages – have been criticized, the project has created tens of thousands of jobs. The World Bank is currently evaluating the social impact of the Hawassa Industrial Park on its workers and community. The findings will help companies and the government continue to industrialize Ethiopia in a socially responsible manner. 

The Ethiopian manufacturing sector has taken a hit in the wake of the Coronavirus epidemic that has made it difficult to import raw materials and other components into the country. Companies that will manage to pivot their operations to source raw materials regionally and sell their goods to local consumers may thrive. 

Potential Challenges

Despite the recent manufacturing growth, several challenges may still hold manufacturers back from venturing into Africa. Most African countries do not yet have the infrastructure capable of sustaining large scale manufacturing and relatively high labor and capital costs. As a result, manufacturing on the continent is concentrated in only a small number of countries

The increasing automation of many low-skilled processes may make Africa less attractive as a manufacturing destination: Automation-heavy factories require an abundance of electricity. And with robots replacing human workers, companies might stop outsourcing production abroad

Now is the Time for Investments in African Manufacturing 

Automation also creates opportunities. Manufacturing companies can strategically involve themselves in developing infrastructure on the continent and use the latest tools and techniques to build functioning roads and ports. Private investment in African infrastructure can yield profits while contributing to the continent’s economic success. The trend away from production outsourcing should not affect manufacturing companies that focus on meeting the increasing demand for consumer products on the continent. Governments can choose to nurture specific sub-sectors, as Nigeria did with cement, to grow their competitive advantage. Entrepreneurs can draw on their creativity and innovation to face the infrastructure challenge and leapfrog over outdated production and distribution processes. Companies that enter the market now may well enjoy a first-mover advantage as they contribute to building Africa’s long term production capacities.

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The Future of Food Production in Africa

The Future of Food Production in Africa

The Future of Food Production in Africa

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By: Leah Ngari

In some regions in Africa, COVID-19 will tip the scale from food insecurity to full fledged famine. But, if governments and NGOs work with the private sector to actualize Africa’s agricultural potential, the current crisis may also embark the continent down a path leading to agricultural self-sufficiency.

Coronavirus-induced panic buying has introduced shoppers in the United States and Europe to temporary shortages of staples such as pasta and flour for the first time in their lives. Meanwhile, people in developing countries are worried that the current trade disruptions would plunge them into famine.

The pandemic is expected to impact Africa beyond the immediate public health crisis. Since 2015, the prevalence of undernourishment on the continent has steadily increased, with extreme climate fluctuations contributing to rising food insecurity. Even without the Coronavirus, this year’s locusts outbreak – which has yet to be contained – is already putting 5 million people in East Africa at risk for starvation. And African farmers often lack regular internet access, which can impede farmers from efficiently utilizing their land and resources. 

Covid-19 lockdowns and border closers have already brought to light deep vulnerabilities in the global food supply chain. According to the UN’s Food and Agriculture Organization (FAO) and World Food Programme (WFP), twenty-seven countries worldwide – over half of which are in Africa – are on the brink of a Covid-19-driven food crisis

As the head of the World Food Program warned the UN Security Council:

“I’d like to lay out for you very clearly what the world is facing at this very moment. At the same time while dealing with a COVID-19 pandemic, we are also on the brink of a hunger pandemic.”

Currently, the biggest challenge to Africa’s food security is that despite its vast agricultural potential, the region is still a net food importer. As a result, disturbances in the global food supply chain that limit access to food imports hit Africa particularly hard. But Africa has the building blocks – including a large population working in agriculture and abundant, fertile land – necessary to grow all of its own food and even produce a surplus. Over the past years, foundations and NGOs have invested in farmer education, improved inputs, irrigation projects, and other such initiatives that can help farmers increase both the quality and quantity of their yields. Private agribusinesses and entrepreneurs who invest in African agriculture can remove some of the obstacles that are currently keeping African farmers from achieving their land’s full potential.

FAO-WFP Early Warning Analysis of Acute Food Insecurity Hotspots

Now is the time to revolutionize agriculture in Africa

If current trends continue, the future in much of Africa looks bleak. But the current crisis also presents an opportunity for Africa to develop and modernize its agriculture sector, which would put the region on a path towards food security and economic prosperity. Countries that wish to use the current crisis as an opportunity to enhance their food security, improve the resilience of their food supply chain, and reach self-sufficiency in food production can take several steps:

a) Diversification

Many farmers in Africa concentrate their efforts on growing a single staple crop (often maize). This lack of diversification not only makes it hard for farmers to receive adequate nutrition; it also makes their fields less resilient to climate change and erratic weather patterns. One of the obstacles to diversification is convincing farmers – and the greater population – to prepare and eat a more varied diet. Since the pandemic might make certain staple foods less available, governments now have an excellent opportunity to educate the public on the health benefits of lesser-known crops. Governments can also run public education campaigns to teach the people that adequate overall nutrition means more than just a minimum amount of daily calories. Companies and entrepreneurs can provide inputs and guidance to farmers on planting and caring for unfamiliar crops.

b) Farmer education

Farmers on the continent often employ traditional farming techniques that have been passed down over the generations. But advances in agriculture have revolutionized agricultural practices and led to much of the world growing more abundant yields of sturdier and more nutritious crops. Introducing and improving national and regional farmer education projects can help farmers get the most out of their time in the field.

c) Mechanization

65% of land in Sub-Saharan Africa is still tilled, plowed, and weeded manually. Due to the availability of physical labor, lack of funds, and other structural reasons, farmers in the region tend not to invest in modern tools and equipment. The lockdown, which has limited laborers’ availability in many markets, may encourage farm owners to shift to machine use over human labor. Investors and entrepreneurs can work together to establish machine-lending schemes that would allow farmers to reap the benefits of mechanization without purchasing expensive equipment that is used only a couple of months a year.

d) Invest in Infrastructure

Africa’s underdeveloped infrastructure poses a considerable challenge to farmers’ productivity and profitability. The scarcity of roads in rural areas makes it difficult for farmers to move their crops to the local markets. The prevalence of unpaved roads and inadequate port facilities on much of the continent hinders national and inter-African trade and makes African countries dangerously dependent on imports shipped by air from outside the region. Lack of access to electricity also hinders Africans’ ability to establish food manufacturing facilities and add value locally to the agricultural raw materials. 

Lastly, investing in irrigation and other water technologies would allow farmers to use current inputs to dramatically improve their yields. Without neglecting large scale irrigation investments, governments and donor organizations can also fund farmer-led informal irrigation ventures

The current crisis, which has underscored the importance of functional infrastructure at the local, domestic, and regional level, may encourage renewed efforts to close Africa’s infrastructure gap.

e) Establish national food stockpiles

Many African countries do not currently have national emergency food stockpiles. Instead, they rely on foodstuff imported on a need-to-need basis to adequately feed their citizens. The pandemic may drive these countries to build storage warehouses and stock up on food when the regular food supply is disrupted. Investments are likely to be made in the growth and expansion of crop storage capacities to have more significant food stockpiles. In addition to directly improving food security, crop storage facilities will also help mitigate the significant post-harvest losses that African farmers currently experience.

In parallel, the private sector can step in to establish communal storage centers, where farmers can pay for storage services with a portion of the grain put in storage. With some more investment, companies can build these storage facilities into holistic support centers for farmers that provide inputs, guidance, and equipment.

f) Encourage local food production

The current crisis has highlighted many African countries’ dependence on imported foods. What happens when an exporting country cuts off the supply? 

When Vietnam announced what turned out to be a temporary ban on rice exports, many experts worried that scarcity would push up the price of food staples beyond the reach of many. Although Vietnam’s rice exports to Africa have since resumed, this episode could serve as a wake-up call for countries to encourage local production and transition towards food self-sufficiency. Now is an ideal time for governments to move their countries away from a reliance on imports. States can institute policies that protect local producers, such as “smart” subsidies as part of sustainable soil fertility management practices.

g) Increased Intra-African Trade

The African Continental Free Trade Area, which entered into force in May 2019, was designed to remove trade barriers that currently inhibit internal trade on the continent. According to experts, the AfCTA is expected to increase intra-African trade in agricultural products 20 to 30 percent, with the highest gains in sugar, vegetables, fruit, nuts, beverages, and dairy products. The current pandemic that has highlighted the risks of relying on air and sea cargo shipments for basic foodstuff could make increasing inter-African trade an even bigger priority for African governments. And if prices for staples such as rice and wheat rise due to Covid-19 induced scarcities, poorer countries may be unable to compete with wealthier buyers and lose out on critical products. Internal commerce will increase as people shift to local food producers and manufacturers. Thus, Intra-African traffic may grow even as the traffic between Africa and the rest of the world slows down.

h) Influx of Youth into Agriculture

Africa’s younger generations’ seeming lack of interest in agricultural work has long been bemoaned by African governments and policy experts. Now that Covid-19 has heavily limited urban employment opportunities, more and more people on the continent are trying their hand at farming. The influx of young, entrepreneurial individuals in African agriculture can revolutionize agricultural practices and business models.

i) Agriculture and Technology

With most people spending even more time indoors due to lockdowns, ICT (Information and Communications Technologies) use has increased globally. As a result, governments and international organizations are redoubling their efforts to increase digital literacy in Africa. This, in turn, will also help Africa’s farmers produce more food, since the increased use of the internet also increases agricultural knowledge.

Effects on Aid

Traditional donor countries such as the US and UK are now facing their own economic crises. So far, states have heeded international organizations’ call for funds, with countries such as Germany and the UK contributing tens of millions of dollars to the WHO’s Coronavirus emergency fund. Given Covid-19’s economic toll on the global economy, however, regular fund transfers and aid for non-Coronavirus programs is likely to decrease significantly. With less foreign funds and expertise, local talent and production will need to fill in the gap. 

Conclusion

The current pandemic may plunge much of Africa into a long term economic and public health crisis. The continent is young, and its demographic gives it an advantage in battling the Coronavirus. In the medium and long term, however, one of the region’s most pressing concerns is the pandemic’s effect on Africa’s food security. 

The IMF has stated that 2020 will be a year of reckoning for the world’s food systems. In some regions, such as the European Union, the pandemic highlighted the urgency of transitioning towards a healthier and more sustainable food production system. The EU is now focussing on offsetting the biodiversity loss caused by industrial agriculture practices that have made humanity more vulnerable to virus outbreaks

Governments in Africa can also take this opportunity to establish measures that will help their population weather the current emergency and develop long-term food security. Creating these programs will require funding from international institutions such as the Worldbank and IMF as well as cooperation from the local, regional, and global private sector. But it can be done. By working together, the current crisis can serve as a turning point for agriculture on the continent. 

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Top Seven Countries for Outsourcing in Sub-Saharan Africa

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Top Seven Countries for Outsourcing in Sub-Saharan Africa

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By: Elena Kimaru

Companies can turn to outsourcing to connect with new pools of talent while reducing overhead costs. By delegating specific tasks to outside experts, businesses can focus their efforts on developing and perfecting their core offerings while saving money for the company. 

The benefits of outsourcing to Africa are not widely known. Hiring African web developers, content writers, customer service representatives, transcription specialists, or data labelers doesn’t just make good sense for your business; it also empowers individuals living in some of the world’s poorest countries and enables them to provide for them and their families. 

Here are seven countries from across the subcontinent with thriving outsourcing industries to help you operate your business more efficiently and contribute to Africa’s economic growth.

   1.  Ethiopia

With an annual growth rate of 7.7 % Ethiopia, has quickly become a BPO hotspot. Technology has driven the country’s economic and social transformation, so it is not surprising that Ethiopia has positioned itself as a leader in technology development and support.

One of the continent’s most prominent names is Addis-Ababa based EdTech and job-placement company Gebeya. Gebeya trains its employees to become top software engineers in such diverse specialties as AI, AgriTech, Blockchain, FinTech, Internet of Things, Media Production, Telecom, and Gaming. Since its inception in 2016, Gebeya has expanded beyond its Addis Ababa headquarters. The company has recently closed a $2 million seed round investment.

The R&D Group also connects international businesses to Ethiopia’s untapped IT talent. The company proactively addresses potential clients’ concerns about Africa’s unfamiliar business environment by offering flexible contracts that range in length from a couple of weeks to years. This flexibility can encourage global executives who might not think to look to Africa for their business solutions to consider setting up commercial collaborations on the continent.

   2.  Nigeria

Over 200 million people live in Nigeria, making it Africa’s most populous country and home to a large young and dynamic workforce. With hundreds of thousands of English-speaking university graduates joining the labor pool each year, Nigeria is a natural destination for outsourcing your BPO or IT development needs. 

Nigeria’s government is actively seeking to draw outsourcing clients to the country. The Federal Ministry of Communications and Digital Economy has drafted a National Outsourcing Strategy, and industry organizations such as the Association of Outsourcing Practitioners of Nigeria (AOPN) can help you find the best partner for your business.

   3.  South Africa

South Africa is keen on positioning itself as a leading BPO destination. Its high number of native English speakers, favorable time zone, and affordable broadband infrastructure make it ideal for companies looking for competent and cost-effective outsourcing solutions.The South African government has launched a program to promote outsourcing activities. The regulatory environment allows companies to draw on the country’s skilled labor pool to improve overall productivity.

Entrepreneurs and small businesses can make use of South Africa’s thriving outsourcing sector. Companies such as Avirtual help individuals and start-ups be more productive by matching them with available talent to provide virtual support. Avirtual’s services include matching companies with virtual assistants, virtual marketing assistants, and other remote employees. Indox, another South African company, provides BPO services such as outsourced document collection, quality assurance, data verification, data extraction, and call center outsourcing. For legal solutions, companies can turn to Integreon, which provides alternative legal and business solutions through multi-lingual and around the clock support. 

   4.  Kenya

Kenya is a BPO trailblazer on the continent. Its numerous outsourcing companies cover multiple sectors and draw on Kenya’s educated workforce and growing infrastructure to offer high-quality services at a competitive cost. 

Kenya’s diverse BPO landscape includes Corporate staffing services. The company helps clients meet their local HR needs by managing administrative and operational tasks such as issuing contracts, processing payments, advising on labor laws, and providing a physical workstation for outsourced staff. Techno Brain, another Kenyan company, offers consumer and market analytics services in addition to its BPO services. Techno Brain’s services include call center management, back-office services, knowledge process management, and digital media services for their clients across the globe.

   5.  Ghana

Ghana is West Africa’s top BPO outsourcing destination. The country is particularly attractive to companies looking to outsource their technology development and support tasks thanks to its business-friendly regulatory and tax environment, governmental support for the industry, favorable time zone, educated and English-speaking workforce, and robust IT infrastructure.

Ghana’s thriving outsourcing ecosystem includes Trinity Software Center, a social enterprise that connects West African and European companies with local software developers. ACS Ghana, another Ghanaian tech outsourcing company, employs highly skilled African engineers and project managers to provide technology solutions to domestic and international businesses. 

   6.  Mauritius


Mauritius, a small island off Africa’s southeast coast, is widely considered the continent’s most politically and economically stable country. The country’s
highly developed infrastructure, coupled with its high number of educated native English and French speakers, and business-friendly tax regime, make Mauritius an ideal outsourcing destination.

Mauritius’ outsourcing landscape includes Mobi Move, a company that employs expert designers, branding strategists, and software developers to help clients grow their business. SIL, a Mauritian tech services company that focuses on IT solutions and services, has grown to include employees in over fifteen countries, with subsidiaries in Namibia and Botswana. 

   7.  Madagascar

Madagascar has the fastest internet in Africa, a large Francophone population, and competitive cost of labor, which has led to the establishment of many BPO companies over the past decade. As a result, Madagascar has begun encroaching on Morocco’s territory and has become a top BPO destination for French speakers. Most BPO companies offer variants of data collection and processing services. Still, some have taken advantage of the robust telecommunications infrastructure to provide technology development and support services.  

Some of the outsourcing companies include Bocasay, which provides IT services such as web development, mobile development, software development, and application management. Oworkers, another Malagasy company, focuses on data entry, processing, validation, categorization, and content moderation services.

Looking to Africa for Your Business Needs

Sub-Saharan Africa might not be first in mind when looking to contract out IT, business processing, or HR services. This will change as the region’s thriving outsourcing continues to expand. Given the variety of services that can be sourced on the continent, companies should look to African talent to maximize the efficiency and profitability of their business while creating jobs on the continent.

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Outsourcing in Africa

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Outsourcing in Africa

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By: Leah Ngari

In an increasingly competitive global economy, outsourcing technology development or business processing remains a powerful tool for companies looking to simplify their organizational structure, improve customer service quality, or develop products faster and more cost-effectively. Outsourcing today is no longer limited to call centers. Companies today outsource their IT, finance, and HR functions to cut costs and focus on their core business functions. 

Traditionally, the go-to outsourcing destinations have been Asia, Latin America, and the Middle East. Now, the growing economy and aging population in these regions is making labor in these regions more expensive and, therefore, less attractive to companies looking for remote, cost-effective staff. Africa, with its large population of educated unemployed and underemployed individuals, is emerging as the next top destination for offshore staff sourcing.

Why companies should consider Africa as their outsourcing destination

Africa is the world’s youngest continent with a median age of about 18 years. A large share of Africa’s population will join the workforce in the next couple of years and face an increasingly competitive labor market. Already today, almost half of Africa’s university graduates struggle to find jobs that utilize their education. The large population of young, working-age people, coupled with the increasing lack of employment within the continent, creates a pool of potential employees for companies looking to outsource. The availability of labor, coupled with the region’s competitive rates, makes Africa an ideal destination that can supply human capital to companies that need it.

Multiple languages are spoken throughout Africa. English is a common first language in countries like Ghana, Nigeria, South Africa, Botswana, whereas Senegalese, Moroccans, Malagasy and others speak French. Mozambique has a large population of Portuguese speakers. As a result, many Africans can communicate easily at a native level with customers and clients worldwide. 

The growing infrastructure in the region also makes it a great offshore outsourcing destination. Many countries like Madagascar enjoy fast speed internet. Fast-growing telecom networks and increased access to technology is creating an enabling environment for digital and remote work.

Africa and Europe lie along similar latitudes, and so African countries and European countries often share overlapping or similar time zones. For instance, South Africa and the UK have a time difference of 2 hours, as do Senegal and France. And where there is a more significant difference between client and outsourcing companies, the increasing adoption of flexible work hours eases these concerns.

Benefits for Africans

Outsourcing to Africa is more than good business; it is also good for Africa. Sub-Saharan Africa has the fastest urbanization rate globally, but job openings are not keeping up. Youth unemployment and underemployment are a growing challenge. International companies that turn to Africa for their staffing needs will create jobs on the continent that can give Africans a chance to learn or perfect a marketable skill while earning a living and feeding their families. Local outsourcing companies that connect clients with qualified professionals contribute to economic growth and private sector expansion on the continent. 

One major worry when it comes to outsourcing is that the jobs created are only temporary. Thanks to technological advances, the type of jobs that are outsourced today might be carried out by AI machines and other digital innovations in the future. But this does not mean that the continent and its people cannot benefit from outsourcing even after the outsourced jobs dry up. The right macroeconomic and social policies can turn the increased employment and economic activity into sustainable, long-term growth.

There is also always the possibility of companies shifting their business models and letting go of employees that rely on their outsourcing services. Andela, a software development company established with the vision of training young Africans to fill junior development positions, let go of hundreds of developers when the proliferation of programming boot camps in Western countries flooded with the market with local entry-level engineers. More recently, the company closed its brick and mortar offices and transitioned to remote working arrangements, making it difficult for some of its African engineers with poor home internet connections to compete with their counterparts elsewhere. 

But the Andela story also offers hope, since much of the laid off tech talent was able to use their skill-sets and experience of working with multinational companies to find new jobs in local tech companies. This, in turn, will benefit the African tech ecosystem. 

Companies looking to source staff in Africa in a cost-effective yet socially responsible way can turn to “impact sourcing.” Impact sourcing involves companies recruiting individuals from lower-income communities and emerging markets and intentionally providing them with sustainable jobs and professional training that can ultimately lead to a lifetime of full employment. By engaging in impact sourcing in Africa, companies can find dedicated, reliable, and cost-effective labor while positively impacting some of the world’s most impoverished areas. 

Services Outsourced to Africa

Many services can be outsourced to Africa, including website and app development, content creation and writing services, transcription, IT support, SEO optimization, data entry and database management, call center services, and data labeling. These services can be acquired using outsourcing companies within the continent and through freelance networks that connect freelancers with potential clients. 

IT outsourcing

Technology-related services provided on the continent range from expert product design and management to the simple tasks such as data labeling. Africa’s is the word’s fastest-growing continent for software development, and major tech giants such as Microsoft and Google offer programming courses and mentorship programs that will further expand the tech talent pool in Africa.  

Tech jobs on the continent are not reserved only for those with advanced programming skills. AI algorithms still rely on human judgment for a large variety of purposes, such as data-labeling and training self-driving cars. As IT infrastructure continues to improve across the continent, Africa is becoming an ideal destination for AI-supporting services that require human perception.

Prominent African IT support and development companies 

Several African companies offering IT and software development services on the continent have expanded beyond their country of origin and opened additional branches throughout the continent. As these companies train and employ an increasing number of Africans, tech talent improves on the continent, boosting Africa’s private sector and its interconnectedness with the global economy.

Below are five pan-African software sourcing companies to keep in mind next time your team is looking for experienced engineers or entry-level programmers:

  1. Code of Africa is a company that trains software developers in Rwanda and Kenya and connects them to the European market, specifically targeting Germany, Australia, and Switzerland.
  2. Techno Brain Group provides professional and academic training in IT to Africans through its training branch based in Kenya. It also offers consultancy and outsourcing services to governments, NGOs, and private organizations across the globe.
  3. Tunga works to source employment for skilled Africans with limited access to job opportunities in the field of software development. It targets individuals from impoverished backgrounds to help them get jobs in the IT sector. It currently works with African developers from Uganda, Nigeria, and Egypt.
  4. Andela trains software engineers and assigns them to different leading tech companies worldwide; their client list includes Coursera and Github, and their engineers come from Nigeria, Egypt, Uganda, Kenya, Rwanda, and more. Originally, the company trained its own junior software engineers. However, it has recently transitioned to hiring more senior engineers due to the increased number of junior developers in its target market, the USA. While it currently only operates a brick-and-mortar training program in Kigali, Rwanda, Andela has partnered with Facebook to offer remote technical training that will give individuals all over the world the opportunity to gain marketable skills. 
  5. Software Group offers digital banking and integration solutions for financial service providers. It serves clients from diverse locations, including Ghana, India, the United States, and Australia. 

Conclusion

In the midst of the COVID-19 pandemic that has seen outsourcing investments reduce drastically, numerous companies have been forced to slow down their operations. Cutting costs has become necessary for survival, and businesses need to go back to the drawing board and restrategize. While the popular outsource markets for IT and software-related needs in countries like Vietnam and Ukraine continues to operate, Africa is slowly emerging as a strong contender in the IT sector. 

Many tech hubs are popping up across the continent from Ethiopia’s silicon valley of Sheba Valley to Kenya’s Silicon Savannah. By outsourcing tech development to Africa, you can create more employment on the continent while benefiting from the readily available skilled labor offered.

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Women Power the Private Sector: 7 Women-Led Businesses Driving Economic Growth in Africa

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Women Power the Private Sector:

7 Women-led Businesses Driving Economic Growth in Africa

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By: Leah Ngari

Did you know that the largest share of female-owned businesses worldwide is found in Uganda, Ghana, and Botswana? In fact, despite the numerous barriers that businesswomen in Africa face, Sub-Saharan Africa is the only region in the world where the majority of entrepreneurs are women. Indeed, as the saying goes – necessity is the mother of all inventions. Women will get creative to find ways to feed and care for their families, and so today, most women in the region start businesses out of necessity.

Traditionally, women who got their start trading small quantities of goods and rose to prosperity through the fabric trade and traditional market place were affectionately nicknamed “Mama Benz,” after the Mercedes-Benz cars, they could purchase with their profits. Today, the high number of women-owned businesses showcases African women’s capacity to create their own opportunities. While many of these businesses remain a one-person operation, some individuals have turned their idea or product into a successful business and scaled it on a regional or global level.

The following women embody the diversity of female entrepreneurship on the continent:

       1.  Bethlehem Tilahun Alemu – Ethiopia

Bethlehem Tilahun Alemu founded SoleRebels with the goal of building Ethiopia’s first global shoe brand. Born and raised in the Zenabwork area, an impoverished community in Ethiopia’s Addis Ababa, Bethlehem quit her accountant job at the age of thirty to found a shoe manufacturing company that went from providing jobs to members of her community to whose annual revenue now exceeds USD 200 million a year.

The company has made more than just a positive economic impact. SoleRebels is also mindful of the environment and creates eco-friendly shoes by using recycled car tires to make the soles and laces as well as local fabrics. Since its inception in 2005, SoleRebels has expanded internationally and now operates physical stores across various countries such as the USA, Germany, Singapore, and Greece. The shoes are hand-crafted to order in Addis Ababa by local artisans using traditional fabric and shoemaking methods. Through SoleRebels, Alemu inspires other entrepreneurs in developing countries to dream big and tap into local talent and resources to benefit the larger society.

Bethlehem Tilahun Alemu, SoleRebels

       2.  Joy Ndungutse and Janet Nkubana – Rwanda

These sisters co-founded Gahaya Links, a handicraft company that creates home decor pieces and jewelry. Founded in 1994, this crafts company partnered with local women weavers in Rwanda to create hand-made crafts – such as Rwanda’s special ‘peace basket’, the national symbol of peace. Gahaya Links has empowered over 5,000 women in 52 cooperatives across Rwanda. They have partnered with brands like Walmart, Macy’s, and Kate Spade, exporting their products outside of Rwanda to a larger international market. Ndungutse and Nkubana’s success demonstrates the power of working together as a community for a common goal.

Joy Ndungutse, Gahaya Links

       3.  Mariam Lawani – Nigeria

With the growing economy, numerous industrial advancements, and rapid urbanization, waste management has become asignificant environmental issue requiring attention in Africa. Mariam Lawani, founder of Greenhill Recycling, has set out to solve the problem of waste management and poverty, beginning with the densely populated areas in Nigeria. Greenhill Recycling gives households an opportunity to receive “Green points” for their recyclable materials, which can then be traded in for items such as school supplies, groceries, or utility bill payment. Greenhill picks up the recyclables directly from participants’ homes, processes the recyclable materials, and sells them to manufacturers to be used as raw material input for the manufacture of new products, such as polyester fiber and floor carpets.

Greenhill Recycling empowers locals to take part in protecting their environment while providing access to the necessary products and services. And Lawani is already planning her next step – tackling Africa’s infrastructure deficit by transforming plastic waste into roads.

Mariam Lawani, Greenhill Recycling

       4.  Odunayo Eweniyi – Nigeria

Odunayo Eweniyi tapped into her passion for technology to create tools that have helped over 200,000 users save money and manage their finances. Eweniyi created PiggyBank (later renamed PiggyVest). The app provides a safe platform for people to save up, putting in as much or as little funds as they can to work towards their desired savings. It also allows low and mid-income people to invest in different sectors, thus creating a saving and investment culture for those who would otherwise not have access to such opportunities due to limited knowledge and wealth. Odunayo gives hope to women who, like her, would like to venture into STEM-related fields which are still highly dominated by men.

Odunayo Eweniyi, PiggyVest

       5.  Laurettah Sibanda – South Africa

The building and construction sector in Southern Africa hosts the founder of Atlantis Construction Group & Developments. After founding businesses in gold mining and media,  before finally settling on construction. The full-service building and contracting company constructs both residential and commercial projects, and currently operates in Botswana and South Africa. Sibanda plans to expand to Zambia and Zimbabwe.

Laurettah Sibanda, Atlantis Construction Group & Developments

       6.  Michelle Adelman – Botswana

Michelle Adelman built a business to solve Africa’s food security problems. Accite is a project development and impact investment firm that funds technology-led, sustainable commercial agriculture projects that spur economic diversification and employment of youth and women. Their first solution, Go Fresh!, uses greenhouse and hydroponics technology to grow vegetables all year round – a significant accomplishment in Botswana, home to the Kalahari Desert.

Accite has created employment opportunities for Botswana’s youth, with local youth leaders running the various projectscurrently in place including Fodder Green (high-quality animal feed), Crossover Meats (affordable and eco-friendly beef alternatives) and Infinite Foods (a market platform for plant-based foods). Her startup shows the economic potential in building business models based on solving social problems in Sub-Saharan Africa.

Michelle Adelman, Accite

        7.  Brenda Katwesigye – Uganda

With a background in IT and an interest in entrepreneurship, Brenda Katwesigye tried several business ideas before settling on Wazi Vision. Her drive to bring quality healthcare to everyone led to the creation of Wazi Vision, a startup that provides affordable eye care solutions.

The company uses a mobile application and a virtual reality (VR) kit to help those living far from an optometrist diagnose vision defects. Wazi Vision also provides an eye care solution, manufacturing eyeglasses made from recycled materials – which slashes the production cost by over 20%.

Brenda Katwesigye, Wazi Vision

Investing in African women

Africa has made impressive progress in closing the gender gap on the continent, but there is still much room for improvement. Despite the high rates of female entrepreneurship, capital investments in male-owned firms are often up to six times greater than capital investments in female-owned companies.

One way to economically empower women is to fund female-owned businesses. Governments can also put in place policies that promote female entrepreneurship to increase women’s access to capital and networks that will enable them to realize their entrepreneurial aspirations. Public education programs can also encourage women to dream big – unfortunately, women themselves often do not believe their business is worthy of outside investment, and so they self-select themselves out of the credit market all too often by not applying for loans.

Economically empowered women lift up their surroundings: women will reinvest up to 90% of their income in the education, health, and nutrition of their family and community (compared with up to 40% for men). Supporting African businesswomen can transform Africa.