How this Entrepreneur Returned to Rwanda for the Business Opportunities: The Story of ARED Founder Henri Nyakarundi
Estimated reading time: 10 minutes
Henri Nyakarundi was born in Rwanda, grew up in Burundi, and moved to the United States at nineteen to study computer science. After spending over a decade in Atlanta and founding several businesses in the States, Henri went back to Rwanda on vacation and felt the pull to come back home. Following several years of researching and working on his idea, Henri moved to Rwanda. He founded ARED, a company that provides green solutions to expand digital access and electricity connectivity in Africa and now operates in four countries.
Empower Africa’s Editor Shira Petrack sat down with Henri to hear his story.
What made you decide to leave the United States for Rwanda?
I was getting tired of living in the States, and I knew that there is a certain quality of life that you can only get in Africa. As an entrepreneur, I believe that there are more business opportunities in Africa, because there is so much to be done here. I saw that Africa was changing, and I wanted to come back and be a part of it.
How did you come up with the idea for ARED?
Once I decided to return to Rwanda, I spent a year researching the market and deciding what sector I wanted to enter.
Initially, the idea of ARED was to develop a product that can provide phone charging solutions using renewable solar energy. Once I got started, I quickly realized that business in Africa is different than business in the States. In the United States, you can build a sustainable business by providing one or two services because the purchasing power there is much higher, so you can have higher margins.
I wanted to cater to low-income people. I realized that to build a sustainable business catering to the base, I would have to make a multi-service model that would create several revenue streams from those multiple services to compensate for the low margin.
As a result, we shifted our project from a charging kiosk to a smart kiosk. We had a vision for a one-stop shop that would allow people to charge their phones while also giving them access to off-line digital storage capacity, some Android apps, games, and surveys by connecting to the kiosk server through Wi-Fi.
The technology took us five years to develop, and we are the first company in Africa to have built this technology.
What problem are you solving?
There are two issues with digital access in Africa. First, the cost of the internet in Africa is very expensive. Seventy percent of the population is still not connected. And most people are at the low end of the spectrum and have extremely basic smartphones with very low internal memory and processing power. And then, of course, you have the energy problem – a lot of people don’t have the electricity to charge their phones at home. You cannot talk about access to digital connectivity without talking about the lack of energy access in those communities.
How does the technology work?
It’s called Edge Technology, but I don’t want to be too technical. To put it simply – the internet is just a highway between a bunch of servers where various applications and websites are hosted. The internet transfers the applications and websites from the servers to the end-user. If you bring those servers closer to the user, you can minimize or eliminate the cost of internet access. That’s really what the idea is. Our servers don’t replace the internet, but they do provide some basic functions and digital applications. By bringing part of the internet closer to the user, we can allow more people to participate in the digital revolution.
What is your business model?
Initially, we tried to control the whole value chain, but we quickly realized it would be impossible for us to be profitable under that model. Instead, we decided to focus and specialize on one aspect of the value chain and find partners or customers that can implement our technology and deal with the rest of the value chain. We now work according to a B2B model, where we sell our technology to businesses and NGOs that handle the technology’s implementation in the field. We focus on technology development and knowledge transfer to the clients.
We had already pivoted when Covid happened, but Covid strengthened the fact that we made the right decision. Because if we had kept the old model, Covid would have killed our business
You now operate in four different countries. What were some challenges you encountered in expanding your business outside Rwanda?
The challenges are genuine. You’re dealing with different cultures and different markets. You’re dealing with different levels of economic development and different tax regimes. We tried to manufacture in Africa. We found out that it’s not only more expensive to manufacture in Africa, but it’s also more expensive to ship from Rwanda to a neighboring country than it is to ship from Asia to Africa.
There is also the challenge of margins. You’re dealing with low incomes, and therefore with low margins, in all those markets. So it’s essential to minimize your footprint.
Another thing learned is that focusing on the technology itself is not enough. You need to build a very innovative business model, and that business model needs to be adapted to every new country. That adds another layer of challenges.
And then you need to find money. Investors still don’t see the value in African technology companies unless it’s FinTech. FinTech now is booming, but every other aspect of the tech industry, like health, connectivity, and smart city technology, are not getting enough investment.
But I love challenges. I mean, that’s really what drives me.
Do you have plans to expand beyond Africa to other developing economies?
We are in talks with a company that reached out to us to license our technology for the Philippines, but to be honest with you – that’s not really my focus. My focus is Africa and solving the problems here on the continent.
What is your vision for yourself and for Africa for the next 20 years?
I think Africa’s biggest opportunities will be in the tech sector, but agribusiness also has huge potential and is massively underrated. Over the next twenty years, global warming will add a new layer of challenges in the food sector and the water sector, and finding technology to adapt to those challenges will be the next biggest opportunity.
Over the next five to ten years, I would like to finalize the ARED journey and sell the company. My next journey will be in the agribusiness sector. We still import so much food from outside the continent. I’m not in agribusiness now, but when I look at the data I know that’s the sector I want to enter next.
I don’t want to develop a new product again like I did with ARED. It just takes too long and is too complex. My next company will be adapting existing technology for the African Market. There’s so much technology out there that’s solving most of the problems that we encounter, but a lot of it is too expensive or intricate to implement in Africa. I would focus on adapting those existing technologies so that they could be incorporated into the African ecosystem. Technology solutions in Africa need to be affordable, and they need to be very easy to fix locally because of the poor infrastructure.
How do you explain just the state of the agriculture sector in Africa today? Why do you think that there aren’t more international partnerships?
There are a lot of reasons. Often, big corporations or international organizations think they know better, so they don’t necessarily look for partners beyond the government. Government bodies are not necessarily the best partners to implement something. They’re a good partner as an entry point, but they’re not a good partner for implementation. Government officials don’t understand the day-to-day business aspect. So that’s the first gap – international companies and organizations are not looking for partners in the local private sector.
The second reason is that most of the existing solutions are very expensive, so they’re not adapted to Africa’s market. When you talk about a solution, you need to recover your investment. And in Africa, you need low-cost, low-tech solutions that are robust and adapted to the market.
Unfortunately, so many agtech solutions that could solve many problems in Africa are very high-tech and very expensive. And a lot of the components that make those technologies expensive are irrelevant to the African market. I mean, do you really need, in Africa, your technology to be controlled from the cloud and all? No, you don’t.
There is also a problem of listening. For example, Google spent hundreds and hundreds of millions of dollars on a project to increase last mile connectivity in Africa, and after a decade, it failed. I can guarantee you that if they had started with a different approach – had they taken time to understand the ecosystem and look for local partners and worked on their product development with those local partners – things would have been different.
Another example is in irrigation – irrigation systems are still extremely uncommon in Africa. I was looking at solutions that many African countries are looking at, and most of the solutions are designed for big farmers. But big farmers make up less than 10% of the farming industry in the region, and most farmers who need irrigation are small-holder farmers. And there are quite a few examples like that.
So, there’s a disconnect between the offering, the need, and what is available to implement the solution. A lot of international organizations think they know best. When those things change, you’ll see a much better ecosystem in Africa.
How should international companies who want to enter the African market look for local partners?
There are thousands and thousands of innovators in every kind of sector now in Africa. With digital tools such as LinkedIn, it’s not that hard to find somebody in a specific space that has proven themselves to a certain degree. The only thing the international company will still have to do is a little due diligence like they need to do before choosing any business partner. There are a lot of innovators on the ground. All they need is some access to funding or some access to expertise to improve on the technology. Finding the right partner is not that hard. It’s just a matter of will and of thinking that it’s important.
What are some of the biggest misperceptions around doing business in Africa?
First, as I said, there is a big misperception that it is always better to deal with the government. Big organizations like to deal with governments, but if they really want to solve a problem – they will need to deal with the private sector.
This is not to say that the government is always a bad starting point – we’re talking about 50 plus countries in Africa, so every government is different, and some governments are better than others. Unfortunately, many organizations focus on winning contracts or obtaining grants rather than solving problems. If organizations really want to solve problems, they should find somebody who’s solving part of that problem already, and plug into that ecosystem to support them in scaling up.
Companies also do not need to go full force right away. Instead, they should start with a pilot project, conduct initial market tests, and then, when they reach a certain scale, they can go to the government for support. But we need to reverse the process.
Another problem of working exclusively with government bodies is that many government officials will put their friends and family into their projects, even if they do not have any experience. This is not always the case, but corruption is real in Africa, at least in some countries. So the government really might not be the best partner in the beginning.
If it’s a good government, it might be the best partner to scale up, but if you’re dealing with a highly corrupt government, I wouldn’t deal with them at all. I’d just deal with the private sector.
You know, governments worldwide are not great at business. They’re good at certain things, but government is just not the way if you want to solve a problem quickly and efficiently. International companies and organizations need to realize that they will not succeed in Africa without working with local partners and local innovators. It’s just not going to work.
I really believe that solving Africa’s problems is not that complex. The problem is the will. There are so many innovators with fantastic technology that can solve many problems, and all they need is funding and support. It’s just that simple.
Foreign investors and international organizations also need to stop having a biased view of African entrepreneurs. There’s excellent entrepreneurship here, and we need to be treated like any entrepreneur from anywhere else.
I’ve done business in the States – it’s highly risky! But investors like to focus on the opportunity and growth potential when it comes to American startups and on the risk when it comes to African startups. There’s an inherent risk in startups everywhere, and there is also a risk in Africa.
But international investors use risk to devalue our companies and our capacity to solve problems, and I take issue with that.
I’ve spoken with dozens and dozens of investors, and I had one investor ask me how he could be sure that I would not spend the investment on something else. Is he asking the same question when he invests in startups in his own country?
What do you think could be done on a regional level to support startups and develop the private sector?
Most of the big African banks do not have investment funds. How can you build an ecosystem like that? And there are no grant programs in Africa that I know of that are 100% financed by African government. All the grant programs that governments in Africa support are subsidized by European or American credits. And when you have a partial grant, then the decision of how to allocate the funds will be made in London or Europe or America.
I think our African leaders could do much more. They could tell the big organizations that if they want to work in Africa, they need to work with a local startup to implement their solution. Supporting African innovators should be central to the government’s economic development strategy.
I was in Ethiopia not long ago, before Covid, and I saw how China is dominating that economy. It’s crazy. And they bring their own solutions and their own technology. Until we own our technology, we’re going to keep being customers of the rest of the world. No country has been able to develop without developing its own technology. It’s just not possible.
Are there any parting thoughts you would like to share?
I’m positive. I wouldn’t be back home if I wasn’t positive. But I also didn’t say it was going to be easy. I like challenges. That’s what keeps me going every day. If it was easy, it wouldn’t be exciting. It’s hard. It’s definitely hard.
I’m extremely optimistic. Things are changing. It’s just not changing fast enough. But a lot of things are moving on the right track. More governments across Africa are focusing more on partnerships among Africans and not just building partnerships with the US or the European Union. I see a lot more conversation within and between countries in Africa.
On the infrastructure side, Rwanda has done a tremendous job. If not for RwandAir, I wouldn’t be able to travel to West Africa. That’s a game changer. On the visa side, I can travel now to most of the African countries without a visa. That’s amazing. Oh my God, it saved me a lot of time and energy.
In most African countries now, you can register a business online. In terms of connectivity, I can connect with pretty much anybody, anywhere in Africa, without having to go to them and without knowing someone who knows someone. That’s also a game-changer.
Fundamentally, things here will accelerate when our mindset changes, and we realize that we need to look inward and not outward for our development.