The Africa Tech Summit flew from Kigali to London last Tuesday to take part in London Tech Week. Ensconced within the palatial interior of the Leonardo Royal Hotel, the ALT network was present to learn about the issues faced by investors, tech companies, governmental agencies, and entrepreneurs in the African tech-marketplace. Speakers covered many of the exciting tech developments currently underway in Africa, such as: the fintech landscape and the future of the blockchain; the new possibilities for efficient and small-scale credit promised by mobile financial services; the ways in which tech can promote good outcomes and greater inclusion; and, lastly, the summit alighted on the seldomly heard perspective of investors and venture capital, uncovering the strategies they adopt to support growing African businesses.
Blockchain and Crypto
Cryptocurrencies are often misunderstood as synonymous with the blockchain, but they aren’t. The distinction is an important one. At present, only a small percentage of all cryptocurrency transactions are used for settling payments, the vast majority are vehicles for investment and speculation. While there is great potential for cryptocurrencies as a new type of reserve currency (see Facebook’s proposed Libra) or for conducting micro-transactions, there was a general feeling that the really interesting future of the blockchain lay in the use of non-fungible tokens. Here the blockchain is deployed to retrieve and authenticate unique information. Widely known examples include the transferring of property and land, but the technology itself can also be extended to safeguard an individual’s personal data (a very prescient issue) and to retrieve a patient’s medical history. Major players who have so far stood on the side-lines, such as Microsoft, are beginning to think about how the token taxonomy can be standardised.
Mobile Financial Services
Many new companies have entered the financial services market to complement and compete with traditional banking, offering lower level loans, quicker decisions (only a day, in some cases), and few requirements for collateral. Increasingly, they’re able to replace the functions of traditional banking by making a better offer to the African consumer: the freedom to withdraw your money, or view your account, without an additional charge. However, since many entrants pursue a data-driven business model alongside an attempt to monetize this data, there is likely to be increasing customer concern about how this data is used. Is consent given and is it truly informed? The future challenge for businesses will be to meet this problem in a way which shows proper respect to the African and regional experience (a sentiment repeated throughout the summit), and to offer a solution in line with customer expectations.
Investment and Scaling
Many entrepreneurs prematurely pursue venture capital before they’ve properly established their value-offer. This tendency to jump the gun goes hand in hand with trying to do too many things at once, without taking the time to do one thing really well. This was a point of agreement amongst most investors.
The African market contains a high proportion of SMEs. This presents an opportunity for scaling and consolidation. However, one of the major impediments to scaling is not the lack of capital investment, but a gap in expertise. African investment firms bridge this gap by advising their entrepreneurs on strategy and governmental relationships. Founders Factory Africa, on the other hand, helps entrepreneurs build and scale their businesses, transforming their ideas into functioning companies. Unfortunately, the issue of scaling is not likely to be resolved any time soon.
Lessons for the African legal and technology community
Tech is not a magic wand; it is a tool to solve a problem better than other means. A successful business must know the problem faced by its target customer before it develops the tech to solve the problem. This means that great tech shouldn’t necessarily look like AI, nor should a company simply attempt to copy and paste its business model from Europe to Africa, or from Nigeria to Uganda. A co-sponsor of the summit, the ride-hailing company Yegomoto, provides an instructive example by developing a service that takes the best bits of new taxi technology and combines it with a business structure and an offer far more suited to the Rwandan marketplace.
Tech must be sector specific.
The blockchain is making great strides in bringing trust, transparency, and efficiency to the market. Property rights can be swiftly validated. Supply chains can be made transparent – see, how Everledger traces the provenance of diamonds down the supply chain. But the technology alone cannot meet the needs of every sector. Many attendees felt the health sector still requires the personal touch of a trusted professional. This may be a lesson (and a relief!) applicable to the use of technology in the legal marketplace.
Regulation is lagging behind the tech.
The delay in regulating new technologies should be seen in a positive light because it allows time for use cases to be proven and for industry pressure to be mobilised. That being said, there remains the possibility of over 54 different regulatory regimes emerging across the continent, and as yet there are few signs of harmonization. This presents an opportunity for industry to lead the way. The African Digital Asset Framework Platform (ADAF) has taken the lead in formulating industry standards for the digital economy. There is room for others to follow.
Context is everything.
A refrain, echoed by almost every speaker, was the need to avoid the ‘danger of the single story’ – a lesson not just valuable for politics and international development, but also a reminder that real innovation demands reflecting, again and again, on what we are doing and why we are doing it. Technology driven companies are too often involved in vertical markets which fail to adapt to their locality. Business models must adapt if they are shifted from Europe to Africa, from large African economies to smaller economies, from the North of the continent to the South, or from the anglophone regions to the francophone. In sum: for tech to be successful it must be grounded in reality.