Why African Cities Are Striving To Be Tech Hubs

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Written by Tom Jackson

The majority of African cities are striving to be tech hubs. From Cairo to Accra, Lagos to Nairobi, Cape Town to Johannesburg, cities are striving to emulate Silicon Valley as tech hubs.

Nairobi’s iHub launched with government support, and the Enterprise Kenya initiative is designed to assist local startups. In Lagos, the presidency has offered backing to tech startups, and there are a myriad of hubs.

MEST has helped put Ghana on the map, while Johannesburg as a business hub is ideal for a startup community too. In Cape Town, Silicon Cape has been driving the city as a tech hub for the last few years.

With good reason. Enrico Moretti, of the University of California, Berkeley, suggests that five additional jobs are created for every high-tech job. A recent study by Neil Lee and Andrés Rodríguez-Pose at the London School of Economics found metros with greater high-tech employment have less poverty.

On a continent riddled by unemployment and poverty, this is something that appeals to those running African cities.

“All of the startups here are developing new IP, creating jobs, and building the Cape economy as a result,” Tim Harris, CEO of Wesgro, the Western Cape’s tourism, trade and investment promotion agency, said at the recent AHUB conference.

“We have models that are replicating the international sharing economy, but putting a local spin on it. These companies are solving problems in the Cape, around inequality and unemployment. They are creating jobs for young people.”

A city developing itself as a tech hub, whether nationally or regionally, can have a great economic impact in terms of jobs provided and services created for citizens.

“A strong local startup scene will not solve Africa’s problems, but it is good for the city in question. It can create a huge number of jobs and drive a huge amount of growth,” Harris said.

Incubators and accelerators are central to the development of such hubs, which is why cities promoting themselves as such have been quick to develop and support as many as possible. Cape Town has more than most, which is good news, as the GSMA recently found a correlation between startup quality and the number of tech hubs in their country of origin.

Technology is a tool that will help drive innovation across all sectors and even create new ones. Establishing a city as a tech hub allows people to be aware of opportunities and helps reduce the barrier to innovation and adoption,” said Olufunbi Falayi, who runs the Lagos-based Passion Incubator.

With the benefits of establishing a city as a tech hub so clear, however, there is a high level of competition. The same report that found areas that had high-tech jobs had less poverty found, similarly, that those without such jobs had much more.

“What tech is doing is creating a winner takes all dynamic in economies. Companies and cities are sucking up the capital and the skills. The hub argument is important because certain cities on the continent have the ability to do that,” Harris said.

Silicon Savannah

The inspiration for all this, of course, is Silicon Valley, which sprung up around Stanford University. Though Harris warns against becoming too wrapped up in the idea of imitating the Valley, he says there is no reason African cities cannot develop something similar of their own.

“As a city you need skills, either because you have good universities or because you can attract skills. Capital is important. You need a basic financial infrastructure to be able to fund a startup scene. And then the telecom infrastructure is very important,” he said.

“A city needs to worry about those fundamentals. That is a pretty obvious template to emulate what is in Silicon Valley. But you need that national political environment not to deter what happens in your tech hub.”

That is key, with Harris noting that detrimental government policy can “turn off the taps”. Falayi agrees governments are vital to facilitating the development of tech hubs and smart cities by making policies favourable for innovators and providing infrastructure.

“These are only achievable if the government understands the needs of other stakeholders, such as entrepreneurs, small businesses and startups, service providers and telecoms,” he said. “Also, there is a serious skills gap in the Nigerian tech ecosystem that needs to be addressed. Government needs to fix that by revisiting the IT curriculum in education sector.”

For Alexandra Fraser of Silicon Cape, Cape Town is a perfect example of how this can work.

“The investment in infrastructure, fibre and Wi-Fi hotspots; supporting projects like the Open Data Initiative; investing in digital skills programmes; trade missions to attract international tech businesses to Cape Town; and providing funding to promote the tech sector internationally are hugely beneficial to the ecosystem as a whole,” she said.