The state of funding in Africa’s tech landscape [ICT Clinic]

Although the year 2021 is still young, a number of issues that survived last year have crossed over. Some of the hot topics range from the resurgence of COVID-19, the release of globally approved Covid-19 vaccines, the grave poverty in Nigeria, the recent insurrection at the U.S Capitol, the WhatsApp debacle, to the current NIN registration struggle in Nigeria.

While some pessimistically see this year as a gloomy continuation of the previous one, many others are more optimistic, believing that interesting developments are underway. Perhaps, one of the most optimistic industries is the technology industry. Why is this so?

One reason is that startups, founders, and investors alike are upping their game in terms of what they bring to the table including innovations, value, and funding among other things.

A common denominator with this group is their understanding of the importance of funding which raises the question- what is the state of funding across Africa’s tech industry? Let’s take a brief look at the African tech landscape to see how the ecosystem fared funding-wise and investment for startups.

According to Africa’s Investment Report of 2020 published by Briter Bridges, a data-driven research firm, the estimated amount of disclosed funding in Africa was at least $1.075 billion while the value of undisclosed funding was at least $243 million.

Some of the 10 successful verticals that received most of the funding include Solar Energy ($137M); Data & Analytics ($96M); PAYG ($93M); Financial API ($53M); Telemedicine ($43M); Supply Chain Management ($34M); Insurance ($33M); and Digital Banking ($30M).

A survey of the funding landscape shows that there is an uneven segmentation in the industry. What this means is that a limited number of sectors secure funding more than others, thereby representing over 75% of recipients.

Unsurprisingly, Fintech companies maintain more than a fair share of total funding at 31%, followed by Cleantech at 22%, Healthtech at 9%, data and IT Infrastructure at 7%, and Agritech at 7%.

It also reveals the progress experienced by the continent with respect to funding. In 2016, there was an estimated value of at least $331M which climbed to $438M in 2017; and in 2018, it moved up to $669M due to an increase in growth-stage deals, mergers, and acquisitions.

In 2019, the funds raised by African startups skyrocketed to an aggregate of $1,119 billion. However, in 2020, there was a slight drop as the estimated value of funding amounted to $1,075. Perhaps 2020 would have significantly surpassed 2019 if there hadn’t been an outbreak of the Covid-19 pandemic and the first wave of imposed restrictions, lockdown, and curfews. Sadly, we would never know!

In addition, the report divulged pertinent information on how funding has impacted the growth and scale of startups over the years. Across Africa, there is a growing increase in the number of accelerators, incubators, and angel investments directed to support the ecosystem especially founders at their idea stage.

Interestingly, even with the existence of these programmes, funding availability for startups at the seed stage is still, to a large extent, untapped, creating a gap between the idea stage and growth stage. Granted, raising funds is probably the second hardest part of building a startup. Still, an increasing number of African tech founders have successfully crossed this hurdle.

It is important to note that in some African countries, successful startups benefit from few resources provided by their governments, yet African entrepreneurs have long suffered from unfavourable regulatory environments that can make it harder to start, grow, and scale an innovative business.

One thing is clear though, these are interesting times and I am quite positive about the possibilities ahead.

Still on the SIM-NIN Integration Directive

I am worried and I mean extremely worried whenever I see images of what is happening at the various NIMC offices across the country. I got so worried a few days ago that I decided to send a private message to the Director-General of the Nigeria Centre for Disease Control, Chikwe Ihekweazu, asking why no member of the Presidential Task Force on COVID-19 has a ‘public’ opinion about this super-spreader NIN registration centres?

I still shake my head at the government’s fallacious assertion that all Covid-19 protocols are fully observed at various registration centres. It is both foolhardy and dangerous to downplay or outrightly ignore the cataclysmic effects of the second wave of the pandemic which is beginning to ravage a lot of African countries.

As Government insists on going ahead with the policy, it becomes apparent that the government has no care or regard for the health and welfare of citizens or are there hidden agendas we’re not privy to?

In response to the on-going situation, Olorunnimbe Mamora, the Minister of State for Health and a member of the Task Force on Covid-19 has said, “It is displeasing to see crowds gather at the National Identity Management Commission, (NIMC) offices. Nobody feels good. I don’t feel good looking at the picture where people are gathered in multitudes. It’s like super spreader events which we don’t like. We have a duty as government to ensure that people are protected; we also have a duty to ensure people comply within the limit of what is good for the society at large.”

In many climes, the head of such an important ministry may decide to resign, if the policies of his principal go against their personal beliefs which I know hardly ever happens in Nigeria but we are talking about lives of Nigerians here.

Based the statement by the Minister of state, any logical person can see that the directive and its implementation lacks cohesion because, on the one hand, NIMC is compelling millions of anxious Nigerians to expose themselves to a deadlier and more infectious strain of Covid -19, on the other hand, scientists and health practitioners in Nigeria are calling for the suspension of the disease- spreading campaign poorly disguised as a public policy. This is nothing short of confusion is an era of massive technology advancement that makes it possible for data to be gathered in the safest possible way.

The way forward

Recommendations have been made to illustrate that the SIM-NIN integration can be carried out smartly through the use of software applications and other innovative technological tools. To see what some of these are, review my ICT Clinic column of Sunday, December 27, 2020.

I once again call on the Government to postpone this ill-thought-out strategy and instead go for a phased implementation. It certainly can be better than this especially with good use of technology. Government is simply punishing its citizens in the name of NIN registration.

ICT Clinic by CFA is published weekly in the Sunday Punch