Why is it Lagos up there and not Nigeria? Because Lagos almost qualifies as a country of its own right now.
Lured by the growth potential of African economies and our increasing interest in technology, many companies are fast expanding their employee base and branches in a market that was earlier viewed as a low-cost. But while most technology companies had earlier chosen South Africa as their African headquarters, many are expanding into fast-growing economies such as Kenya and Nigeria.
This piece was going to be titled “Is Kenya the new ICT hub for Africa”, but I think it will benefit from insight from everyone as to where the hub is.
Five years ago, South Africa was the undisputable ICT hub in Africa, the African headquarters for all foreign companies looking to expand to the continent.
Fast-forward five years. Nairobi, Kenya, has now matured into a globally-recognized hub for technology and innovation. Boosted by government support, interested investors, and low barriers to entry, young tech-savvy Kenyans have led the way for this evolution; taking risks, launching new products for the local market [e.g. M-Farm and iCow], while creating a pan-African presence with brands like Cellulant. This innovative energy that stemmed from “Silicon Savannah”, as Nairobi is known, captured the attention of governments, aid agencies, venture capitalists and Silicon Valley giants. Google executive chairman Eric Schmidt predicted that Nairobi could become the African tech leader. Google and other tech giants such as Cisco Systems, Intel, Nokia and Microsoft, have proven this faith by founding hubs and expanding their business operations in the city. The IBM lab, although Africa-focused, was built in Nairobi and its partnership with the Kenyan government is seen as a clear vote of confidence in the country’s ICT sector.
But is Nairobi ready to take on South Africa, Africa’s most established tech center? Or has the Nairobi tech sector already superseded its South Africa counterpart.
Kenyan techies and ICT companies have earned global praise for their ability to get with the needs of the local market, but Kenyan tech blogger and founder of iHub, Erik Hersman, says the two markets are operating at different strengths.
“Both Kenya and South Africa have their advantages. To date, Kenya has had a better policy and legislative environment for tech startups, specifically around the banking and telecom sectors. What South Africa has is much better infrastructure and a more evolved investor and business side, this means a lot of the tech that comes out of the country tends to be internationally focused (over domestic), and that you’ll also find more B2B there than in Kenya.”
But in Tomi Davies’ and Kirsten Buch’s opinion, attention is suddenly shifting from those two competitors up there to Lagos. Lagos is now the focus of start-up and ICT attention in Africa with the arrival of AngelFairWestAfrica and the soon-to-be-launched 88Mph accelerator unit.
While Kenya may have had the first incubator space outside of South Africa and there is a constant stream of start-ups getting profiled from there, a Nigerian probably wrote the manual on self-promotion. It has been a struggle overcoming the stereotypical reputation that doing business in Nigeria and Lagos got, but dare I say, Nigeria is steadily climbing out of that hole.
Lagos is developing an ICT-themed start-up ecosystem that is drawing international investment and has seen the launching of several incubators [iROKO’s Spark, IDEA, Rocket’s space and CcHub] and with a market big enough to make certain kinds of online plays and an estimated 700,000-1,000,000 broadband consumers in the city, Lagos is in the running.
Kirsten Buch, founder of 88Mph, says of his company “The plan was always to cover Africa and you can’t really say you’ve got African coverage, if you’re not in Nigeria… Kenya has been destroyed by the impact of NGO funding. On the media side, it’s been well exposed and there’s a lot on the surface. Real substance, companies that are successful? There’s not a lot. The Kenyan business community have also become discouraged by that…The bigger, serious investors lean more towards Nigeria. It’s mostly about market size. You can scale something here.”
So there you have it. Different choices, for different reasons, for different people. We’d like to hear your opinion.