Zanzibar has tapped Wasoko – East Africa’s most valued tech startup – as an anchor company to position the island as Africa’s next destination for tech talent and innovation.
This article was submitted to TechCabal by Conrad Onyango, bird story agency*
Zanzibar is eyeing rising investor interest in Africa’s business-to-business (B2B) e-commerce start-ups to attract funding and tech talent and to build its profile as an island tech hub.
It has picked Wasoko, a B2B e-commerce platform that connects informal retailers to manufacturers of consumer goods previously headquartered in Kenya, as its first anchor company and official “private ambassador”.
The semi-autonomous group of islands off the coast of Tanzania does not feature in global startup ecosystem rankings but the move by its government is seen as deliberate positioning to make “Silicon Zanzibar” Africa’s next destination for talent and innovation. The region’s leadership says it will engage with entrepreneurs to ensure that the environment is conducive to tech startups.
“We are excited to officially partner with Wasoko and other tech companies coming to Zanzibar to co-create policies and initiatives that will transform Zanzibar into a leading tech centre for the African continent,” said Zanzibar Minister of Investment and Economic Development, Mudrick Soraga.
Soraga said the government will streamline the issuance of work visas to skilled tech workers and provide an open and enabling environment for all tech companies to operate in this world-renowned tourism destination.
Tanzania’s largest city and financial hub, Dar es Salaam, features in StartupBlink’s global ranking of 1,000 cities at position 583 after improving its ranks by 141 places over the past year alone. In East Africa, the city is ranked sixth.
The Financial Times named Wasoko Africa’s fastest growing company in May, following a 125 million US dollar fundraising in March – the largest venture fundraising for a non-fintech startup on the continent. The startup is now valued at 652 million US dollars, inching closer to becoming East Africa’s first “unicorn” with a billion-dollar valuation.
The development of Wasoko’s Innovation Hub on Zanzibar Island is expected to drive more funding to the area, a nascent market as investors pile into African startups that leverage digital platforms to make it easier for informal retailers to access goods from distributors and suppliers.
” As a Pan-African tech company, Wasoko has been looking for a location where we can bring together the best talent from across the continent and beyond to innovate and develop new products and services for our customers,” said CEO and Founder at Wasoko, Daniel Yu.
The Economist Intelligence Unit estimates that Africa’s annual retail spend is worth more than US$ 1.4 trillion with that figure expected to rise to US$ 2.5 trillion by 2030. Yet, 90 percent of these sales are driven by informal retail channels like kiosks and street hawkers, according to PriceWaterhouseCoopers.
Just 10 countries were responsible for 94 percent of all online businesses in Africa in 2019, as documented by the International Trade Centre (ITC) in its 2020 report, ‘Mapping e-Marketplaces in Africa’ highlighting a vast, untapped e-commerce potential.
Over the last one year, there has been significant fundraising by B2B e-commerce startups looking to plug this hole and tap opportunities.
Apart from Wasoko, Kenya’s MarketForce and Twiga, along with Nigeria’s TradePort, Alerzo and Omnibiz are among B2B platforms that have driven fundraising into e-commerce startups to more than 400 million US dollars since July 2021. More than three-quarters of this venture capital went to startups in Kenya and Nigeria.
In December 2021, Nigeria’s TradePort, with a presence in South Africa and Ghana, raised US$ 110 million and is looking to expand to other African countries.
MarketForce raised US$ 40 million in Series A funding early in February, to expand services across East and West African markets. Market Force has a presence in Tanzania, Uganda, Rwanda and Nigeria.
Data by Statista shows that global retail e-commerce sales will rise from 4.9 trillion US dollars in 2021 to about 7.4 trillion dollars by 2025. Zanzibar hopes to become the regional centre for nascent tech solutions tapping into this huge opportunity.