Increase in the number of mobile phone users and improvement of Internet infrastructure in Africa has led to greater demands for mobile apps, which means more opportunities for those who hope to startup businesses on the continent. Statistics from Global System for Mobile Communications Association show that Africa had 557 million mobile phone users by the end of 2015, or 46 percent of the continent's population. This makes it the world's second largest mobile service market after Asia. By 2020, this figure is expected to reach 725 million. In light of this booming sector, more and more African entrepreneurs are eager to dive into the technology sector and get their share of the digital pie.
ChinAfrica reporter Ge Lijun met with Yang Jinguang, a teaching fellow at Meltwater Entrepreneurial School of Technology (MEST) in Accra, Ghana, to discuss Africa's potential and challenges in this sector.
ChinAfrica: How does MEST help Africans to start up businesses?
Yang Jinguang: MEST is a non-profit post-graduate training and mentoring program and startup incubator in Accra, Ghana. It provides a free one-year training and mentoring program for students mainly from Ghana, Nigeria, Kenya and South Africa, including return air tickets, free food and accommodation.
Every year, we receive 2,000-3,000 applications from those countries, but the admission rate is quite low. Last year, we only chose 52 students. We mainly train students in technology, business development and communication skills. During the one-year training, students have many practice opportunities and conduct at least three large-scale roadshows. Then, we will choose the teams worthy of investment and provide financial support. Our incubator also provides assistance in office resources and facilities.
So far, we have incubated 26 companies, including the company that develop Flippy Campus, the most popular networking app among university students in Ghana with more than 100,000 subscribers. On average, we invest in two to three teams and nurture them into functioning companies every year. The teachers are from Europe, America, India and China.
For each startup team, the school invests $50,000-100,000, holding a 20-percent share. When the company goes public or is merged, the school takes corresponding ratio of the money, and uses it for further investment. To date, two of the companies incubated here have gone public or were merged, including a real estate listing platform, which was merged with meQasa, an online company that helps people find residential and commercial property to rent or buy in Ghana.
What is the current African context for entrepreneurship in the technology sector?
There are 54 countries and more than 1 billion people on the African continent. The diversity of national situations is therefore large and many challenges remain. But the population is young, with an annual growth rate of 2.5 percent. In recent years, more and more people from African countries are using mobile phones, most of who are from Egypt, Nigeria and South Africa. This trend has become increasingly evident, and there are now over 900 accelerators and incubators specializing in mobile app development in Africa.
In West Africa, from a technological point of view, Nigeria and Ghana are the strongest players. Universities attach great importance to the teaching of new technologies and there are local organizations that train students in Internet technology. International Internet companies and experts often travel to this part of the continent to help create a positive dynamic. Lately, there has been a trend of young African people creating their own businesses, and many of them have decided to dive into the Internet technology sector. I would also like to highlight the place of women entrepreneurs in this trend, who often have to struggle with many prejudices. I hope we can give them more support.
What specific aspects of Internet technology attract most startups in Africa? And what are the challenges?
I would say, Internet-based financial technology attracts the largest number of new entrepreneurs. They also capitalize the most investment, with $31 million in 2016 for all of Africa. But today, the biggest challenge lies in the strict management of these activities by government bodies, which oversee payment companies, assess their professional qualifications, supervise capital flows, issue permits and so on. Another challenge is the high cost of financial transactions. Indeed, money transfers between banks and private companies remain expensive. All these add costs to financial technology companies in doing business in this sector.
But despite these challenges, the need for Internet-based financial service remains high, particularly when it comes to online financing, as it is still difficult for small and medium-sized enterprises to borrow money from banks.
In what other fields can Internet technology in Africa be applied?
Yes. I am thinking in particular of e-commerce. A good example of this is Jumia, Nigeria's largest e-commerce platform, whose network covers almost all African countries. Its biggest challenge, however, is logistics. In Sub-Saharan Africa, including Nigeria and Ghana, the postal service is not so developed as that in China, and it is sometimes difficult to find a place of residence based solely on an address. In addition, local purchasing power is weak. We hope that the e-commerce sector can take off, and the Belt and Road Initiative may very well accelerate this process by building infrastructure such as roads, telecommunications and Internet facilities. Moreover, in the field of agriculture, which remains the biggest sector in Africa, Internet technology has great potential. A team from our incubator is currently setting up a company to provide local farmers with a tractor-rental platform. Farmers will be able to find and rent available tractors nearby using this app.
A rather unique area where Internet technology is applicable is church service. In fact, a church is a community that brings together human, material and financial resources of a given region. Providing services to these communities is therefore a great opportunity for entrepreneurs. One of the companies in our incubator aims to assist ecclesiastical staff in their fundraising and administrative tasks. Things are going very well for this company, and it has already attracted many investors. Obviously, another area with great potential is advertising. Almost all young Africans have mobile phones with Internet access: placing advertisements in mobile content is a very promising marketing opportunity.
How exactly does China lend its support to African countries in starting up Internet companies?
China is helping build infrastructures such as roads, and telecommunications and Internet facilities in African countries, which will further promote development of Internet technology on the continent. In addition, Chinese companies, such as Huawei and ZTE - two major Chinese telecommunications enterprises with branches in Africa - have begun providing technological support to new local businesses and training young Africans in Internet technology-related jobs.
In addition to the Belt and Road Initiative, which will greatly improve Africa's infrastructure network, more than 50,000 young Africans are currently studying in China and many of them are closely following how our startups work, especially in the area of mobile payment. If they bring back what they have learned to Africa, they will form a pool of top-level human resources in the field.