Industry opinion
6 min read

Change is a constant and only effective policy can save us

This is a guest blog from Dr. Diana Wangari Gitau, 2020 MBA alumna and former Skoll Scholar.

I have been away from Oxford and more specifically, Said Business School, for over three years. In that period, I can tell you one thing that I know to be true – life changes. As the author Preetham Mohanty puts it, ‘Life changes. You lose love. You lose friends. You lose pieces of yourself that you never imagined would be gone. And then, without you even realising it, these pieces come back. New love enters. Better friends come along. And a stronger wiser you is staring back in the mirror.’

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There have been changes in sub-Saharan Africa’s startup ecosystem, in that period, particularly post COVID 19 pandemic and the narratives would vary depending on the stakeholder. Many startups shut down, while many investment funds struggled to meet their fundraising targets. Others were forced to take write downs on their valuations and make deep cuts to their teams. According to BriterBridges, H1 2023 Africa Investment report, 'Startup funding in Africa experienced a decline. With fintech losing some of its hold on both funding volumes and number of deals, whereas markets like the DRC, Rwanda, Morocco amongst others, are picking up momentum.'

One entrepreneur summarised the three-year Covid period as, 'It was the best and the worst of times.'

Bringing it closer to home, the East Africa region has had its fair share of shake-ups from the news of logistics firm Sendy going into administration and trouble brewing at several other startups, some of which have raised over $50M for expansion into Africa.

All this raises the question: why are we seeing this relative decline, given that African governments are all so eager to encourage any job-creating project and innovation, and African youth are all immersed in the dream of helping to create – within their countries - the next Silicon Valley, or at the very least, the next Bengaluru (previously known as Bangalore) the vibrant heart of India’s ICT sector?

 

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I have a number of opinions on this, which I hope to spool out over a series of articles, but what I consider to be most fundamental is that we in Africa (quite logically) imitated what had succeeded elsewhere but did not fully appreciate the policy and institutional underpinnings of the successes we sought to emulate.

I would compare it to looking at the lush tea plantations of the Central Kenya highlands, and assuming, that if this wonderful carpet of green can bloom here, then surely the hardy coconut tree can also thrive here: forgetting that a lot depends on the underlying soils, as well as rainfall patterns.

In this two-part series, I will attempt to make a case on why governments and policy stakeholders need to pull not push, to catapult the innovation ecosystem in sub-Saharan Africa. 

I know it is quite a pivot, from my previous narrative, that increasing access to capital will catapult the entrepreneurship and innovation ecosystem in Africa. I now think there’s a missing fundamental step - creation of effective policy to build a strong foundation. Believe me, no one was more surprised than myself when I arrived at this conclusion. If it is of any comfort, I speak from a point of acquired knowledge, lived experience and data. As you see, I have become a passionate empiricist.

I will start off with tourism. (Yes, I am full of surprises).

In my quest, I was referred to an article by Dr Ralf Heckner, former Swiss Ambassador to Kenya, where he uses the case study of the establishment of the Kenya Utalii College in the early 1970s, to illustrate the institutional underpinnings which are a prerequisite for the development of a new economic sector.

At independence, Kenya was largely an agricultural nation and the popularly elected Kenyan government was looking at opportunities that would create jobs for the growing educated population. Most of whom would not be content to ‘return to the land’ as small-scale farmers after years spent in a modern classroom. Their definition of economic opportunity was tied to paid employment, rather than rudimentary, back-breaking farming.

One of the opportunities that was evident then, was tourism. It was a ready opportunity as there was some consumer demand (and Kenya was a good ‘product market’ fit as the entrepreneurs will know), guaranteed to create jobs in large scale and would be replicable in most parts of the country, if not the region (in today’s terms ‘a scalable model’).

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The Kenyan government needed a strategic partner – to not only provide capital, but technical support and a network that could unlock growth opportunities (hoping this sounds familiar for those in the startup ecosystem). 

This partner was the Swiss Government who aided Kenya in the setting up of Utalii College which paved the way to development of Kenya’s Tourism Sector. This, subsequently allowed for the private sector to thrive as, beyond skilled manpower, the partnership provided for:

  • the policies which guaranteed sustainability
  • the creation of a completely new institution which provided the training ecosystem for Kenya’s nascent tourism sector.

Both were a prerequisite for this success story. It did not occur by accident nor yet without a careful ‘preparing of the soil’ on which the new sector was to grow.

What Kenya requires from development partners .... is not so much aid, as private sector investment to generate economic growth and create new jobs.

Fast forward to current time, where Dr Ralf Heckner refers to Kenya’s need for private sector investment as follows:

'Kenya is now a middle-income nation. And what Kenya requires from development partners, in my view, is not so much aid, as private sector investment to generate economic growth and create new jobs. Now guess what the Swiss trade mission will see when visiting Kenya? I want them to see the vibrant and innovative side of Kenya’s 21st century economy. That’s what I see in Kenya.' 

In the current era, the age of disruption, where entrepreneurship is ranked as one of the top career paths for graduates, there’s one question that troubles my mind.

How are entrepreneurs to thrive if we do not have substantive policies in place to facilitate the entrepreneurship and innovation ecosystem to transform local economies? The entrepreneurship and innovation conversations should not only focus on founder and investor dynamics but must include governments – both local and national.

When we look at this evolving new sector, we are obliged to ask, ‘Where are the foundational pre-requisites in matters of training, infrastructure, and policy, without which, there can be no sustainability?'

In my next article, I shall explore why we, in the Kenyan innovation and technology ecosystem, have failed to learn from the development of Kenya’s tourism sector.