The Opportunities the Smart Money is Scoping - Ethiopia: Africa’s Upcoming Tech Hub
Like the bud of a spring flower, waiting to burst, a watershed moment is fast approaching in Ethiopia’s digital scene — otherwise known as the ‘Sheba Valley’. Investors from China are paying close attention to the burgeoning opportunities within this East Africa nation. The Ethiopian government, and quickly multiplying tech start-ups held within the country’s capital, Addis Abada, have set their sights on rivalling Kenya, Nigeria, South Africa and Ghana, in transforming Ethiopia into a front-of-the-crowd tech hub on the global stage. There are certainly hurdles to overcome, but the promise is thrilling to witness.
2018 saw the arrival of Abiy Ahmed, the freshly elected, forward thinking, and tech-savvy prime minister. Abiy began his term with sweeping changes to business, education, finance, and telecoms, and a commitment to enabling innovation and digital access. He, and his appointed Minister of Innovation and Technology, Getahun Mekuria, have rolled out their ‘2222 strategy’, which aims to harness the power of start-ups to address the country’s unemployment gap, with targets of creating 20,000 tech jobs, spawning 2,000 start-ups, and generating 2% of GDP from these growing industries over the next two years.
A Dramatic ShiftThis reflects a dramatic shift within the nation, where the number of individuals with access to the internet has moved from only 1% in 2011, to more than 15% today — mostly in urban centres. Despite these challenges, more than 100 start-ups have sprung from Addis Ababa’s innovative scene. An explanation for this can be traced to Ethiopia’s education system.
As Africa’s second most populous country, with a population of close to 110 million, but an average age of only 18 years, Ethiopia’s youth is loaded with potential and clawing for opportunity. The government’s STEM focused education policies (science, technology, engineering and mathematics) saw the implementation of a 70:30 higher education policy, with 70% of students investing their efforts in technology and science focused subjects. This, in combination with a five-fold increase in overall enrollment in higher education since 2005 has resulted in a driven, entrepreneurial, and youthful workforce appearing on the scene.
Emerging Hubs, Incubators And Start-UpsJune 2019 saw the first annual Startup Ethiopia, a start-up event coordinated by Mekuria’s Ministry of Innovation and Technology, and the country’s expanding community of innovation hubs. Ethiopian’s In Tech, or EiT, were on the scene to showcase their skill-set in offering an entrepreneur support system with Silicon Valley roots, and meet with ambitious local start-ups.
Artificial Intelligence and robotics researchers at Ethiopian iCog Labs gained notoriety for helping to develop Sophia, a humanoid robot that was granted Saudi citizenship in 2017. IceAddis, founded in 2011 in Addis Abada, and claiming the prestigious title of Ethiopia’s first tech hub, are on a mission to develop the country’s IT ecosystem. Other notable spring-boards in the capital include Gebeya, a marketplace offering services that enable individuals and start-ups to cultivate new skills and grow their digital businesses. Across town, the Ethiopian agri-tech incubator BlueMoon, founded by Eleni Gabre-Madhin, are busy giving GroHydro a leg-up, among many other start-ups. GroHydro, the brain child of 29 year old Selam Wondim, manufactures hydroponic farming systems and is ready to revolutionise Ethiopia’s food production systems. The number of female entrepreneurs at the helm of start-ups and incubators is notable, and exciting to behold.
Other start-ups making a splash include ZayRide, and Ride, offering a similar service to Uber in a nation that hasn’t yet seen the arrival of the international ride-sharing giant. Deamat are striving to connect small-scale farmers with their customers through app based purchasing and delivery systems, and YenaPay are introducing digital payment systems in a country that has, until recently been dominated by cash transactions.
Investments From China And The Ethiopian DiasporaAt Startup Ethiopia, there was much talk of leveraging the prosperous Ethiopian Diaspora, who are eyeing the growing tech sector with interest, in light of government reforms and the bursting potential within Addis Abada, and beyond. The government also announced it’s collaboration with China, with Mekuria journeying to Hangzhou to discuss collaboration with e-commerce giant Alibaba. Chinese investors see great potential in Ethiopia, not only in it’s emerging digital industries, but also in medical industries, and it’s competitive manufacturing scene, with Chinese brand TECNO — Africa’s largest mobile phone supplier — establishing one of it’s three major production plants within Ethiopia.
The Potential For LeapfroggingAs Ethiopia storms forwards in terms of technological developments, the opportunity to leapfrog over the notable milestones of other country’s is undeniable. With one of the lowest GDPs per capita in the world, despite continuing growth, and citizens’ lifestyles still dominated by subsistence farming, young and skilled Ethiopians are embracing technology as a means to transform their day-to-day experience. Many start-ups are geared towards re-invent practical elements of daily life through culturally relevant, but cutting edge systems such as Flowius, eliminating the need for people to walk for water by using geo-location, solar power and micro-finance solutions to build water pipelines; or Equb, allowing communities to continue the tradition of making shared investments, but in a fresh digital format.
Mekuria’s goal to bring GDP from technological industries to 2% within two years seems modest when set against the global average of 65%, but this initial blossoming marks the beginning of an exciting Ethiopian rise, should the nation overcome it’s historic limitations. The main barrier remaining is the inconsistent access to high-speed internet that impedes start-ups in their ability to compete in the global marketplace. The government has expressed a desire to enable this industry, but periodic shut-downs of the nation’s internet access continues to be the norm. Alongside reducing data tariffs and opening the nation up to foreign investors, the government announced it’s intention to begin privatisation of the currently state-owned telecoms sector. Improvements are also needed in business registration procedures and legal frameworks for raising capital. Tech entrepreneurs and investors, both inside and outside the country, wait with baited breath to see if Abiy can deliver on his ambitions. If he can, the full display of Ethiopia’s tech potential is sure to quickly be in bloom.
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