A breakthrough in Africa: Prospects of innovation and startups

In 2018, UNDP initiated the “AFRI CONVERSE” dialogue series leading up to the 7^th summit of the Tokyo International Conference on African Development (TICAD) held in August 2019. Co-organized by the Government of Japan, UNDP, the African Union Commission, the World Bank, and the United Nations Office of the Special Advisor for Africa, TICAD has for over a quarter of century contributed to mainstreaming human security and human-centered approaches to development. Following up on the agenda of TICAD 7 and preparing for TICAD 8 in 2022, UNDP resumed its AFRI CONVERSE series with the Japan International Cooperation Agency (JICA).

The first session in 2020, held virtually, discussed about current status and future prospects of start-ups and their innovative business models as well as rising opportunities for partnerships with Japanese corporations, looking into the impact of COVID-19.

Panelists included speakers from public and private sectors and 270 participants across multiple sectors from Africa and Japan. The discussion followed one of the main pillars of the Yokohama Declaration endorsed at TICAD 7, “Accelerating economic transformation and improving business environment through innovation and private sector engagement”.

In his opening address, Ryuichi Kato, Director General of JICA Africa Department, expressed his strong hope that the series of AFRI CONVERSE would continue to contribute to deepening understanding on development in Africa and to build a momentum for TICAD 8 among multi-sectoral stakeholders. To respond to the pandemic of COVID-19, he stressed that JICA would lead various initiatives with different partners with materializing the concept of human security. He concluded his remarks by emphasizing that recovery from COVID-19 would require innovative ideas and by expecting that discussions during the session would suggest promising examples and way-forward.

Akihiko Kodama from the Economic Development Department of JICA introduced a new initiative called NINJA（Next Innovation with Japan）which aims to enhance start-up ecosystems in Africa by providing one-stop-services for business incubation, acceleration and matchmaking. Under this new initiative, a regional COVID-19 innovation business competition is to be implemented in 19 countries in Africa. Mr. Kodama detailed JICA’s emerging areas of support to start-ups, beyond the traditional aid to the creation of job opportunities, of solutions for social challenges, and of radical evolution through local innovation. He further articulated the need for support by development organizations to start-ups at early/seed stages to multiply investment opportunities for them. As Japan’s bilateral aid organization, JICA will provide added value services by connecting start-ups with opportunities for investment and technical cooperation with the Japanese private sector.

James Kuria, Head of Middle East & Africa Business Development, Global Strategy Office of the Deloitte Tohmatsu Consulting LLC, pointed out to the growing business areas for start-ups resulting from the COVID-19 pandemic in Africa, such as Digital Payment (various actors have started to offer services in addition to traditional large telecommunication companies), Digital Platforms (communication, e-commerce, healthcare, and education), and logistic and mobility (share ride and last mile delivery). He stressed that access to internet needed to be enhanced as a prerequisite to business growth in these areas. Currently, a stable internet connection with access to 4G network is available only in large capital cities in Africa, while poor connection hinders opportunities in the suburbs. Investing in internet infrastructure is a critical issue. Mr. Kuria expressed hope for the emergence of new start-ups in the suburbs as the lock-down due to the pandemic forced people to work from home, minimizing the need for new business ideas to be incubated in hubs located in large cities.

Shigeru Handa, Director of the Asia Africa Investment and Consulting Pte Ltd (AAIC), explained that the start-up ecosystem in Africa had been rapidly evolving with overseas companies - including from Japan and China - gaining ground, also referring to the growing portfolio of the company’s Africa Health Fund. The fund invests in sectors such as health care, health technology, medical services and public health. One of their portfolio companies, Flare (Uber-like Ambulance system) has contributed to achieve 100% safe delivery and survival rate of mothers and babies by providing a means of transport with a total of 370 pregnant women during lockdown. He pointed out that it is a challenging time for start-ups to mobilize resources due to a huge investment downturn with the impact of COVID-19 leading to a sharp decline in investment deals and amounts in the second quarter of 2020. On existing investment portfolios, he explained that efforts have been made to create synergies among companies. While start-ups in areas such as fintech and health tech are growing with the pandemic, the start-ups operating in-person health check-up services have experienced a downturn. AAIC supported these start-ups to make the business more resilient and get to break-even point, through consultations at an early stage before the virus spread, review of their business plan to minimize expenditures focusing on cash flow, and dialogues with employees.

Caroline Kiarie Kimondo, UNDP Kenya Accelerator Lab's Head of Exploration, talked about the dynamic ecosystem of the country, supported by extensive mobile penetration, mobile money infrastructure, high rate of internet subscription, high literacy rate, government support and private sector investment. On the Great COVID-19 Challenge recently co-organized by UNDP Kenya Office and KONZA Techno Police (a government-funded incubation hub), she clarified that finalists were selected with promising business models such as production of medical equipment by 3D printer, telehealth platform, infrared surveillance system, digital crop diagnosis, and remote business management systems, out of over 300 applications across the country. She demonstrated local insights referring to the growing trends of start-ups in areas such as online platforms, contract work, gig economy, virtual HR, appliances for social distance, contactless payment system, and customer data analysis. She further stressed the need for external support such as finance, mentorship, networking, and legal aid and articulated that UNDP had been providing start-ups with mentorship, support for networking with the other UN agencies and government agencies, and support for collaboration with private corporations, as well as policy recommendations towards the government.

On the prospects of start-up investment in Africa, Shigeru Handa of AAIC expressed his view that polarization would accelerate and that lack of financial resources would necessitate public support by governments and donors. He foresaw that, with the emerging trends of digitalization, business models focusing on individuals would prevail. Regarding the partnership between African start-ups and Japanese corporations, James Kuria articulated the need for Japanese corporations to clarify their standpoint of engagement (supporting growth of start-ups or contracting with them as business partners), and their vision on how they could contribute to societies and people on the ground by becoming a part of the society in Africa.

AFRI CONVERSE will continue to be held bi-monthly and to build momentum for TICAD 8 by mobilizing wide-ranging stakeholders from Africa and Japan.

Article Source: Here