1 July 2017

Ethiopia: Opportunities for Digital Entrepreneurship

Following the invention of M-Pesa in Kenya - the mobile money transfer technology - Africa has seen a relentless rise of innovative tech solutions.

African software engineers and developers continue to demonstrate technical and professional advancement by converting societal needs into revolutionary concepts that are transforming Africa and the world.

The invention of the E-voucher, an electronic voucher, enables Zimbabwean cash-strapped small-scale farmers to access agricultural inputs.

Mi-Sika, an international money remittance platform used by the Ghanaian diaspora in the United States and the European Union, has helped them send money back home. These inventions are among the many solutions that have propelled Africa onto the map as a hub for innovation.

Despite the milestones achieved, Africa still records low Gross Domestic Product (GDP) compared to the rest of the world. This is mainly attributed to the high digital skills gap and poor infrastructure on the continent.

Currently, only one percent of African children leave school with basic coding skills. Africa's population has been increasing at an average rate of 2.5pc in the last five years. It is projected that the continent will have the largest labour force by 2040 or even sooner.

This, therefore, leads to a shortage of digital skills that are a key ingredient in the growth of this digital economy. Consequently, local companies are increasingly looking for the right digital skills to enable them to adapt and respond to the constant changes in technology trends.

Unfortunately, the low information technology (IT) literacy levels have made it difficult for companies to find local, qualified talent to fill these positions resulting in a stagnated growth or increased expenses due to outsourcing talent from developed countries.

Developed markets such as China, Europe and the United States record high GDP compared to emerging markets, with an estimated growth rate of 5pc to 10pc per annum, outpacing traditional industry sectors such as energy and finance within their economies and other global markets.

Behind this immense growth is an advanced infrastructure fully backed by government support and a skilled IT labour force. China in recent years boosted its budget for technological innovation by allocating billions of dollars of incentives for start-ups and research firms to nurture IT talent and innovation.

It is for this same reason that the world has seen a series of progressive tech products, automated systems and revolutionary solutions, i.e. robotics and augmented reality, emerging from developed markets. Their effort in developing digital talent and nurturing ideas has created winning ideas and disruptive business models such as Uber and Airbnb, putting them ahead of the pack.

All hope is not lost for Africa, at least not yet. According to GSMA, an organisation that represents the interest of mobile operators worldwide, more than 314 tech hubs in Africa are spread across 93 cities in 42 countries.

The hubs are centralised in five major African countries - Egypt, South Africa, Kenya, Nigeria and Morocco - and it is not a surprise that these regions are the lions of innovation and technological advancement in Africa.

Ethiopia, with its huge population and growing economy, has the opportunity to grow in IT innovation and entrepreneurship. For the concept has proved to work and now more than ever, it only asks the public and private sectors to join forces to provide a supportive environment for software engineers and developers to thrive and create solutions that positively impact society and the economy at large.

Especially, the private players are key in this process. It is believed that with more efforts and investment on the youth, Ethiopia can produce a robust client-facing IT workforce and build a strong IT ecosystem in Africa. In fact, the interest for the private sector in the area is also growing in the country.

However, the concept of entrepreneurship in IT particularly is relatively new to the country. Of course, there are many attempts happening but are yet to be seen of a vibrant start-up ecosystem in places such as Nairobi, Accra or Lagos.

The target of universities and IT training centres should be to create a new generation of high-quality impact entrepreneurs, capable of going beyond "survival entrepreneurship" while creating jobs in the formal economy for others. And the IT sector in Ethiopia is hanging fruit waiting for anyone interested.

Digital literacy ought to be improved from an earlier stage in the educational system to build a robust workforce fit for the digital economy and transform the country into a technology powerhouse.

For the innovators and technopreneurs, easy access to funding and professional support should be readily accessible to increase the success rate of African tech start-ups.

Ethiopia

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