Rwanda and Uganda are emerging favourite destinations in Africa for investment in information and communications technology.
However, the leading investor destinations in the ICT sector in sub Saharan Africa -- Kenya, Nigeria and South Africa -- have recorded a decline in investment flows.
According to new data, East Africa attracted $200 million in technology-based investments in 2017, with Kenya accounting for $147 million.
Rwanda and Uganda are starting to get a slice of the investment that has traditionally gone to Kenya, taking in a combined $52.7 million last year out of which $36.7 million went to Rwanda.
A new report by the GSM Association (GSMA), the global lobby for mobile network operators, titled The Mobile Economy in sub-Saharan Africa, shows that Kenya, Nigeria and South Africa accounted for 76 per cent of total funds raised by startups in the region.
"However, the downward trend in the combined share of investments for the three markets, from more than 80 per cent in 2015 and 2016, shows growing investor appetite for other markets, notably Ghana, Rwanda, Senegal and Uganda," the report says.
Last year, 124 tech start-ups across Africa raised $560 million, a 53 per cent increase from the previous year. Of this, sub Saharan Africa accounted for around $515 million in more than 100 deals.
The range of tech start-ups funded and the growing size of deals reflect the accelerating development of the ecosystem, with fintech and solar accounting for 21 per cent each. E-commerce and edtech accounted for 19 per cent and 12 per cent respectively.
"This underscores the increasing innovation and investor interest in solutions that address the region's starkest social challenges, such as limited access to financial services, education and energy for large swathes of the population," the report says.
Last year, Ugandan solar start-up SolarNow secured a $6 million loan to help reach more customers and expand access to pay-as-you-go solar power.
This year has already seen a number of high-profile investments, including a $3.5 million investment in Kenya-based customer feedback platform mSurvey to fund its expansion into Nigeria and South Africa.
mSurvey gathers opinions via SMS conversations with its Voice of the Customer and Consumer Wallet products. The new funding round was led by TLcom Capital, with investment from Social Capital, Kapor Capital and Golden Palm.
Kenya also got $8.6 million Series A funding for mobile solutions start-up Africa's Talking, led by the International Finance Corporation, alongside Orange Digital Ventures and Social Capital.
The Africa's Talking platform provides unified access via its API to more than 20,000 software developers in Africa. The firm operates a cloud-based communication platform that virtualises telco infrastructure across the continent.
Nigeria received $1.1 million in seed funding for its startup Piggybank.ng, which offers online savings plans to low- and middle-income Nigerians for deposits of small amounts on a regular basis.
The financing was led by a $1 million commitment from LeadPath Nigeria, with Village Capital and Ventures Platform contributing $50,000 each.
Apart from the reduction in startup funding, Kenya is also seeing fewer technology hubs being established in the country compared with its traditional competitors South Africa and Nigeria.
In the past two years, Kenya has only seen three new tech hubs established in Nairobi, compared with 32 in Nigeria and eight in South Africa. Uganda has started four new hubs over the same period.
As at June this year, there were 355 active tech hubs across sub-Saharan Africa, up from 239 in 2016.
Nearly half of all the tech hubs in the region are located in four countries -- Ghana, Kenya, Nigeria and South Africa -- data from GSMA Ecosystem Accelerator programme shows.
In March this year, Kenya's iHUB launched the second phase of its six-month scale-up accelerator programme with 27 startups drawn from Kenya, Rwanda, Somalia, Tanzania and Uganda.
Three months ago, Nigeria's CcHub selected four startups to take part in its 2018 incubation programme, providing them with $25,000 in funding, free workspace, mentorship and other support.
CcHub has also partnered with Facebook to launch NG Hub in Lagos, the latter's first flagship community hub space in Africa.
"Tech hubs are a critical part of the tech startup ecosystem. They promote ideas and collaboration locally, and provide startups with business support resources and services to help them scale up," GSMA said in the report.
Technology giants Google, Facebook and Microsoft have also been making investments in the region, scrambling for its multibillion dollar broadband and technology businesses.
In June, Google announced the second phase of its $3 million African accelerator programme that will now be expanded to tap into tech startups from a further 12 African countries as it seeks to spread the $3 million in equity-free support.
"In the second class, we will now be accepting applications from startups in 18 countries across the continent including Egypt, Tunisia, Algeria, Morocco, Zimbabwe, Rwanda, Cameroon, Botswana, Sénégal, Ethiopia, Cote d'Ivoire, Algeria and the existing six - Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda," Folagbade Olatunji-David, the head of startup services, Launchpad Accelerator Africa at Google, said.
Read the original article on East African.
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