Do innovation hubs always need fast broadband?

We are witnesses the surge of tech startup ecosystems in cities globally.  This is happening in both developed and developing countries.  In my previous blog post I showed this trend and the studies that confirm it. Among the questions we are looking for in our research to map urban innovation ecosystems is whether there is a minimum set of requirements for these ecosystems to emerge.  A minimum set of infrastructure or skills of the population, for instance.  What we are encountering is that, although you need a minimum level of infrastructure, e.g., there must be at least some broadband connectivity and mobile phone networks, this level is much lower than many people expect.  A city does not need to have 4G mobile broadband or fiber optic fixed broadband widespread.  It is enough to have broadband connection in some key points (particularly hubs and collaboration spaces) and basic mobile phone coverage and use, e.g., 2G mobile phone service.  A similar conclusion is applicable to the skill level of the population.   The results of the study of New York tech ecosystem shows that almost half of the employment created by the ecosystem do not require bachelor’s degree.  In this blog post I present the case of Nairobi and the tech start up ecosystems emerging in Africa and how these ecosystems can not only surge, but compete internationally despite having limited broadband connectivity (both mobile and fixed).  This is also part of the paper I am working out and the research we are doing on urban innovation ecosystems.

Map of Accelerators and Collaboration Spaces in Nairobi. Source: Manske, Julia. 2014.Innovations Out of Africa. The Emergence, Challenges and Potential of the Kenyan Tech Ecosystem.

The development of technology innovation ecosystems in Africa despite limited infrastructure

Technology start-up communities have surged in many countries in Africa. South Africa, Ghana, Nigeria, Kenya, and Tanzania are some of the countries where technology start-ups have been emerging, forming communities of entrepreneurs. This transformation has occurred despite the level of available broadband and connectivity, which differs substantially from that of European countries or the United States, for instance. In many of these African countries, there is no abundance of broadband, quality is low, and Internet access is expensive relative to what developed countries pay. One of the most successful examples of technology innovation ecosystems in Africa is Nairobi, which has grown into one of the largest and most active ecosystems in Africa, with more than 200 active start-ups, 14 accelerators and incubators, 3 collaboration/community management spaces, and several tech-community regional events. Although Nairobi has enjoyed a substantial increase in international capacity through submarine cables, which have provided a base for broadband availability through mobile (99 percent of Internet subscribers access the Internet through mobile devices), 80 percent of mobile subscriptions are second generation (2G) with no Internet access.  This limits possible technology innovations; however, it also presents opportunities to address markets that have been ignored by other entrepreneurs and multinationals because they are based on 2G technologies, using SMS and USSD apps, and address other cases and scenarios than those from developed countries.  These markets today are not only restricted to Africa but also exist in many other countries in South Asia, East Asia, and Latin America. It is not by chance that two of the most innovative platforms used in 2G environments—M-PESA, the world’s largest platform of mobile payments, and Usahidi, which serves to crowdsource data from users to monitor election processes and help disaster recovery—come from Nairobi. This has led to multinational companies, such as Facebook, to set labs in developing countries to emulate the technology conditions of countries like Kenya in order to adapt their products to these markets.

This post first appeared on The World Bank’s Information and Communications for Development Blog

Author: Victor Mulas is an ICT Innovation Specialist at The World Bank

Image: An employee registers a customer for a mobile money transfer, known as M-Pesa, inside the Safaricom mobile phone care centre in the central business district of Kenya’s capital Nairobi July 15, 2013. REUTERS/Thomas Mukoya