Four trends accelerating entrepreneurship in Africa

This month, President Obama will make his second trip to Sub-Saharan Africa for the Global Entrepreneurship Summit, highlighting the growing importance of Africa on the international stage and the increased dynamism of business on the continent.

As Steve Case, Co-Founder of AOL and an investor in African entrepreneurs says, “Historically, Africa has been viewed by many as a problem to solve – but now there is a growing recognition it is in fact an opportunity to seize and entrepreneurs leading the way.”

Source: Africa Progress Report 2014

East Africa has seen incredible changes over the past decade with the rise of Silicon Savannah and its tech hubs. Unlike Silicon Valley, with its roots in quantum physics and semiconductors, tech in Sub-Saharan Africa is more citizen-driven— tackling issues as basic as workers in Nairobi waiting at bus stops with paper sacks full of money.

Most discussions of the origins of the African tech movement circle back to Kenya and the mid-to late 2000s. A nation of 40 million people—perhaps more associated with safaris, distance running, or colonial-era romantic novels—has become known for innovations that are transforming commerce. From 2005 through 2010 an exceptional combination of circumstance, coincidence, and visionary individuals created an environment for a nascent tech industry. In their recent book ‘The Next Africa’ Bright and Hruby identified four pillars of Kenya’s success:

1. Mobile money (M-PESA) has leapfrogged traditional banking infrastructure and cultural payment habits and granted access to financial services for millions of unbanked people. Recent estimates show that 17 million Kenyans (70% of the adult population) use M-Pesa and an estimated 25% of Kenya’s gross national product flows through the channel.

2. Crowdsourcing was pioneered in Kenya through a local app called Ushahidi that was developed for real time tracking of post-election violence in 2007. It has subsequently become a model for crowdsourcing problems from earthquake response in Nepal to business process outsourcing models like Cloud Factory..

3. Entrepreneurship is now seen as a viable route to success for young people. This was due in part to the piloting of the tech incubator model through iHub, which has now spread to dozens of African countries. .

4. A government commitment to ICT policy that created the physical infrastructure for innovation, connecting the country to sub-marine fiber optic cables that dramatically reduced the cost of internet access. Several cables came online in 2009 and 2010. These connections and other improvements to Kenya’sICT infrastructure led Internet penetration in the country to jump from less than 10% in 2008 to 49% in 2013.

Many challenges remain, from bringing electricity to rural communities to providing high quality education for young people and a pressing need for mass job creation. But entrepreneurs are bringing their tenacity and innovation to bear on these problems with companies like Brck, a Kenyan company that provides “rugged internet” for network dead zones, and Bridge International Academies, which is bringing low-cost schooling to the poorest communities. The old Africa narrative is being discarded and Africa is ready to bring its innovative solutions to the world.

Publication does not imply endorsement of views by the World Economic Forum.

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Author: Aubrey Hruby is a senior advisor to Fortune 500 companies doing business in Africa and author of the book ‘The Next Africa.’ Reuben Coulter is Associate Director and Fellow of the World Economic Forum.

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. REUTERS/Thomas Mukoya