Technology innovators in Rwanda and the region are not getting the funding they require to develop the needed solutions. This emerged at the Transform Africa 2015 Summit, which was held recently in Kigali.
Although the number of technology-savvy people is increasing, many of their ideas do not see the light of day because the existing financiers are too risk-averse to consider financing technology.
The few smart solutions developed locally in different sectors seem to be gaining traction, especially in health and e-commerce, but most of the solutions that are operational are coming from outside Africa.
“Truthfully, there are few investors putting money into new innovations; so often, tech entrepreneurs don’t have the opportunity of choice,” said Sara Leedom, the chief operating officer of African Entrepreneurs Collective, which works in Rwanda as Inkomoko, at the summit.
Saying technology entrepreneurs just have to find investors who share their vision and should also try different options, she added that “unfortunately banks are not an option, banks don’t understand the business models of new tech innovations, some options are beginning to emerge like crowd funding.
Ms Leedom, who spoke on the sidelines of the summit, added: “Hopefully, as we talk about homegrown solutions we shall also talk about homegrown financing.”
ICT industry captains across Africa set a $300 billion target of investment by 2020 which is envisaged to unlock the sector’s potential in driving economic development.
Rwanda generated over $66,354,840 in revenue from ICT in 2014.
Markets not developed
In an interview, Amrote Abdella, the regional director for Microsoft 4 Africa, said one of the reasons behind the limited financing of technology innovation is that markets in Africa and the region are not developed to a level where they can attract funding.
“Our markets are too nascent to attract venture capitalists; no one is addressing the financing gap, and angel networks are not fully developed,” said Ms Abdella.
“In regard to funding, the technology world is different and should be looked at differently, tech innovations come from failures, yet the funding systems here are too risk-averse to give any room for failure.
“This scares them off, yet it’s where innovations are born.
“If we are to develop tech entrepreneurs we have to understand that failure is okay, there is need for a funding model which accommodates the aspect of failure in innovation, funding failure is one way to unlock the technology potential.”
Most of the operational technologies were developed outside Africa, and most of them do not address the local problems, highlighting a need for local technology entrepreneurs to be supported and developed.
“Mobile payment started in Africa,” said Tongai Maramba, the CEO of Tigo Rwanda. “The Western banks have started using mobile payment platforms for their customers; this should show us that we have the brains to innovate, so let us support these talents.”
During the summit, it was noted that there have been investors who look for innovative ideas to fund but do not find good ideas to put their money in while there are innovators with ideas who do not get funders.