Digital Entrepreneurship in Africa Digital Entrepreneurship in Africa How a Continent Is Escaping Silicon Valley’s Long Shadow Nicolas Friederici, Michel Wahome, and Mark Graham The MIT Press Cambridge, Massachusetts London, England © 2020 Massachusetts Institute of Technology This work is subject to a Creative Commons CC- BY- NC- ND license. Subject to such license, all rights are reserved. The open access edition of this book was made possible by generous funding from Knowledge Unlatched and Arcadia—a charitable fund of Lisbet Rausing and Peter Baldwin. This book was set in ITC Stone Serif Std and ITC Stone Sans Std by Toppan Best-set Premedia Limited. Library of Congress Cataloging- in- Publication Data Names: Friederici, Nicolas, 1985- author. | Wahome, Michel, author. | Graham, Mark, 1980- author. Title: Digital entrepreneurship in Africa : how a continent is escaping Silicon Valley’s long shadow / Nicolas Friederici, Michel Wahome, and Mark Graham. Description: Cambridge : The MIT Press, 2020. | Includes bibliographical references and index. Identifiers: LCCN 2019034676 | ISBN 9780262538183 (paperback) Subjects: LCSH: Electronic commerce- - Africa, Sub- Saharan. | Entrepreneurship- - Information technology- - Africa, Sub- Saharan. | Information technology- - Economic aspects- - Africa, Sub- Saharan. Classification: LCC HF5548.325.A357 F75 2020 | DDC 381.14206567-- dc23 LC record available at https://lccn.loc.gov/2019034676 10 9 8 7 6 5 4 3 2 1 Contents Acknowledgments ix 1 Hopes and Potentials 1 Africa in the Global Economy 3 New Connectivities, New Beginnings 4 Is African Digital Entrepreneurship on the Rise? 6 Digital Technology and Entrepreneurship: How Two Gospels Have Become One 9 What Does Digital Entrepreneurship Theory Suggest? 13 The Why and How of This Book: A Grounded Empirical Inquiry 23 Analytical Framework 27 Book Outline 30 2 Taking Stock 33 How Can We Take Stock of Digital Entrepreneurship in Africa? 34 Comparing Digital Production in Africa versus High-Income Countries 37 Africa Is Not a Country: Continent-Wide Variation of Activity 42 African Digital Markets and Infrastructures 46 What African Digital Enterprises Do 62 Summary: An Uneven and Uncertain Landscape 74 3 Bounded Opportunities 77 Close to Home: How Most African Enterprises Become Specialists for Localization 78 Global Competition, at Home and Abroad 85 Pan-African Expansion: Resources and Relationships 89 Summary: The Lure of Scalability 95 vi Contents 4 Viable Strategies 97 Scaling Based on Customer and Partner Relationships 98 Local Information Platforms: Digitizing, Curating, and Mediating Local Content 102 Distant Markets, Local Assets: Labor, Market, and Culture Brokers 105 Last-Mile Platforms: Asset-Heavy User Base Scaling with a Digital Backend 107 Summary: Location-Based Strategies and Hyperlocalization 113 5 Uneven Ecosystems 117 Entrepreneurial Ecosystems: Concepts and Theory 118 Unevenness of African Ecosystems: Discerning Three Tiers 120 Bottleneck #1: Markets and Infrastructures 124 Bottleneck #2: Entrepreneurial Knowledge, Mentorship, and Experience 127 Bottleneck #3: Digital Venture Labor and Talent 131 Bottleneck #4: Innovation Hubs and Other Support Organizations 137 Bottleneck #5: Inadequate and Exclusive Funding 145 Summary: Bottlenecks and Vicious Cycles Thwart Ecosystem Evolution 152 6 Transitioning Identities 155 Digital: Technological Aspirations 156 Entrepreneurs: Agents of Change 163 Summary: An African Avant-Garde? 178 7 Silicon Tensions 179 Silicon Somethings and the Digital Developmentalist Aspiration 180 Down to Earth: Local Markets, Local Models 190 Racial Bias 194 Reluctant Responses 198 Summary: The Future Mirrors the Past 206 8 Ways Forward 209 Chapter Summaries and Testing of Analytical Framework 211 Digital Expectations 216 Global Ambitions 217 Down a Notch: Contextualizing the United States’ and China’s Digital Success 218 Local Realities 221 Uneven Development 222 A Long-Term, International Game 225 Implications for Policy and Practice 227 Future Directions 231 Contents vii Appendix A: Methodology 233 Research Questions 234 Selection of City Cases 234 Interviews 237 Field Notes 240 Participant Observation and Desk Research 241 Analysis 241 Validity and Reliability 244 Ethical Considerations 245 Appendix B: Case Study Notes and Market Data 247 Abidjan, Ivory Coast 247 Accra, Ghana 249 Addis Ababa, Ethiopia 252 Dakar, Senegal 254 Johannesburg, South Africa 256 Kampala, Uganda 258 Kigali, Rwanda 260 Lagos, Nigeria 262 Maputo, Mozambique 264 Nairobi, Kenya 266 Yaoundé, Cameroon 268 Notes 271 References 275 Index 311 Acknowledgments This book emerged from a five-year European Research Council (ERC) funded project called Geonet. The project (ERC-2013-StG335716-GeoNet) gave us the opportunity to fund both the salaries of the authors (Nicolas and Michel as full-time Postdoctoral Researchers on the project, and Mark as the Principal Investigator) and the extensive fieldwork that was required to undertake a research project of this size. Needless to say that our research in this area—and by extension, this book—would not have existed without the support of the ERC. The Geonet project incorporated three core research areas, of which the work in the book represents one. Each area of the project has been shaped by the innovative research and hard work of our colleagues in the rest of the team. Therefore, we wish to thank our Geonet collaborators: Mohammed Amir Anwar, Fabian Braesemann, Chris Foster, Sanna Ojanperä, Stefano De Sabbata, and Ralph Straumann. We are especially thankful to Sanna and Fabian for providing data-scientific inputs to this book. This book is an exercise in empirical grounding and, as such, it could not be written without the participation of the people “on the ground”: Africa’s digital entrepreneurs and their supporters. We conducted 202 in-depth research interviews including with 143 digital entrepreneurs, plus countless informal conversations with people we met during field visits. Many of these individuals are pioneers and leaders in their local communities, making them sought-after candidates for studies and media pieces. We found it fascinating and inspiring to be invited into their professional lives, and we are grateful for their hospitality and the time they dedicated to participate in our research. We especially want to thank the founders of AgroCenta for allowing us to profile their companies as a case study. x Acknowledgments Our fieldwork spanned eleven African cities. To make such ambitious data collection effective, we relied on help from friends and colleagues who live in those cities or have experience working in them. They introduced us to participants, showed us around the most important spots of entrepreneurial ecosystems, and sometimes even helped us with travel essentials like visas and accommodation. We want to extend our thanks to Claude Migisha for Rwanda; Tessy Onaji, Abi Jagun, Tunde Akinnuwa, David Souter, and Tim Kelly for Nigeria; Gerawork Aynekulu, Enku Wendwosen, Seyram Avle, and Markos Lemma for Ethiopia; Bitange Ndemo, Tim Weiss, and Moses Kemibaro for Nairobi; Maxine Moffet and Arielle Kitio for Yaoundé; Parfait Ouattara for Abidjan; and Linda Swart for Johannesburg. We also thank all representatives of local organizations who reviewed and approved the research ethics of our project: Olufunbi Falayi, Akintunde Oyebode, Kayode Adegbola in Nigeria; Dr. Ernest Mwebaze and Dr. Grace Kamulegeya in Uganda; Adama Camara and Baidy Sy in Senegal; Thomas Herve Mboa Nkoudou and Horace Fonkwe in Cameroon; Jean-Jacques Bogui Maomra and Obin Guiako in Côte d’Ivoire; and Francisco Mabila and Ruben Manhica in Mozambique. We presented the findings discussed in this book in talks and workshops with Humboldt University in June 2017; with the DIODE group in Oxford in October 2017; with the GIZ Make IT Alliance in Berlin in May 2018; and with audiences at Freie University Berlin, Humboldt Institute for Internet and Society, the World Bank, Michigan State University, Weizenbaum Institute, and University of Bayreuth audiences throughout 2019. We thank all participants for their feedback and encouragement. We also want to acknowledge the Higher Education Impact Fund at Oxford which was the source funding for the Geonet conference in South Africa, where a large majority of presenters and panelists were the digital workers and digital entrepreneurs who had informed the research. This was an invaluable opportunity to share and validate analyses, and to engage in constructive debate and discussion with participants. Emily Taber and Laura Keeler of the MIT Press have been a wonderful source of support, seeing the value of our book from day one and guiding us through the editorial process. We very much appreciated Kathy Caruso’s diligent and constructive editing, which made for a seamless journey from manuscript to final product. We also thank Melinda Rankin for copyediting Acknowledgments xi our text and greatly improving its legibility. Several anonymous reviewers of sample chapters and the first full draft provided valuable guidance on how we could more effectively communicate our findings. We want to especially thank one reviewer who clearly dedicated a great deal of their time to a comprehensive review, making valid suggestions on how to restructure the manuscript. Their ideas contributed to the ultimate message of chapter 7 in particular. The project found a supportive home at the Oxford Internet Institute, and we wish to thank Duncan Passey, Tim Davies, Emily Shipway, Adham Tamer,