Can tech solve Africa’s fundamental problems?
In this edition of Building The Future, founding partner of Future Africa and co-founder of Andela & Flutterwave, Iyinoluwa Aboyeji speaks on how he sees the future of Africa.
And also on the role tech can play in this future.
When Aboyeji shares his thoughts on the future of Africa, he says,
“I’m excited but I’m not just excited, I’m determined.”
The year 2020 started off with high expectations but turned out different.
Despite this, Aboyeji believes this year created incredible opportunities and also brought to the surface some of Africa’s challenges, including non-aligned governments, infrastructure challenges, and the revelation that tech is responsible for Nigeria’s economic growth.
“We’re moving from a globalised economy to a distributed economy. This means that anyone can build anything from anywhere in the world. This requires an Africa that’s structured and thinking differently about the global economy,” he says.
If you’re wondering how Africa has been doing so far this year, Aboyeji has thoughts on that.
He believes that even though Africa’s heavyweights – Nigeria and South Africa – are not aligned in terms of making Africa work, there are a few bright spots in countries like Ghana, Rwanda, and Togo among others. But despite the bright spots Africa must be aligned for the continent to work.
How do we fix these fundamental problems with tech?
There’s a popular narrative that tech can solve everything, the government just needs to move out of the way.
If you’re nodding your head to that, not so fast, there’s also a counter-argument that you can’t tech your way out of bad infrastructure.
In response to these statements, Iyin states that every major civilization that has emerged has been a result of a collaborative plan, but that’d be a hard sell right now in Africa due to the diverse interests of African countries and the effects of globalization.
In terms of fixing infrastructure, Africa’s infrastructure deficit is about $130 – 170 billion per year. New York has a bigger capital expenditure budget than Nigeria and Kenya combined.
So if the focus is on financing this change, that’s a tall order. What we need to be thinking of is how we can leapfrog these challenges.
He cites telecoms as an example.
Telecoms is the most valuable sector in almost every African market, although it didn’t exist 20 years ago.
Abojeyi concludes with an important question; “How can we mine African human capital to contribute to the world in the next 30 years the way China did in the last 40 years?”
What’s the role of a Tech CEO?
For the tech CEO, assuming they amass some influence, what can they do about these challenges in Africa?
He starts by saying that the biggest challenge the African tech ecosystem has is that it doesn’t believe it has a purpose. It still believes it’s just a tool.
To remedy this, tech CEOs have to lean into their power and use the tools they have to advance the common good.
“What does tech exist for? To better the lives of others.”
“Tech CEOs have to believe that it is more than us. It has to be about how we can improve the lives of others. We’ve got to bring in others. We have to see ourselves as enablers.”
“We can’t exist for just money, there’s got to be a mission. We’ve got to productively engage the government. Which other industry is providing as much hope for the continent as Tech? None.”
Aboyeji admits tech can’t and shouldn’t do it all alone, it needs to partner with other sectors.
He says the tech sector has had to grow up fast and there’s a need for engagement where tech companies are seen as collaborators and not just vendors.
On Future Africa
After speaking extensively on the role of tech in building a better future, the conversation shifts to focus on the work happening at Future Africa, the investment fund co-founded by Aboyeji.
Narrating how the journey started, Aboyeji recounts Future Africa starting as a community with an initial purpose to have a conversation. Over time he realised that the conversation people wanted was one around action and that led to what currently exists.
Future Africa’s core offerings are capital, coaching, and community. It’s a platform that connects mission-driven innovators and investors looking to turn Africa’s most difficult challenges into global business opportunities.
In talking about who the investors are, Aboyeji says the earliest adopters were tech people, then over time mid-class (Oil & Gas workers) came into the picture, and more recently High Networth Individuals are looking to invest.
Currently, there are 125 members of the Future Africa collective, out of which 40% are from the diaspora while 60% from Africa.
Future Africa tends to majorly invest in four areas: technology and talents, digital and physical infrastructure, media, and environment.
Future Africa takes a different approach to how it evaluates companies. Unlike other funds, Aboyeji says Future Africa is not a venture fund that says Yes or No. It works with thresholds.
This means companies are evaluated based on four parameters.
The first of them is talent, it looks at who the founders are and their track record, the next parameter is data, data about the market and financial model. Then comes design, and this looks at how the product is designed. The final parameter is distribution, this looks at whether the founders have connections with distribution channels or expertise in marketing.
After assessing the companies by these criteria, companies are funded based on the highest scores until the capital available is exhausted. If a company doesn’t get funded, it doesn’t mean it’s the end of the road. Future Africa still provides coaching and coaching support for these companies.
Future Africa is thinking a lot about remote work and the infrastructure for remote work. It’s looking at project finance and city infrastructure for people who want to leave Lagos. There are already early-stage ongoing projects in Ekiti and Cross River.
Aboyeji believes it’d take a while for people to get comfortable with investing in infrastructure, as it is a known fact that we can’t build bits without understanding atoms.
Speaking a bit more about the problems of infrastructure in Nigeria, he points out that there are three fundamental issues: It is difficult to make, move, and grow things, or people in Nigeria.
When asked what his biggest miss as an investor was, he points out that the investment industry is still early and the only thing he considers is that he should have started Future Africa after Andela.
On the journey ahead
Aboyeji talks optimistically about what Future Africa would do, making a few projections.
“Based on this year’s numbers, we could do 20 deals next year. I don’t think we’ll make money by only giving other companies money; we have to support them,” he says.
“I want to be bigger in scale so 20 deals are not enough in my mind. I want to do 100 a year. We don’t take a hard yes or no on anything. That said, our preference is to invest in businesses that are already live. If you haven’t launched, it’s a much higher bar to scale. “
“I’m looking to get more Nigerian companies on the Nigerian Stock Exchange, especially the growth board.”
Is he bothered that most capital investment in Africa comes from outside Africa?
“I’m not concerned. Money will go where it wants to go, but we need to be creating wealth for our brothers and sisters.”