CAPTURING LEARNING FROM

TECH INNOVATION HUBS ACROSS AFRICA: 2017

This report summarises discussions with staff from seven technology

innovation hubs operating in five countries across Sub-Saharan Africa. It

explores financial sustainability and how the hubs are overcoming key

challenges that they encounter.

The Indigo Trust,

Loren Treisman,

PhD

Contents

Executive Summary ............................................................................................................................. 2

Introduction ........................................................................................................................................ 2

Financial Sustainability ........................................................................................................................ 3

Membership Fees............................................................................................................................ 3

Space Hire ....................................................................................................................................... 4

Training and Events ......................................................................................................................... 4

Talent Hire ....................................................................................................................................... 5

Consultancy ..................................................................................................................................... 5

Research .......................................................................................................................................... 6

Tackling Challenges ............................................................................................................................. 6

Lack of Understanding of the Role Technology Can Play ................................................................ 6

Recruiting and Retaining High Quality Staff .................................................................................... 7

Lack of Skills within a Community ................................................................................................... 7

Members Defaulting on Payments ................................................................................................. 8

Power Outages and Internet Access ............................................................................................... 8

Internet Cuts ................................................................................................................................... 8

Competing with Larger Players ....................................................................................................... 9

Low Adoption of Products .............................................................................................................. 9

Links with Rural Communities ....................................................................................................... 10

Graduating Start-ups ..................................................................................................................... 10

Relocating ..................................................................................................................................... 11

Conclusion ......................................................................................................................................... 11

Call Participants and Contributors .................................................................................................... 12

Executive Summary

Technology innovation hubs have been recognised for their potential to spark innovation, stimulate

economic growth and tackle societal challenges in novel ways. However, much of the hype has been

tempered and many hubs are struggling to become financially sustainable while grappling with

complex challenges in diverse ecosystems.

We asked hub staff in seven hubs across five countries in Sub-Saharan Africa to provide an overview

of how they are addressing some of these challenges and generating revenue.

While most hubs have diverse revenue streams, to a large extent, they still depend on donor

income. This enables them to pursue social goals such as upskilling their communities, supporting

social innovation, running less profitable programmes like coding schools and women in tech

initiatives and offering discounted rates for training and events.

Many hubs are starting to generate income through tiered membership fees, space hire, talent hire,

training, events, research and consultancy. Consultancy also generates income for community

members, which enables them to work on entrepreneurial ventures for longer.

Despite operating in extremely diverse ecosystems, hubs often experience similar challenges. These

include society at large lacking an understanding of how technology can help to address their

challenges, recruiting and retaining good staff, expensive and unreliable electricity and internet,

start-ups struggling to compete with larger players, low adoption of products created by their

members and difficulties in linking with rural communities and understanding their needs.

It's difficult to summarise how all the above challenges can be addressed. However, adopting user

centred design methodologies or similar approaches which consult end users of products at all

stages of development can help to increase the adoption of products, ensure that solutions

developed align with the needs of users and give a competitive edge over larger players.

It’s also necessary to invest in initially unprofitable activities such as building a strong community,

which buys into your mission and values, establishment of strong partnerships and outreach

initiatives to ensure that society at large understands the role that technology can play in addressing

their challenges and to ensure that the communities that hubs support have the necessary skills to

develop successful businesses and social projects and to take on work opportunities made available

to them.

Introduction

The Indigo Trust has been supporting a burgeoning movement of technology innovation hubs in sub-Saharan Africa for six years. To date, we’ve supported 21 spaces across the continent. We believe that hubs are a crucial part of the technology innovation ecosystem in a given country.

These hubs vary dramatically according to their objectives and country context but all help to build, galvanise and upskill tech communities in-country. They run a range of activities including training, events, networking opportunities and mentorship and create a collaborative environment which supports both social innovation and the establishment of commercial start-ups.

We are strong believers in the provision of core funding, as it can enable hubs to respond to real needs and opportunities and to grow more organically, stimulating creativity and innovation. We have created a fund to streamline the process through which technology innovation hubs can access core funding so that their teams can focus on delivering value to the communities which they support. You can learn more about this initiative here.

We also work with a range of partners to provide programmatic support to hubs including Queen’s Young Leaders Programme, run by The Queen Elizabeth Diamond Jubilee Trust in partnership with Comic Relief and The Royal Commonwealth Society, Open Society Initiative for West Africa, the British Council and the Dutch Good Growth Fund.

As we’ve been working with technology innovation hubs across the continent for several years, we’ve gained a wealth of experience about the factors that can help them succeed as well as having learnt through some of their failures.

In 2015, we published a report which explored how technology innovation hubs across sub-Saharan Africa are working towards achieving sustainability, building partnerships with civil society and the private sector, tackling social challenges, measuring impact and building their communities. The report also shared advice for funders in this space. The report and an accompanying article in the Huffington Post can be found here.

This year, we spoke to senior staff from some of the tech innovation hubs that we support across the continent to explore more deeply how they are working towards achieving financial sustainability and addressing some of the key challenges which they face on the ground. This report attempts to summarise those conversations.

Financial Sustainability

One of the biggest challenges that many technology innovation hubs across sub-Saharan Africa face

is generating sufficient income to sustain their operations. Almost all of them tackle this through a

range of income generating streams. However, like us, they recognise that revenue generation

often has to be accompanied by donor income, particularly if hubs are keen to support less

profitable endeavours including upskilling their communities, social innovation, outreach in

schools/universities and women in tech programmes.

Below, we explore some of the ways in which hubs have successfully generated income.

Membership Fees

Most hubs have a tiered membership fee package including options which provide permanent office space, access to shared office space or virtual support.

HapaSpace (Kumasi, Ghana) raised around £13,000 through membership fees in 2016. Members pay

monthly or quarterly. The monthly package costs approximately £30/month and as well as access to

the space it includes reduced rates for printing and photocopying, back-up power and discounts for

hiring event spaces.

They are competing with a nearby internet café which has faster internet. However, they believe

that people are attracted by their low costs, additional offerings and feeling part of a community

where members can leverage skills and network with people.

Hive Colab (Kampala, Uganda) rents an office space for between $200-$300 (approximately £150-

£225) per month and desks for $50-$150 (approximately £38-£115) per month. However, a

proliferation of hubs in Uganda is forcing them reduce their prices to what they believe may be

unsustainable levels.

They are exploring a new type of membership, which is proving popular for start-ups who don’t want

to be based in a hub, yet want access to its facilities. They charge $400 (approximately £300)

annually and members in this tier have access to their board room (monthly), events and their

developers. They’re also able to host events at a subsidised rate.

Space Hire

Many hubs also generate income from hiring out various rooms within their facility including offices, event spaces and board rooms. HapaSpace hires out its rooms for approximately £65 (larger room) and £30 (smaller room). It provides all the facilities clients need including power, chairs, tables, microphones and internet. People can also hire desk space. A team of four would pay around £125 per month, of which around £30 is profit for the hub. Hive Colab has divided their hub (300 square metres) into 7 offices plus a board room and co-

working space, which is also used for events. They made approximately £10,000 last year through

renting out office spaces.

While space hire has been a successful source of revenue for some hubs, others like Sensi Tech Hub

in Sierra Leone are limited in the amount of space they’re able to rent out without jeopardising core

activities.

Training and Events

Some hubs charge for some of the trainings that they provide such as advanced coding skills, usually at discounted rates. Sensi Tech Hub has generated income from lower-tech training (design, photoshop, basic ICT etc) and is trying to provide this support to businesses and NGOs.

In some ecosystems, hubs struggle to get community members to pay for training, such as in Addis Ababa. However, xHub Addis manages to leverage their relationship with the leadership organisation which supports them (Centre for African Leadership Studies) to work with external agencies and provide them with tech training. In other ecosystems, it can be hard to identify trainers. For example, in Sierra Leone, Sensi Tech Hub has clients approach them seeking basic training on things like ICT literacy and Adobe Photoshop but they sometimes struggle to identify appropriate people to deliver such courses. Many hubs host a range of events, some of which are free for community members while others

have a small charge. HapaSpace raised around £6,000 from events in 2016.

Talent Hire

xHub Addis (Addis Ababa, Ethiopia) is running a talent hire programme. They negotiate contracts for

members with private businesses. Their members work in the company for one or two days a week

and spend the rest of their time working on their own projects. xHub Addis does all the legwork,

matchmaking and negotiation. xHub Addis pays the consultant a salary for their role and charges

15% for arranging the consultancy. They believe this approach also lowers the drop-out rate for

entrepreneurs by encouraging them to continue working on their start-ups, as they need income to

do so.

Community members support businesses on activities like building websites, supporting their IT

networks and app development.

Consultancy

Many hubs generate a large portion of their income through consultancy. Iceaddis (Addis Ababa, Ethiopia) has a programme where community members dedicate part of their time to undertaking projects which they have identified. This might be external consultancy projects or projects emerging from within the hub. As well as generating income for Iceaddis, this offers members an alternative way to earn an income. As an example, Iceaddis held a hackathon for a US based NGO interested in creating teaching apps for children. They’ve now produced 12 apps for the NGO. xHub Addis managed to generate over £14,000 from consultancy in 2016. Their members developed

an Enterprise Resource Planning tool for a local company called Qualable which provides a labelling

service to manufacturers. They achieved this at a far lower price than competitors and as a result,

showcased the potential of young technologists to undertake complex projects. Their community is

also supporting a social enterprise called Bemella Coffee and the development of a Health app in

collaboration with St. Paul Millennium Hospital.

ActivSpaces (Buea and Douala, Cameroon) leverage their brand to bring together those with

technical skills to service the public and institutions. They’ve acquired some contracts with

companies in the Netherlands. ActivSpaces receive 20% of the income from a project, with the

remainder going directly to the developers involved.

There are challenges involved in this approach, particularly in less developed ecosystems. For

example, Sensi Tech Hub (Freetown, Sierra Leone) is regularly approached by development

organisations who wish to consult with them on technical projects but often the skill set of their

community members is insufficient to match their needs. They’ve found that in some cases they’ve

had to outsource in order to complete a job effectively. They suggested collaborating with other

hubs in the region where their community members have more advanced developer skills.

Despite these challenges, Sensi Tech Hub has generated some income through consultancy services

like app development, building websites and SMS solutions. A recent example is developing an SMS

platform to help monitor elections on behalf of NGOs.

Research

ActivSpaces is considering opening a research centre in their offices. Government and other

organisations have expressed an interest in understanding the technology and entrepreneurial

ecosystems in Cameroon and at the time of our conversations, they were bidding for this research.

iHub (Nairobi, Kenya) has successfully generated revenue through its research department and Co-

Creation Hub (Lagos, Nigeria) has also generated income through research including the mapping of

innovation clusters.

Tackling Challenges

We asked hub staff to share some of their key challenges and gave staff from other hubs a chance to

suggest potential solutions, based upon their experiences. This section of the report aims to

summarise the key points from these discussions.

Lack of Understanding of the Role Technology Can Play

In many ecosystems, hubs have found that society at large don’t understand the role that

technology can play in addressing their challenges. Many assume that information technology is for

“educated people” and both the private sector and civil society struggle to understand how

technology can help to make their work more efficient or impactful.

Therefore, many hubs spend significant amounts of time on outreach, events and meetings which

help to showcase technology’s potential. Unfortunately, this is time consuming and resource

intensive. Results can also be unpredictable.

Coders often come from a science background and have limited understanding of human behaviour

and social sciences. Teddy Tadesse of xHub Addis highlighted the importance of their community

speaking to people outside the “tech bubble” in order to really understand and address their needs.

Recruiting and Retaining High Quality Staff

In some ecosystems it can be hard to recruit staff with adequate skills at an affordable price. Hub

Directors are keen to pay staff more but often lack the budget to do so. Sometimes hubs have been

forced to let go of staff who are underperforming, which can cause friction and result in grievances

being raised.

In-house training can really help. However, some hubs also spend significant resources training up

staff or community members and find that they then leave the space when new opportunities arise.

Albert Opoku of hapaSpace highlighted the importance of good knowledge management systems

given the high turnover rate of staff.

Building a strong culture can also support staff recruitment and retention. Through offering

something to community members that is of interest to them professionally and personally, it helps

members to feel part of the community and they’re likely to want to contribute. It’s worth ensuring

that community members buy into your vision and paying volunteers that make significant

contributions. It’s useful to have a forum which gives all community members a chance to share

their ideas and feel valued.

Yemi Tadesse of Iceaddis explained how she started off as a grant writer and now manages the hub

alongside two colleagues. The management team aims to bring in community members as

employers if they show initiative.

Lack of Skills within a Community

In some ecosystems, technical skills are quite low, making it hard to provide appropriate services to potential clients. It can also mean that hubs need to invest a significant amount of time and resources into upskilling their communities before successful start-ups and social projects can be developed. This sometimes conflicts with donor’s expectations. Potential suggestions included:

• Donors need to provide core funding over the long term and be realistic in their expectations, understanding that it can take time before successful products are developed

• Collaboration with other hubs to pool resources

• Building up the skill set of community members over time through training, events and mentorship

Members Defaulting on Payments

Several hubs cited a key challenge being members defaulting on payments. They are reluctant to

force members to leave as a consequence, as they recognise that start-ups are often struggling

financially and this goes against their social mission. Suggestions to minimise this included:

• Having a pre-paid model so start-ups can only come if they’ve paid. Some hubs feel uncomfortable with this approach.

• Sometimes decisions can be made on a case by case basis. For example, candid conversations with members can reveal whether start-ups are struggling despite their best efforts or if they are not listening to advice or lack focus.

• Hive Colab has a system whereby if you’re occupying an office or cubicle but don’t pay, you’re asked to give it up and move into the co-working space

• Limits can be placed on how long people can stay in the space without paying

• Sometimes people will volunteer their time in lieu of payment

Power Outages and Internet Access

There have been challenges around power supply for many hubs. In Ghana, frequent power outages have forced hapaSpace to run on generators and batteries far more than they’d expected, which has affected their budget. In Ethiopia, Iceaddis was limited in the hours that it could run generators by their landlord, which meant that they couldn’t provide backup when the electricity failed. Power outages have also been a problem in Sierra Leone. Some hubs are considering a move to solar-power but the cost of panels is inhibitive. Sensi Tech Hub has reduced its opening hours so that it can provide more reliable power between 9am and 5pm. They’ve also aimed to reduce energy consumption by using fans and coolers instead of air conditioning and only switching on refrigerators for parts of the day. Providing fast, affordable internet is also really challenging. Costs can be obscenely high and even the best services remain unreliable. As an example, in Sierra Leone, a 5Mb line can cost $400 (around £300) per month and used to cost over $1000 (around £750). If many people utilise the internet at once, this puts further strain on this service. In some countries, government regulation may be able to bring down prices. Morris Marah of Sensi Tech Hub believes that a liberalisation of the networks would help to bring prices down.

Internet Cuts

The government in some countries has turned off the internet all together.

ActivSpaces had many problems with internet blackouts in Buea, situated in an anglophone region of Cameroon. This forced their community to migrate into areas which had the internet and resulted in some potential funding leads pulling out. Iceaddis in Ethiopia experienced similar problems. They used old-style mail, travelled physically to make sure that events were known about and used word-of-mouth to raise awareness of their programmes. Nonetheless, this had a really negative impact on them. The importance of making the hub a community, rather than just somewhere to use the internet was highlighted to maintain engagement at times like this. However, the importance of the internet can’t be underestimated either.

Competing with Larger Players

Some hubs expressed concern that people don’t always trust start-ups and want to work with more

well known, bigger players. Start-ups can also struggle to compete with big software developing

companies which have larger teams. It can require a lot of outreach, education and marketing for

people to understand what start-ups can achieve.

Providing cheaper solutions than competitors and having a few successful products which showcase

the quality of the work of start-ups can go a long way.

Low Adoption of Products

Several hubs including ActivSpaces have had trouble getting users to adopt the technology products that the start-ups they’re supporting are creating. Potential solutions recommended included:

• Conducting adequate research into the local ecosystem and users before developing products e.g. the types of technology people use, the challenges they most wish to address. User centred design methodologies or similar approaches which engage users at all stages of development and implementation e.g. iterative/agile approaches can help to overcome such challenges.

• Building solutions based on an identified need from e.g. civil society or the private sector, in partnership with them

• Adequate promotion and marketing. For example, hapaSpace hold show and tell events at the hub and send messages out to their networks through WhatsApp. People start to install apps just to try them out and then they gain new users through word of mouth. They have identified key “influencers” in the city who can share the news about new technologies that are being developed by their communities and post information in other forums.

• Adapting already existing solutions as opposed to building from scratch can also help. For example, hapaSpace incubated a microfinance start-up which struggled to gain clients.

When they adapted a widely regarded opensource software (Mifos X), they started to get clients. They even managed to integrate MTN Mobile Money into Mifos X.

Links with Rural Communities

Sometimes it can be difficult to reach communities outside the main cities. This is where most of the market resides. Research has found that people in cities often don’t have experience of rural communities and therefore struggle to build solutions that are appropriate to their needs. Potential Solutions Include:

• Partnering with civil society organisations or other groups with access to potential end users like farmers groups can really help. iCow, an SMS based agricultural platform for small holder farmers attributes a large part of its success to their deep knowledge and understanding of the needs of the farmers they serve.

• Adopt user centred methodologies. Such an approach enabled technologists from the Iceaddis community to partner with beekeepers to develop Yenemar, a micro-investment platform which creates urban-rural linkages and connects beekeepers with capital for high quality honey production.

• Some hubs are starting to develop physical spaces outside large cities or to provide virtual support to rural or peri-urban communities

It can also be hard to finance rural projects, where income is low. However, it should be recognised

that the size of the potential market is huge so it may be possible to generate profits by charging

very small amounts to a large amount of people. iCow generates income through charging premium

rates for their SMS service. Rural farmers are willing to pay as use of the platform increases their

income through increasing the milk yields of their cattle and reducing disease outbreaks.

Development organisations or governments may also be willing to pay for services which reach the

most marginalised. Hubs could partner with such organisations.

Graduating Start-ups

Some hubs, including xHub Addis reported that it can be hard to move successful start-ups on from the hub. It’s a challenge for start-ups to register as businesses and overheads are extremely expensive once they need their own offices and facilities. It was suggested that intermediate spaces like incubators could be created to support start-ups that are ready to graduate from a hub but not quite ready to survive independently. Co-Creation Hub in Nigeria has adopted this model, hosting co-working, pre-incubation and incubation services on different floors.

Relocating

Hubs are sometimes forced to relocate due to rising rental costs in the city centre or other factors

such as a need for a larger space. There are challenges associated with moving hubs and some fear

this will destroy the community which they’ve established.

Some hubs have actually seen positive benefits when moving such as attracting new members and

providing a more appealing space. It’s important to consult members to get their opinions and

identify their priorities before making a decision.

When iSpace relocated, the less dedicated members, who mainly used the space to access the

internet mostly dropped away and only the dedicated community followed the hub to its new

location, which revitalised the community.

Iceaddis have seen an improvement every time they’ve moved. They reminded us of the importance

of offering something new and of value to your community e.g. quieter meeting rooms, reduced

rates, a better location etc.

Conclusion

Technology innovation hubs vary widely. They have different key goals and objectives, are working

in very different country contexts and support communities of varying sizes and skill sets.

Nonetheless, hubs often learn a great deal from each other and experience similar challenges

including unfavourable regulatory environments, difficulties accessing affordable, reliable electricity

and internet, society at large lacking understanding of the benefits of technology in addressing social

challenges and securing funding/generating income for both themselves and the start-ups and

projects that they support.

We hope that through convening hubs across sub-Saharan Africa, we can help to enable knowledge

exchange across the continent, resulting in more successful technology innovation spaces which

better serve their communities and society at large.

Report Contributors

Hub/Organisation City and country Website Name

ActivSpaces Douala/Buea, Cameroon

http://activspaces.com/

Valery Colong

ActivSpaces Douala/Buea, Cameroon

http://activspaces.com/ Steve Tchoumba

hapaSpace Kumasi, Ghana http://hapaspace.com/ Gideon Brefo

hapaSpace Kumasi, Ghana http://hapaspace.com/ Ben Nimako

hapaSpace Kumasi, Ghana http://hapaspace.com/ Albert Opoku

Hive Colab Kampala, Uganda http://hivecolab.org/ Barbara Birungi Mutabazi

Iceaddis Addis Ababa, Ethiopia http://www.iceaddis.com/ Markos Lemma

Iceaddis Addis Ababa, Ethiopia http://www.iceaddis.com/ Yemi Tadesse

Indigo Trust London, UK https://indigotrust.org.uk/ Catherine Gathercole

Indigo Trust London, UK https://indigotrust.org.uk/ Loren Treisman

iSpace Accra, Ghana http://ispacegh.com/ Josiah Kwesi Eyison

Sensi Tech Hub Freetown, Sierra Leone http://sensi-sl.org/ Morris Marah

xHub Addis Addis Addis Ababa, Ethiopia http://www.xhubaddis.com/ Elias Gizachew

xHub Addis Addis Addis Ababa, Ethiopia http://www.xhubaddis.com/ Teddy Tadesse