A look at Zambia’s Economy

Against a backdrop of depressing statistics, there is an increasing buzz within Zambia about the potential role low cost technology startups could have in increasing the financial prospects of the country and the population. Naturally, investment is hard to achieve in a cash strapped country. The technology startup micro company model may be exactly the remedy needed to overcome the problem that entrepreneurs in Zambia have – a lack of capital raising options.

While Zambia may not yet be synonymous with the term “tech hub” in the same way as Silicon Valley in the US or Hyderabad in India, investors are beginning to see signs of an exciting new location in the Africa innovation map. The list of already established African innovation hubs, such as Nairobi’s iHub headed community, may soon need to be extended to include Lusaka.

Headed by the innovation hub BongoHive, Zambian technology enthusiasts are converging to participate in events such as, “Social Media Day”, “Game Dev Weekend” and “Mobile Monday”. Attendance of these events is popular, and importantly, big business has taken note. BongoHive has attracted African industry leaders to share their experience with attendees, including sessions with Vodafone’s Head of Solution Sales in Africa.

BongoHive was founded in May 2011 by a group of 4 founders. One founder is Simunza Muyangana, who recently explained in an interview his intentions behind the group as an, “innovation centre that provides space for technology enthusiasts in Lusaka to meet, swap experience and attend training, networking and geek events like hackathons, bar camps, etc.” [1] Muyangana goes on to explain how BongoHive is an open community, which is not limited to “geeks” or graduates in Information Technology.

The inclusivity is clearly a strong point with some notable successes stories coming out of the BongoHive hub in recent months. A mobile application for file sharing called Fist Drive was developed by Daryl Lukas; this application went on to to be a semi-finalist in the Google Apps competition for the Sub-Saharan Africa region. Other mobile applications have caught national attention in Zambia. The Zambia Draft Constitution application deals with addressing the knowledge gap that exists in the general population about pertinent issues and is available in the Google Play store for download.

The BongoHive innovation hub is well backed with support from the well established iHub in Kenya, the Belgian organisation VVOB, and UK based Indigo Trust. However, if BongoHive and Zambia in general is to be taken seriously internationally as a technology hub, the true mark of success will be strong and consistent investment from venture capitalists and business angels. That investment came in early 2012 when Mobile Transactions International, now known as Zoona, received a $4m investment of venture capital from the Omidyar Network, backed by ex-eBay billionaire Pierre Omidyar.

Zoona describes its core mission as leveraging, “mobile technology and an agent network to enable financial transactions across the Zambian economy.” Its core products include Money Transfers, Electronic Voucher Payments, and Agent Payments for consumers, non-governmental organisations, government agencies, and commercial enterprises.

Such high profile investments by a very well established US based investment group will be highly encouraging to the Zambian technology startup community. The challenge for Zambia and innovation hubs such as BongoHive will be to leverage the industry interest created by the Zoona deal and translate it to interest in other local technology startups. With the backing of NGOs, other established innovation hubs and the precedent of tangible investment opportunity given by the Omidyar Network, the micro technology startup potentially offers an important weapon in the Zambian economic landscape. BongoHive has shown there is no shortage of skilled and interested technologists to take on the challenge of technology innovation, to which the membership levels and success stories are testament.

In the development of a technology innovation hub, Lusaka and Zambia at large must take inspiration from the efforts of other developing nations with established communities. In general terms this means a shared vision and cooperation will be required from key agencies such as government, local business, international business and the general population.

Most close to home, Nairobi’s technology innovation hub called iHub is a key example of what can be achieved in the African continent. For BongoHive to grow key concepts and models can be mirrored from iHub. Perhaps unsurprisingly a large proportion of the financing from iHub comes from the Omidyar Network who have already invested in Zambian startups. Core to the iHub model is a mentorship program. Technologists are paired with people with strong industrial experience and are closely mentored and tutored in business concepts. The key aim is to transfer business acumen to those who need it. Mentors are both locally and globally based and their advice is easily accessible to the bidding technology entrepreneurs.

Positively, BongoHive has attached itself to an organization called AfriLabs. Originally founded by a group of 5 leading African technology innovation hubs, the organisation now has 16 members across the African continent. The aim of Afrilabs is to be a single point of access to, “allow investors and media to connect more quickly to the tech activity in each of the countries that houses a member lab” [3]. Organisations like Afrilabs that promote international cooperation and pooling of resources will be key in the context of developing the budding Zambian startup community, and in Lusaka developing as a potential future technology innovation hub.

There are of course other factors involved in the success of building a technology innovation community aside from having sufficient organisational support in place.

According to Google president Eric Schmidt’s blog, the key to Nairobi’s potential success is, “a combination of relatively stable politics, the British legal system, and a benign climate” [4]. Schmidt went on to put large amounts of emphasis on the key as being a stable political system, “If they manage to get through the upcoming March elections without significant conflict, they will grow quickly.” [4]

Clearly the deterrent to big business coming to the African continent is the turbulent political situation found in many countries. Compared to Kenya, Zambian political history is less stable. Although the riots and attempted coup to depose the then president, Kenneth Kuanda, are now a distant memory 20 years in the past, the political system is still arguably not as stable as some of its neighbours. Since 2010 efforts have begun to address this image problem with the drafting of a new constitution. As of 2013 the constitution is still in draft format. Until large corporations can be protected in law when operating within Zambia, Lusaka may continue to struggle to attract interest as a technology innovation hub from the likes of Google, or Taiwanese computer firm Asus, who have also expressed an interest in getting a foothold in the continent. [5]

A technology innovation hub is of course made from a community rather than a single organization such as the facilities offered by BongoHive. To truly become a developed prospect for outside investment Lusaka must have suitable infrastructure in place that supports a high tech economy. This is of course a chicken or egg scenario – does the outside investment buy the infrastructure in order to be able to operate, or does the outside investment come once the infrastructure has been put in place. Lusaka is a rapidly expanding city and faces challenges in this respect which could also be considered an opportunity. According to Open Africa the current rate of population increase is 5% annually. Based on compound growth Lusaka’s population will increase from the current figure of slightly over 3 million to well over 5 million within the next decade. [6] With such growth the opportunity to make large capital investments in infrastructure by the government not only seem likely, but also very necessary. The right positive steps at this point will naturally generate interest in the city, and the signs of the stabilising political landscape can only be a benefit to improving the internationally held image of corporations.

It’s of course difficult to make predictions about where Zambia and particularly Lusaka will be as a technology innovation hub in the next decade. However, a large number of positive signs exist which point towards the potential that exists. While Nairobi may have stolen a march on pushing itself forward as the forerunning African technology hub, by no means is their journey over in establishing dominance. Key factors such as the early actions by supporting organisations, a stabilising political situation and a budding community all count in favour for Lusaka and Zambia. The potential is large with the Indian subcontinent becoming wealthier and their middle class expecting higher wages. Global scale corporations have shown they are looking already at options in Africa and will undoubtedly be looking deeper into alternatives of the future where a high skilled and motivated work force exists at competitive wage levels.

By all accounts Lusaka and Zambia do seem to have the tools to answer the questions global corporations are asking of Africa. The question is, can the political, economic and social landscape answer it before other cities get ahead.

This Article has been written by Philip. Philip is a London based software engineering professional with a strong interest in technology innovation and start up concepts. Philip is involved in the London technology hub community and is currently working on several start up ideas in his spare time. As a result of his involvement in the London technology hub community Philip has become interested in the role that low investment technology innovation could have in developing nations where investment is scarce. Alongside the opportunities that exist for individuals Philip is also interested in the implications on big business of increasingly technologically developed and politically stable nations.

[1] http://globalvoicesonline.org/2013/01/31/zambia-interview-with-bongohive-co-founder/

[2] http://www.omidyar.com/about_us/news/2012/02/29/omidyar-network-and-accion-invest-us-32-million-mobile-transactions-interna

[3] http://www.bbc.co.uk/news/business-18878585

[4] https://plus.google.com/+EricSchmidt/posts/VRFReMyLwfS

[5] http://www.businessdailyafrica.com/Corporate-News/Asian-tech-giant-Asus-eyes-East-Africa-from-Nairobi-hub/-/539550/1868762/-/ispfncz/-/index.html

[6] http://www.guardian.co.uk/environment/2011/oct/24/population-growth-zambia-slums


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