African Technology Loses its Innocence

This week I was fascinated to learn that a startup called ‘Andela’ has become the first investee of the Chan-Zuckerberg Initiative, and that the amount invested by the powerful majority owners of this medium and their business allies was a whooping $24 million (in tech startup terms, yes, that’s huge).

I was not fascinated merely because of the investment however. I was intrigued more by the ‘African origin’ of the company. Andela first hit the limelight when regional media begun to tout it as a Lagos phenomena. At that time, the business model was advertised as a way to give talented African programmers a headstart, and eventually a level playing field to compete with their better-heeled competitors elsewhere. Andela today still focuses on training African software developers on two ‘campuses’ in Lagos and Nairobi.

It was curious then to see ‘New York – based startup’ in virtually all the announcements.

My sense in the beginning was that this was to enable the ‘internationalisation’ of the company’s brand. Most of the early clients of Andela have been US-based technology companies. So far they appear to be the ones picking up Andela-trained programmers. Hence it would make sound business sense for Andela to market itself as ‘New York – based’ to preserve the confidence of its American clients. This in itself is an interesting point. Despite technology’s supposed ‘global character’, the fact still remains that a New York -based company inspires more confidence than, say, an Abidjan-based company. Fact of life. It is important to bear that critical point in mind.

But digging deeper, using SEC filings and a few other documents as my shovels, it became quickly obvious that Andela is New York based because it is in fact ‘owned in new York’. That is to say the initial equity owners are New York based, and the company was incorporated there. Since formation, the company has had four rounds of financing, and though a few African investors have made some tiny investments, only the the venerable and far-seeing Hakeem Belo-Osagie was mentioned in regulatory filings. Not a single major African investment fund participated in the latest round, despite all the attention the company has received in Nigeria. Not surprisingly the shareholding and board composition reflects this stark America-centric reality. This is an even more critical point.

Let’s face it: 10 years after the ‘African Tech’ and ‘African Innovation’ narratives bloomed and created a new industry in commentary and analysis, it is time to review the time-worn wisdom and talking points.

I myself, in the beginning of the era, was taken in by the idea that: ‘tech will be different’. That the continent won’t ‘allow it’ to go down the same path as real estate, agribusiness and aviation. Which is to say that the tech industry in Africa was supposed to be faster, nimbler, more inclusive, more empowering, more transformative, more progressive, and simply more systems-upturning than any of the other industries that, though promising in their capacity to turn Africa’s fortunes around, have so far proved much too slow in driving the saw through the status quo.

Technology was supposed to be completely different. Capital access, talent access, market access, state-power access, infrastructure access, and all the other barriers to ascendancy for the marginalised and young in society were supposed to dissolve in the wake of the African technology boom. It was not supposed to become beholden to boring old realities, such as Foreign Direct Investment, WTO rules, legal systems reform, financial intermediation, and geopolitics.

I guess we were just naive. If we had looked carefully and with more savvy at the EU anti-trust cases against giant American companies; the concerns of American senators about Chinese OEM vendors penetrating the IP vaults of America; the low representation of minorities on US tech-giants’ boards; and Japan’s inability to produce global consumer internet products with any ease, we would have disabused our minds of the notion that technology can somehow leaves the complex issues of African transformation cleanly behind.

Andela is owned in New York and based there because that is where the brand power and the money STILL are, and from where they still flow.

Smart African programmers and their innovator cousins can’t wave a wand and let that disappear.

FDI is STILL A MAJOR ingredient in African capitalist success. African investment funds still wait for outsiders to de-risk new areas before they venture. African decision-makers still can’t look beyond their cronyist lens to size up strategic opportunities.

The few times technology companies with a predominantly African identity have attracted significant, non-seed, venture funding, the investment funds have had African principals. Since these episodes have been few and far between, the landscape of venture-backed African tech ‘success stories’ is one of America-centric, and occasionally eurocentric, players doing business in Africa. Hardly different from what is the case in mining, telecoms and breweries.

The data is now almost unambiguous in respect to the fact that it is now virtually impossible for an African technology company oriented towards a particular African market to grow off the back of venture capital. Positioning has to be in the US, or in one or the other of a few European countries, and orientation has to be ’emerging markets’ to create the right ‘aesthetics’.

So, fact: African tech pundits, and those that aspire to be, can’t bloviate their way around NEEDING TO UNDERSTAND how that works in theory and in practice.

The ‘old’, boring, economics, politics and development philosophy questions are still very much with us. Those who seek to discuss and analyse the African tech and innovation story without an ounce of knowledge in these heavy, sticky, sometimes complex, and treacly paradigms and disciplines, do their followers a disservice of distraction. By omitting many vital details in the full value chain of creation and distribution and rather concentrating on production alone, they misdirect attention from some very critical matters.

There is an ‘Africanness’ about the unique situation of technology creation and financing here on the continent such that any ‘Silicon Valley-ish’ coverage of the sector will lead to simple confusion.

More importantly, African technologists and their chroniclers need to be more politically and economically literate than their counterparts in Europe and America to succeed at their missions.

Their special circumstances warrant it.

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