No Silicon Valley in Africa yet?

The Silicon Valley does not hold the monopole of entrepreneurship. More and more new attractive centres for start-ups are created all around the world, in New York, Boston, Singapour, and Sao Paulo and Bangalore, also called the Indian “Silicon Valley”. These cities are well ranked in the international benchmark reference, and progress every year.

As a matter of fact, no city or region in Africa can reasonably claim to offer a similar international business ecosystem, in spite of all the imported concepts and plans that could not be successfully implemented in the continent. Under what conditions can we expect African start-ups to develop and be competitive in the world? How can they create a business ecosystem that could integrate and progress in the most selective international benchmarks?

The stakes are high: economies are transitioning towards services and knowledge-based economies will expand progressively in the next decades. Countries offering the best entrepreneurial ecosystems will have the best chances of being successful in the world. They will become the driving force for growth and employment.

The most successful start-ups created in the past decade (Google, Facebook, Amazon) are known internationally and have revolutionised our lives. These companies now belong to the playground of the greats. They have overthrown the well-established international conglomerates and their market capitalisation grows exponentially.

This economic revolution is likely to last long and keeps on growing larger. In 2030, the world economy will be dominated by companies that are unknown today or that haven't even been created yet. These companies will not only come from the Silicon Valley but from new emerging hubs in India, Brazil and maybe African countries in the near future.

The typical atmosphere for start-ups in the 21st centhury : more space, less time

A start-up is generally the result of a combination of different additional factors : the capital (which is more and more limited), talented co-founders, innovating techonology (not always digital) and an enabling environment.

The business environment is changing day by day. Past methods do not work anymore for those who cannot or who do not want to adapt. The major challenge for companies in the 20th centhury is to expand in a vast area and to extend their services without hurting the quality of services or the visibilty of the brand.

Things are very different in the 21st centhury. The challenge is not to conquer space, but time which seems to go faster and faster. The distance between companies and client has reduced and many obstacles have disappeared. Offer and demand are met almost instantaneoulsy in all parts of the world, thanks to the fast connections that new technologies now offer.

Since consumers are more easily accessible, the cost of access to the market has massively reduced for entrepreneurs. As a consequence, the market is much more competitive and the competition can come from the most unexpected companies.

An increasingly intense competition

Many sectors have been through major changes thanks to digital technology : media, education, healthcare, entertainment, transport, retail,… Some start-ups, such as Uber and Airbnb, have completely transformed their sectors and have created new opportunities. Innovation is not the priviledge of big companies or States anymore. It has expanded to younger and more ambitious new actors that constantly challenge the status quo.

For decades, most companies have benefited from more or less sustainable income. They have evolved in an isolated environment characterized by low competition, an asymmetry of information regarding the clients and growing consumption.

The obsolence of the established practices were revealed by the arrival of new trends and new actors. The companies were not protected anymore. Leading companies, such as Kodak, which had the quasi monopole in their sector for decades suffered a lot.

Easy to set up, difficult to keep up

Nowadays, it is very easy to set up a new company (apart from the administrative problems that persist). The readily available technologies (clouds, social media networks, free lance) make it easier for people to lauch their businesses quickly and with very few ressources (crowdfunding). A lot of people have set up their companies this way. This does increase competition among the new entrepreneurs who want to access the same markets.

The information flows quickly. Therefore, it makes it easier to adjust and personalize the products in real-time. Moreover, search engines and price-comparison sites give totally transparent information to the clients and help maintain a constant pressure on prices.

Thus, there is no reason why there cannot be a competitive business ecosystem in Africa, all the more so because innovation advances far more quickly here than elsewhere. One thing we can learn from successful start-ups in the Silicon Valley is that companies should be ready to constantly change and adapt their activity to keep up with the competition. Innovation is not necessarily a linear progression. It evolves in irregular rythms and often takes unexpected paths.

Translated by Bushra Kadir