Despite diseases and terrorism, Africa still remains a ripe field for entrepreneurship if only enterprises could embrace venture capital to develop their trades.
When disaster strikes in Africa, investment momentum experiences major impediments with donors reluctant to fund ventures in the continent.
However, Mbwana Alliy is optimistic that “Africa is about to peak” and it is time to invest in the region.
According to Mr Alliy, who co-founded Savannah Fund, a seed capital investment firm located in Nairobi, Kenya, smartphone connectivity, an emerging middle class, and opportunities for technology are unprecedented and provide great platforms to expand enterprises in Africa.
“When there is a negative event, like Ebola or a terrorist incident, investment momentum gets set back and talent leaves,” he said noting that enterprises can benefit better from venture capital.
Originally from Tanzania, Alliy returned to East Africa after pursuing degrees in England and America, and found a venture capital firm which targets “entrepreneurs in Africa who are shut off from access to risk capital”.
According to Alliy who was once as a product manager at Microsoft, operating in emerging markets can be harsh; entrepreneurs burn out quickly. He added that roads are badly congested, which leads to negative productivity. Additionally, the developing ecosystem makes it difficult to find competent lawyers, advisors, product managers, and others who are willing to work with startups for lower fees.
“One year of operating in Africa is like two or three years in the US,” he said.
Despite all these, people are starting to see Africa as a private-sector market, rather than just a recipient of aid, he told ‘Insights’ by Stanford Business. “Africa is not just comprised of poor people who need to be saved. People here want the same things people have in the US,” he added.
When he returned to Africa, the venture capitalist invested between $25,000 and $500,000 in the early-stage mobile and internet start-ups in Sub-Saharan Africa and today, he has made 22 investments in six countries.
Savannah’s Fund aims at demystifying venture capital which is a foreign concept to many Africans and especially Kenya where the firm is based.
Venture capital not only provides funds for enterprises to grow but also gives continuous support through monthly updates on the day to day running of the start-ups. Savannah Fund also requires proper governance and accountability.
When it comes to navigating the local environment in Africa, Alliy compares this to climbing Mt Kilimanjaro where one has to take three steps up as you expect to slide two steps back.
“You have to push, push. You are pushing against unreliable roads and corruption. To get anything done you have to work extra hard. You will still get up to the top; but you can’t think of these as normal steps,” he advised.
Alliy does not merely rely on reports. He talks to people on the bus or when walking around in the market. After all, that is how his mentor learned- through apprenticeship. He seeks to know why people are using a particular technology.
The venture capitalist whose main achievement is creating a bridge between two worlds believes that the Alibaba of Africa will be founded by an African.
He holds that the introduction of mobile money and payments in Africa is the greatest innovation in the region in the past decade. According to him, basic technology and a little business model innovation have leapfrogged traditional banking infrastructure. This has given people who have never had a bank account a means to pay their rent and get paid.
Savannah Fund wants to be the leading venture capital firm in Africa.
Image credit: news24africa.com
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