Technology innovation hubs have been celebrated for their potential to spark innovation, stimulate economic growth and tackle societal challenges in novel ways.
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.
However, much of the hype around them 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 explain how they are addressing some of these challenges and generating revenue.
Why donor funds are needed
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 and running less profitable programmes like coding schools and ‘women in tech’ initiatives.
Many hubs are starting to generate income through tiered membership fees, space hire, training, events and research.
xHub Addis (Addis Ababa, Ethiopia) brings in revenue through their talent hire programme. “We negotiate contracts for our members with private businesses, charging 15% for this arrangement. They support clients on activities like building websites and app development while working on their own projects at the same time,” explains Teddy Tadesse, CEO of Center for African Leadership Studies.
Other hubs, like Iceaddis (Addis Ababa, Ethiopia) have identified consultancy opportunities for their members. “We held a hackathon for a US based non-governmental organisation and produced nine teaching apps for them,” explains their co-founder, Markos Lemma. “This has also helped members generate income at the same time as working on their start-ups.”
Despite operating in extremely diverse ecosystems, hubs often experience similar challenges.
Low Adoption Rates
Several hubs complained that their members experience low adoption rates for the tech products developed. However, there are ways to combat this.
As Josiah Kwesi Eyison, CEO and co-founder of iSpace (Accra, Ghana) explained, “You need to really understand the market. It’s worth working in partnership with a civil society or private sector organisation so that you can build a product that directly addresses a need they have.”
“We run show and tell events to get feedback on products that our members are creating and encourage people to download their apps using WhatsApp groups. It’s helped us to identify influencers who help promote these products”, says Albert Opoku, Programme Manager at HapaSpace (Kumasi, Ghana).
User centred design methodologies or agile/iterative approaches that consult end users throughout design and implementation of products can also increase uptake by ensuring that products address a specific need.
Ben Nimako, co-founder of HapaSpace made a further suggestion, “One of our members was struggling to bring their microfinance software solution to market until they adapted a widely regarded open source software called Mifos X. They integrated this with MTN Mobile Money and got significant uptake. It’s better than building from scratch.”
Showcasing the Value of Tech
Often society at large lacks an understanding of the role that technology can play in addressing their challenges. Some hubs also expressed concern that people don’t always trust start-ups, preferring to work with better known, bigger players.
It can require significant outreach, education and marketing for people to understand what start-ups can achieve and this is costly and resource intensive.
Providing cheaper solutions than competitors can go a long way. Members of xHub Addis developed an Enterprise Resource Planning tool for a local company called Qualable at a far lower price than competitors, while demonstrating the potential of young technologists to undertake complex projects.
Reaching out to Rural Communities
Many hubs also recognise that they operate within an “urban tech bubble” and struggle to understand the needs of rural communities.
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 that they serve. They generate income through charging premium rates for their service.
Through adopting user centred methodologies, Iceaddis partnered their community members with beekeepers to develop Yenemar, a micro-investment platform which creates urban-rural linkages and connects beekeepers with capital for high quality honey production.
Unreliable and Expensive Power and Internet
In many ecosystems electricity and internet access are both excruciatingly expensive and unreliable. These are difficult challenges to overcome.
“We’re considering a move to solar power but the cost of panels is inhibitive. Internet access is currently monopolised. Liberalisation of the networks could really help to reduce prices”, explains Morris Marah, Founder and Director of Sensi Tech Hub (Freetown, Sierra Leone).
Recruiting and Retaining Good 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.
In-house training can really help. However, some hubs spend significant resources training up staff or community members and find they then leave the space when new opportunities arise.
“Building a strong culture can support staff recruitment and retention”, says Yemi Tadesse, Partnership Manager at Iceaddis. “Through offering something that is of interest to our members professionally and personally, they feel part of the community and want to contribute.”
The management team at Iceaddis aims to bring in community members as employers if they show initiative. Yemi Tadesse was promoted to her current role after starting out as a grant writer.
Some challenges remain extremely difficult to overcome. Hubs in both Cameroon and Ethiopia experienced internet cuts by their governments and regulatory environments are often unfavourable to the entrepreneurial ecosystem. Members often default on payments and it can be a challenge to balance social objectives such as upskilling a community and outreach work with a need to generate sufficient revenue to stay afloat.
It’s likely to take considerable time for the majority of hubs to become financially independent. Donors need to provide core funding over the long term and be realistic in their expectations, understanding that it can take time to grow and upskill communities before successful start-ups and social innovations are developed.
It’s my hope that patient investments will yield promising results and it’s exciting to see the progress made by hubs across the continent already.
If you’d like to learn more about what technology innovation hub management had to say, you can read this report, created by Indigo Trust: