The African Advantage: The benefits of obvious problems

School children sit outside a school in central Nairobi, Kenya
School children sit outside a school in central Nairobi, Kenya

By Tinashe Mukogo, CA (SA) & Musekiwa Samuriwo

We have been talking about the inherent advantages that Silicon Valley has over start-ups in operating in African environments. The goal of these posts is to help the African entrepreneur navigate the risks that they are likely to encounter.

In the next series of posts, we want to explore another angle. One that perhaps not often talked about enough, the African Advantage. Whilst undoubtedly Silicon Valley has clear advantages over not only Africa but the rest of the world when it comes to building a tech startup, there are some unique advantages that working within the African context provides the entrepreneur, that he or she ought to be aware of and exploit. We endeavour to highlight this ‘African Advantage’ in the next few posts.

   Every morning when I wake up, I make up my mind to solve as many problems, before retiring home. – Aliko Dangote

Business is essentially about solving problems for profit. Based on this understanding there are businesses everywhere in the world because there are problems everywhere in the world. The only difference is the type of problems that exist in different parts of the world.

In developed countries, the problems are often more complex and at times more abstract simply because many of the base level problems have already been solved. So whilst in Silicon Valley, a start-up such as Zuli works on automatically adjusting the lighting in your home based on your mood and presence, in Kenya a start-up such as M-koba works to bring solar lighting into homes have never had electrical lighting before.

The fact that many of the problems in Africa are glaringly obvious means that tech entrepreneurs can more easily identify a market need when compared to their peers in Silicon Valley or other developed markets. This advantage should not be discounted. Research by CB Insights indicate that one of the main reasons that startups fail is that there is ‘No Market need’.

This is the case 42% of the time. It is easy to see how Zuli’s plan to develop mood and location sensitive home lighting could run into the ‘No Market Need’ problem but with M-koba, the market need is so clear and basic, provide electricity and lighting to low-income households, that this risk is minimal.

Anytime you can reduce an element of the ‘Risk of Failure’ by 42% that is a massive advantage. Granted, there are other risks (which we have discussed before) that the African Entrepreneur will need to overcome, these risks still do not negate the fact that the African Advantage exists.

   Anytime you can reduce an element of the ‘Risk of Failure’ by 42% that is a massive advantage.

What does this mean for the African entrepreneur? Firstly, one should spend more time thinking about the how rather than the what. This may seem like strange advice, but in reality, as entrepreneurs in Africa, we can get caught up on “the what’ we want to do. An example of this is when entrepreneurs starting a business, invest a lot of time on creating a corporate identity. For example, coming up with a logo, a tagline, a website and perhaps some cool social media posts that talk about what they intend to accomplish. This is nice, but not necessary. More time should be invested in thinking about how to solve the target problems that exist.

Secondly, as we think about how to solve a problem, the next step is to then ask the why question. One of the most important tools to navigate the inherent risks in starting a venture in Africa is to explore the reasons why no one has tried or succeeded in solving the problem that exists.

This question forces the entrepreneur to deepen his or her analysis of the underlying problem and explore risks and unique ways to solve the problem. In the case of M-koba, power was always assumed to be a large infrastructure project financed by the government or large corporations but by asking the how and why questions interchangeably false assumptions and barriers are pulled down leading to previously unexplored solutions and opportunities.

For example, M-koba’s primary customers and, in a sense, financiers are low-income households with no credit history and pay less than $1 per day for access to electricity.

The combined effect of focusing on the how and why questions creates a point of intersection for innovative and actionable solutions to emerge. By so doing, we can create unmatched and unexpected value. After all, it is unlikely that many people in Silicon Valley are thinking about solving African Problems, and even if they are, there is another African Advantage that exists.

The home field advantage.

More on this in our next post.