KAMPALA – A new report has indicated that Uganda and Rwanda are now the emerging favourite destinations in Africa for investment in information and communications technology sector.
Although the leading investor destinations in the ICT sector in sub-Saharan Africa are Kenya, Nigeria and South Africa, the three countries have recorded a decline in investment flows.
Uganda and Rwanda are starting to get a slice of the investment that has traditionally gone to Kenya, Nigeria and South Africa.
A new report by the GSM Association (GSMA), the global lobby for mobile network operators, titled The Mobile Economy in sub-Saharan Africa, shows that Kenya, Nigeria and South Africa accounted for 76 per cent of total funds raised by startups in the region.
“However, the downward trend in the combined share of investments for the three markets, from more than 80 per cent in 2015 and 2016, shows growing investor appetite for other markets, notably Ghana, Rwanda, Senegal and Uganda,” the report says.
Last year, 124 tech start-ups across Africa raised $560 million, a 53 per cent increase from the previous year. Of this, sub-Saharan Africa accounted for around $515 million in more than 100 deals.
“This underscores the increasing innovation and investor interest in solutions that address the region’s starkest social challenges, such as limited access to financial services, education and energy for large swathes of the population,” the report says.
Last year, Ugandan solar start-up SolarNow secured a $6 million loan to help reach more customers and expand access to pay-as-you-go solar power.
Apart from the reduction in startup funding, Kenya is also seeing fewer technology hubs being established in the country compared with its traditional competitors South Africa and Nigeria.
In the past two years, Kenya has only seen three new tech hubs established in Nairobi, compared with 32 in Nigeria and eight in South Africa. Uganda has started four new hubs over the same period.
As at June this year, there were 355 active tech hubs across sub-Saharan Africa, up from 239 in 2016.
Nearly half of all the tech hubs in the region are located in four countries — Ghana, Kenya, Nigeria and South Africa — data from GSMA Ecosystem Accelerator programme shows.