Tech start-ups, telcos unite to spread innovation gains

A report released last month by GSMA, an organisation that represents the interests of global mobile operators, has found that there has been an increase in partnership between technology hubs and telecommunication companies in Africa with over 14 per cent run or supported by telcos.

This has been driven by the demand for local content in a bid to gauge consumer interests, evidence shows.

In markets such as Kenya, a majority of the internet traffic is via smartphones at 83per cent according to the latest report on the state of the market by Jumia. Therefore, mobile operators are the main channel for internet access.

Telecommunication companies have therefore set up strong distribution services in order to reach all consumers and give them a competetive advantage.

But with the emergence of new innovations it could be difficult to keep up, hence the need to form strategic partnerships with tech hubs.

“Emerging markets provide an opportunity for mobile operators and start-ups to collaborate. Start-ups have the local innovation that mobile operators need in order to stay ahead in the market whereas mobile operators have the scale to reach potential customers that startups lack,” reported GSMA.

Africa has 442 active tech hubs with Cape Town, Lagos, and Nairobi identified as the continent’s attractive technology centres.

Kenya is home to 30 of these active tech hubs. Some of the tech hubs supported by telcos and that have been launched since 2016 include MTN’s-Y’ello, in Congo and Cote d’Ivoire. Orange has launched two; one called Fab in Cote d’Ivoire and another called Start in Morocco. Djezzy, a mobile operator in Algeria, launched one called ENP in the country.

“Mobile operators support or run over 14 per cent of the active tech hubs identified in Africa. MTN supports 12 active tech hubs while Orange supports 12 and Vodafone seven. These are the leading providers to engage with start-ups across the continent,” reported GSMA.

Start-ups provide a customised solution for a local challenge or need. For instance, M-Kopa, a Kenyan start-up launched in 2012, sought to make solar power affordable and available to homes not on the electricity grid.

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It is backed by the country’s largest telecommunication company, Safaricom #ticker:SCOM. Through the partnership, the start-up gained brand exposure, visibility, credibility and consumer trust that has since seen it connect over 600,000 homes.

“When a start-up builds a business or an idea, they do it so as to add value to a specific sector service line such as telecommunications, banking and banking among other sectors. Some of them do not necessarily want to drive this particular product but they want them to be taken up by an existing organisation in the private sector hence the increased partnerships,” said Josephine Mwangi, Head communication, marketing and stakeholder management for Nailab, a Kenyan startup incubator.

“Start-ups look at the larger map and figure out a solution that they can plug into a particular challenge and make consumers’ lives better and easier. This also improves business for the private sector.”

However, there are other start-ups helping to add value to products but in order for them to penetrate the market, they need to partner with private organisations.

E-commerce website, Jumia which was launched in 2012, partnered with MTN and Millicom, multinational telecommunications companies operating in Africa in 2013 in a strategic move to increase its presence in different African countries.

The two telcos combined at the time had more than 220m mobile customers in Africa with MTN the market leader in Nigeria and South Africa.

- African Laughter