By Nco Dube 26 August 2024

The African continent is experiencing a technological revolution, with countries like Kenya and Rwanda emerging as leaders in the tech industry. This opinion piece explores the factors that have enabled these nations to capitalise on the tech boom, contrasting their successes with South Africa’s struggles to attract investment. Furthermore, it discusses the lessons South Africa can learn from its East African counterparts to enhance its own technological landscape.

The Success of Kenya and Rwanda in the Tech Sector

Both Kenya and Rwanda have established themselves as vibrant tech hubs, driven by several key factors:

– Government Support and Policy Framework: Both countries have implemented favourable policies that encourage innovation and investment. Kenya’s Vision 2030 and Rwanda’s National Strategy for Transformation emphasise the importance of technology in economic development. 

These frameworks provide a clear roadmap for growth and attract foreign direct investment (FDI). For instance, Kenya’s government has invested heavily in the Konza Technopolis project, a planned smart city designed to attract tech companies and startups. 

Similarly, Rwanda’s government has prioritised the development of the Kigali Innovation City, a hub for technology, innovation, and entrepreneurship.

– Infrastructure Development: The rapid expansion of digital infrastructure, such as internet connectivity and mobile networks, has been pivotal. In Kenya, the widespread use of mobile money platforms like M-Pesa has revolutionised financial transactions and fostered entrepreneurship. 

M-Pesa has over 30 million active users in Kenya and has been a key driver of financial inclusion. Rwanda has similarly invested in ICT infrastructure, positioning itself as a regional tech hub. The country boasts a 4G LTE network that covers 95% of the population, enabling widespread access to high-speed internet. In comparison, South Africa’s 4G LTE network only reached those levels as late as 2021.

– Youthful Population and Education: Kenya and Rwanda boast a young, tech-savvy population eager to engage with digital technologies. The emphasis on education, particularly in STEM fields, has produced a skilled workforce capable of driving innovation. 

In contrast, South Africa faces challenges with skills shortages and an education system that does not always align with market needs. Kenya has made significant strides in improving access to education, with initiatives like the Digital Literacy Program that aims to provide laptops to primary school students. Rwanda has also prioritised education, with a focus on developing digital skills through programs like the One Laptop per Child initiative.

– Entrepreneurial Ecosystem: Both countries have cultivated robust entrepreneurial ecosystems, supported by incubators and accelerators that nurture startups. Nairobi’s Silicon Savannah and Kigali’s innovation hubs have created environments conducive to technological advancement, attracting both local and international investors. 

For example, the iHub in Nairobi has been a key player in fostering the growth of the tech ecosystem, providing co-working spaces, mentorship, and access to funding for startups. Similarly, the Kigali Innovation City has attracted major tech companies like Volkswagen, which has established a software development centre in the city.

Challenges Facing South Africa

Despite its advanced economy, South Africa has struggled to leverage the tech boom effectively. Several factors contribute to this situation:

– Political Instability and Corruption: South Africa’s political landscape has been marred by instability and corruption, leading to a lack of investor confidence. High-profile scandals have tarnished the reputation of the government, making it difficult to attract foreign investment. The country has experienced a series of political crises, including the ANC administration’s constant corruption allegations that hardly get prosecuted.

– Infrastructure and Service Delivery Issues: South Africa faces significant challenges in infrastructure development, particularly in energy and transport. Frequent power outages and unreliable services deter potential investors, who seek stable environments for their operations. 

The country’s aging electricity grid and reliance on coal-fired power plants have led to a chronic energy crisis, with load shedding becoming a regular occurrence. The country is currently in a good run with loadshedding having be staved off for a consecutive 150 days. But it remains to be seen if this can be sustained for long term.

– High Crime Rates: Crime remains a significant barrier to investment in South Africa. The perception of risk associated with crime can deter foreign businesses from establishing operations in the country, unlike in Kenya and Rwanda, where security measures have been prioritised. South Africa has one of the highest crime rates in the world, with high levels of violent crime, property crime, and corruption.

– Skills Mismatch: While South Africa has a relatively high level of education, there is a notable mismatch between the skills produced by the education system and those demanded by the tech industry. This disconnect limits the growth of the tech sector and the ability to attract investment. The country’s education system has been criticised for its focus on rote learning and lack of emphasis on critical thinking and problem-solving skills.

Lessons for South Africa

To improve its position in the tech landscape and attract more investment, South Africa can draw valuable lessons from Kenya and Rwanda:

– Enhancing Government Support: South Africa should prioritise creating and implementing clear, supportive policies that foster innovation and entrepreneurship. This includes simplifying regulations for startups and enhancing access to funding. The government can learn from Kenya’s and Rwanda’s initiatives to create special economic zones and provide tax incentives for tech companies.

– Investing in Infrastructure: Significant investment in infrastructure, particularly in energy and digital connectivity, is crucial. Ensuring reliable services can create a more attractive environment for investors. South Africa can look to Rwanda’s example of investing in renewable energy sources, such as solar and hydropower, to diversify its energy mix and improve grid stability.

– Fostering a Culture of Innovation: Encouraging a culture of innovation through education and support for startups can help South Africa develop its tech ecosystem. This includes investing in STEM education and promoting entrepreneurship at all levels. The government can establish programs similar to Kenya’s DigiFarm, which provides smallholder farmers with access to information, inputs, and markets through a mobile platform.

– Addressing Crime and Safety: Improving safety and security measures can enhance investor confidence. A focus on crime reduction and creating a stable environment is essential for attracting foreign businesses. South Africa can learn from Rwanda’s approach to security, which emphasises community policing and the use of technology to prevent and respond to crime.

In conclusion, while Kenya and Rwanda have successfully harnessed the tech boom through political will, strategic government policies, infrastructure development, and a supportive entrepreneurial ecosystem, South Africa faces significant challenges that hinder its ability to attract investment. 

By learning from the successes of its East African counterparts and addressing its internal issues, South Africa has the potential to revitalise its tech sector and enhance its appeal to investors. However, this will require a concerted effort from the government, private sector, and civil society to create an enabling environment for technological growth and innovation.

(Dube is a Political Economist, Businessman, and Social Commentator on Radio and various newspapers. Read more of his articles here: ncodube.blog)