Interview: Jørn Lyseggen
What advantages and challenges does Ghana offer in terms of fostering technology start-ups?
JØRN LYSEGGEN: There are three key advantages Ghana has compared to other West African countries: user proximity, great local talent and a real need for technological disruption. Consumers in Ghana are not afraid of technology, as is the case in some neighbouring countries, and they are also more than willing to participate in user acceptance sessions. In other parts of West Africa there is a massive gap between users and start-ups that is much more difficult to overcome. In Ghana, however, there is great demand for technology, as more and more businesses are beginning to understand the need to have an online presence. In fact, the demand for tech talent nearly outpaces supply – as a result, there is a keen interest among young people to become involved in technology. When it comes to the challenges, these are mainly related to the institutional framework. Barriers to incorporating small companies, access to capital and tax regulations are major inhibiting factors to the growth of many start-ups. Overall, access to early-stage funding is still a major challenge in West Africa, as securing funding or loans from banks can be very difficult. In terms of venture capital funding, only $366.8m was raised on the continent as a whole in 2016, with $109.4m of this going to Nigeria. By comparison, Finland, with a population of 5.5m, also raised $366.8m in 2016.
What sort of difficulties do start-ups face when scaling up their activities in the country?
LYSEGGEN: The difficulties are two-fold. From a capital perspective, banks and investors are gaining momentum, but really slowly. Entrepreneurs are working to tackle these challenges by trying to raise capital from outside the country, often by applying to start-up and accelerator programmes abroad, like Y Combinator, 500 Startups, Start-Up Chile etc. From a product perspective, most start-ups are still extremely solution-driven, whereas the analysis of the problem needs to be deeper. However, techniques such as human-centric design are helping start-ups explore problems to make solutions that are more context-driven.
Overall, access to start-up finance can be improved by increased collaboration with banks to create policies specifically directed at start-up financing, in compliance with regulations. Nevertheless, local investors need to play a more central role. Foreign investors have a positive impact and are welcome, but local investors are essential since they understand the market, have local connections and will work with these start-ups not only on capital but also on growth.
Which sectors of the economy are most susceptible to disruption by new ventures?
LYSEGGEN: Agriculture and energy are two main areas ripe for innovation. New technologies offer farmers more data to help them run their farms with greater efficiency. For example, satellite technology can give them a bird’s-eye view of their property, and help predict weather patterns and humidity levels, while global tracking technology can help them keep tabs on their livestock. The energy sector is also promising, with a number of start-ups focused on solar and clean energy provision. When rural areas receive access to electricity, a number of improvements follow, from the ability to store vaccines in refrigerators, to the ability for residents to have mobile phones and regular internet access. Start-ups like Black Star Energy and PEGA frica in Ghana, M-Kopa and d.lite in Kenya, and Off-Grid Electric in Tanzania have made major strides in the solar power industry. Developing broad national policies, that support start-ups as they launch and scale up is a key role for the government. Other major interventions that could be required include having open data widely available and setting up training facilities, as well as ensuring the reliability of critical infrastructure, including roads, electricity and internet access.
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