August 27, 2010 by staff
Ihub, The lack of seed capital funds, setting, and some avenues of debt financing have allowed humanitarian organizations to invest in technology scene in Africa, hoping to capitalize on the growing “techpreneurship.”
The U.S. State Department, Hivos, the Dutch aid agency, the Omidyar Network and the World Bank are leading proponents of technology initiatives in Africa through direct financing, competition and subsidies, among other associations.
While humanitarian agencies have been known to give “free” money, that trend is changing, with the focus shift to sustainable options for communities and ways of working without visible donor “hands.”
“With a few ways to finance debt and equity available in seed stage almost nonexistent, the odds are often against African founders of start from the beginning – with a humanitarian org known to support an effort that can help in several ways, “said Bill Zimmerman, co-founder of Limbelabs in Cameroon.
There are questions whether organizations expect the venture capital gains, as do, because they expect a seat on the board and if the interest in technology funding will fade or change, and change the donor sites over time focused.
“I think it’s good to have the support, provided that this does not mean many claims that contain [up] growth. After all, is a business that must grow, regardless of source of funding,” said Erik Hersman, founder of Ushahidi.com, which began Nairobi Innovation Hub.
Ushahidi been supported by Hivos and the Omidyar Network to the establishment in the Innovation Hub (iHub) and humanitarian organizations have demanded that the board or control operations.
Apart from financial benefits, support of humanitarian organizations at no cost and provides visibility through marketing channels of funding partners. ”
“Having a major funding organization in your corner helps to legitimize an initiative, creates opportunities for networking and opens the door to other partners to do the same,” said Zimmerman.
For Hivos, the financing of co-working spaces for developers was supported by a study on emerging software culture that took place in 2009 on behalf of the University of Amsterdam and the University of Makerere in Kampala. The study explored the development of the technology industry and the financial picture that could allow ideas to grow into successful businesses.
“From my time in the laboratories of Appfrica and other emerging software companies, I see something important happening: Young people not only through technology, they were in reality is the deconstruction and reuse for their own needs,” said Ben White, who conducted the study. Appfrica Laboratories is based in Uganda, but is dedicated to the developers of East Africa.
Despite Hivos has been investing in the technology industry, the study allowed White to make a case for focusing on individual developers through the creation of co-working spaces to help them grow the business. Hivos was associated with Ushahidi, which provides a mapping platform worldwide used to establish the iHub.
“The iHub was created to be a space for the technology community to use as a physical link space for meetings, events and work. It is an open forum for technologists, investors, technology companies and hackers in the area; this space is a technology community center with a focus on young entrepreneurs, developers and mobile Web and designers, “said White, who also created the program in techpreneurship Hivos.
The initiatives have received support, but the main challenge will be what happens after time and if the humanitarian organizations that provide a few donations after taking off, depending on the availability of funding sources.
“The downside risk is that over time this can create a culture of dependency grant if there is no alternative funding structures in place,” said Zimmerman. “Even the largest humanitarian organizations depend on the ebb and flow of national budgets and the Global Economy.”
The areas that receive technical support are also the delicate balance of proof to young innovative company should always be sound and realize successful exits in the case of funding.
“In the end, center or laboratory is to function as a business, move – is a company able to compete, and emerging techpreneuers should know that,” said Hersman of iHub.
In terms of the level of funding, Hivos insists he does not expect to stop with a few donations and hopes that projects funded iHub to be economically profitable. Finally, Hivos will exit, the generation of success stories in the process.
To demonstrate its long-term commitment, Hivos and Omidyar have formed the African Technology and Transparency Initiative as a joint effort to provide financial support to organizations working in the exchange of technology, participation of citizens and government transparency.
The World Bank is to engage governments in creating content and reducing the cost of connectivity, which benefits the individual developers. For example, the World Bank has a U.S. and 3 million competition of content with Kenya ICT Board. Winners will be announced next week.
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