In a few months’ time, two new submarine fiber optic cables will go live in East Africa, TEAMS and SEACOM. These are expected to lower the cost of accessing the internet by about 90% for consumers in Kenya.
This is a big deal for two reasons:
1) Kenya is home to half a million high school and college graduates who face 60% unemployment upon finishing school. A lot of them (at least 15,000 by my estimate) study technology. Over 100 people took matatus and/or walked to Samasource’s Facebook Developer Garage at the University of Nairobi last year. There’s a huge pool of talent in that country that can found or work for start-ups, especially since the opportunity cost is so low.
2) Most organizations focusing on entrepreneurship in Africa (Enablis, the Business in Development Network,…) are not focused on high tech, because costs have been too high. That is, until now. Tech makes perfect sense in a place with a lot of human capital and not a lot of physical infrastructure for manufacturing or other economic activities. Telecom giants Safaricom and Celtel (two of the biggest companies in African history) offer good proof: Safaricom’s M-PESA mobile money transfer has processed a whopping $1.7B in transactions since late 2007, in a country where average annual income per capita is less than $600.
Most investment capital in Africa is managed by private equity funds — angel investing is extremely rare. With just a million dollars (if that), we could do in East Africa what Paul Graham has done in the US. The 145 companies funded by Cambridge and Mountain View-based Y Combinator have made it possible for college kids with smarts and vision to dream big; why can’t we do the same in Africa?