Software from Africa? The question sounds like a joke to many, but there’s no punchline. Companies in Ghana are serious about a promising new industry taking hold in their country.
From indigenous startups and mid-sized firms founded by foreigners to new offices from multinational giants like Google and IBM, the software scene in the capital city of Accra is blossoming.
It’s no Silicon Valley, but companies are finding that solutions developed for the local context are resonating across borders. Driven by sluggish growth in established tech markets, venture capitalists from around the world have become frequent visitors to this West African nation.
Still, some local companies say it’s an uphill battle to persuade investors that a tech wave is swelling on a continent known more for coups than computers.
“Our biggest challenge is credibility,” said Blaise Bayuo, founder of RetailTower, a software service that helps online sellers get their products listed on price-comparison websites. “People don’t expect a software company to come from Africa.” The company hopes putting an office in San Francisco can help close this gap.
RetailTower came about after founders ran across a discussion forum where a retailer requested help getting his wares to show up on Google‘s shopping listings. They decided to solve his problem and realized the solution could be scaled up.
Now RetailTower has 10,000 sellers (mostly outside Ghana) and is concentrating on growing that number. It hopes to eventually charge for premium membership while keeping most of its services free.
Robert Lamptey, co-founder of mobile messaging service Saya, said you can’t blame outsiders for failing to see Africa’s tech potential. It has lagged the developed world, though he believes media coverage has unfairly exaggerated the continent’s negatives.
Saya was built to answer a Ghanaian problem. Smartphone penetration here is low, and people use SMS (text messaging) to chat with each other on their mobile phones.
Saya’s interface organizes messages into threads and sends them over the phone’s less-expensive Internet connection. By some estimates it costs 1,000 times less to send a Saya chat message than a text, and it works on practically any phone.
Only about 40 days after its official launch, the app boasts 20,000 downloads, also mostly outside Ghana. There’s been a surge in Egypt, India, Indonesia and even strife-ridden Syria, possibly thanks to its “street-chat” function that allows users to converse with others nearby.
“Building an application to solve our problem ended up solving a problem for a lot of people,” Mr. Lamptey said.
Like RetailTower, Saya is building its user base before trying to collect sales. It’s testing ads that use demographic and locational data, hoping eventually to help companies target consumers who don’t mind receiving useful information, he said.
The small firm has momentum, having presented at the Mobile World Congress in Barcelona, Spain, the mobile phone industry’s largest global conference.
ClaimSync, a new health-care IT company, sees itself going the opposite route, focusing on the domestic market before expanding into other countries. Its software organizes patient information for hospitals and clinics, helping them better track diagnoses and submit insurance claims more efficiently.
With 200 hospitals in Accra, CEO and co-founder Seth Akumani doesn’t foresee any problem earning revenue once the software breaks into the right channels. The problem will be getting hospitals to move away from the paper-based systems they’re used to, which would require investment in equipment and training. “I think the biggest issue is change,” Mr. Akumani said.
All three companies are in the incubator affiliated with the Meltwater Entrepreneurial School of Technology, or MEST, a pioneering institute tucked away in Accra’s East Legon area. It’s funded by the charitable arm of Meltwater, a software firm that started in Norway but now is based out of San Francisco.
The two-year program takes a holistic approach to shaping college graduates into software entrepreneurs. No programming experience is required, and there’s instruction at all stages, from the first keystrokes of code to the last pitches for funding.
Michael Szymanksi was impressed when he heard Meltwater CEO Jorn Lyseggen speak about the idea. While studying for an MBA at Oxford University, he became a mentor for an annual competition in which the top student business idea gets funded by the Meltwater Foundation.
After graduation he was offered a full-time mentor position at the incubator. Mr. Szymanski is bullish on the tech industry in Ghana and believes celebrating homegrown heroes will help Ghana develop as an industry hub. Ideally he’d like to see MEST grads rivaling soccer stars as role models.
A recent trip to London showed that “hard-core” venture capital investors are taking a serious look at setting up offices Accra, he said.
“The strongest message that I was hearing from these investors was Africa is a continent of opportunity, and not opportunity just in the traditional areas of extraction. It’s a continent that has opportunity in the area of ideas, of building something, of building solutions that are applicable globally, and that gets me excited,” he told Global Atlanta.
Mark Davies makes the same argument, that Africa should play up its success stories to shed negative perceptions.
Though he hails from the U.K., Mr. Davies has seen Ghana’s tech industry from the inside. After launching successful tech startups in Europe and the U.S., he came to Africa in 2000 looking to “give back.” He heard surprisingly innovative discussions and was advised – by the philanthropic community, no less – that a new company would have more impact than another charity.
He helped found Busy Internet, which started as an incubator but morphed into the country’s largest Internet-service provider. Busy’s offices are just across Ring Road from Esoko, where Mr. Davies is now CEO.
Esoko’s software platform delivers crop prices via SMS to farmers, helping them avoid price gouging by middlemen. It’s used mostly by public projects, but the company, which has mostly Ghanaian staff, will soon go after its “real, long-term” customers: agribusiness firms looking to manage their relationships with suppliers.
Mr. Davies said that Ghana’s tech scene has traditionally been driven by prominent personalities rather than a grassroots movement, but the community is starting to develop beyond the five or six stable companies that existed when he first arrived.
“In the last two years things have changed quite dramatically, and I think it’s really with the advent of mobile maturing – mobile platforms, mobile data connectivity – that the barriers to define businesses, to build businesses and to monetize businesses have really transformed a lot,” he said. With new cables landing in West Africa, the cost of data has also been reduced.
Now it’s conceivable for a small group of developers (like those at Meltwater) to master programming and then sell new products in a market that understands apps and other mobile services, he said. Before, developers had to focus on desktop applications in business context, a much more limiting field.
There are still hurdles to growth. While Mr. Davies started his first venture in New York using 18 different credit cards to cobble together $80,000, innovative Ghanaians have much less access to financing. It also has an underdeveloped venture capital scene and few angel investors, rich individuals who invest in companies with nascent technology.
“Capital is a big problem here, but nobody’s really talking about it,” he said.
Ghana IT leader Eric Osiakwan, a Berkman fellow at Harvard University who advises startups including Saya and holds many academic designations, said his country has a lot of disparate innovation but few places for nurturing it.
“People are increasingly entrepreneurial and innovative but there’s no environment for getting that support infrastructure… ” Mr. Osiakwan said.
He is part of a group trying to raise $100 million to build Ghana Cyber City, a technology park that aims to attract business-process outsourcing work and create an “ecosystem” for startups that would breed more employment. Plans for the complex have been in the works since 2005. It would include office, housing and incubator space and is to be built on land owned by the University of Ghana.
Note: Global Atlanta reporter and editor Trevor Williams traveled to Ghana April 1-5. This is the first of his articles reporting on the country’s economy and opportunities for Georgia investors.