Interview William Sonneborn : “Over next five to ten years, Africa will become exporter not only of minerals and oil but also of ideas and technology”

Interview by Dounia Ben Mohamed

 The African tech ecosystem is evolving fast, revealing its impact on African economies and societies. What are its strengths and weaknesses?

When I think about the Africa tech entrepreneurship economy, it’s dynamic, as you mentioned. It’s very fast growing, but it’s been historically concentrated in four key markets: South Africa, Kenya, Nigeria, and Egypt. So, it’s unbalanced. And even within those four markets, it’s been concentrated in fintech. About 40 % of the activity in funding and success stories coming in fintech. So, our job is to even out those success stories into other parts of the continent, which is how we build ecosystems. We did it originally by working in Kenya, South Africa, and Egypt. Now we’re doing it in places like Tunisia, Ethiopia, Morocco and Ghana, really to try to create this entrepreneurship opportunity for jobs. Really, it’s about jobs given the youth who are so numerous in Africa. And with jobs you get in hopes.

How is IFC supporting the players in this ecosystem in terms of financing, skills development and so on?

 We have basically three pillars of focus on the startup ecosystem in Africa. One is building the basic layer for nascent markets. A great example is we did some work with a consultant on Ethiopia. This is about a year and a half ago. Country the size of Ethiopia, with a population of more than 120 million, do you know how many startups were in Ethiopia? Total? 7. We realized that that was a problem. So, we partnered with a firm. We decided we were going to put 350 women between the age of 18 and 22 through full stack coding school with mentorship in Ethiopia. Of the assisted 350 women, 90% per cent of them are going to go work for a state-owned entity, Ethiopia Airlines, Ethiopian Telecom or work in technology. I think 90 % of those women at the end of the program said, I want to be an entrepreneur.

Now, we realize the reason there’s seven isn’t because of lack of interest or capability. It’s lack of funding. It’s government policy and regulation that takes over a year to set up a startup in Ethiopia. So, we’re working with our colleagues at the World Bank to embed a startup act in Ethiopia to do ease of doing business with tech startups.

We’re working on building the first incubator in the country to provide free seed capital for startups with a gender balance between men and women, which is also important for us.

What we are going to have to do over time is come in as a direct investor, which we do in series A and series B, the growth stages to ramp up these success stories. We’ve done that in South Africa. We’ve done that in Kenya, Nigeria and Egypt. We’ve done that in Senegal with Wave, the first ‘unicorn’ in Senegal and more widely in francophone Africa. That’s part of our job. We are first an investor. To return to this example, Wave offers a mobile money wallet that allows its customers to pay for goods and services electronically, transfer money, buy airtime or pay their bills – all instantly, directly from their smartphone and at a fraction of the cost and hassle. Not surprisingly, since its launch (2017), Wave has already reached over 11 million customers per month.

The third pillar we have developed is investment. We’ve invested about three and a half billion dollars in the tech ecosystem in Africa over the last eight years, and that’s accelerating. So, the next eight years, we could invest much more.

Because when you think about Africa on a per capita basis, it’s one 50th of the penetration of venture capital where we are here today in France at VivaTech. We need to level off the playing field. And the way to do that is for IFC to invest and crowd in private sector participants to invest alongside us to scale these businesses. That is a big part of it. It’s regulatory policy, it’s building the ecosystem, doing it with the gender focus in terms of balance, and providing capital advisory support and guidance to our global network to give these companies a better chance to succeed.

Once again this year, you will be present at VivaTech, notably through the African Tech Awards. What is the purpose of this initiative?

 The idea of mobilizing other commercial investors to be excited about investing in African tech companies was the idea for last year, which is our premiere edition. In that edition we decided to launch, in partnership with VivaTech, the Africa Tech Awards, focused on three categories fintech, climate tech, and healthtech.

VivaTech was shown to hundreds of thousands of people through streaming over the last three days. The idea is to showcase really good African startups to the world in a room where it’s filled with investors, venture capital investors from around the world looking for innovative ideas and startups. We use the publicity around the awards to elevate the winners on a global stage. And we continue to grow and it is our second year now, which we grew. We grew the nominations for the awards by 30 % from first edition to second edition.

And What’s amazing is the quality of entrance is extraordinary. We have nine finalists we brought here from Africa to Paris. Three of them were chosen on June 15 as the winners of the 2023 Africa Tech Awards, one startup per category. But for three days, the nine finalists were able to meet with investors at VivaTech.

We have a team including Deloitte as independent, one internal judge and several independent judges that come from venture capital firms that serve as the judges of the awards. It was very well done to make sure it’s unbiased and independent.

What really counts in the selection of these startups, is really how disruptive the idea is and the business model that promise it has both in terms of financial returns as an investor looking for and development impact. That’s one of the reasons we focus on fintech, climate tech and health tech. Fintech because it is really focused on financial inclusion. Health tech is that since we are not going to have as many doctors with the population in Africa doubling over the next 20 years. There’s no way to get as many doctors as we need in the continent. We need to use technology to improve the efficiency of the health care system in Africa. Climate tech because Africa is in the bull’s eye with the challenges of climate change. So, it needs to adapt to new ways for agriculture, develop circular economy and think about new ways of energy production. 

 Because we have to build a bunch of infrastructures in Africa. Let’s build a really innovative infrastructure, close to most of what Europe and the US., Australia and Japan did, let’s come up with the next layer, which makes Africa the model of the most friendly, climate efficient, productive, innovative economies in the world.