Government initiatives, enabling regulation: Rwanda’s innovation sphere is booming

Back in 2016, Kasha, a purpose-driven business focused on promoting women’s empowerment for health and self-care, was formed in Rwanda. The company, providing a confidential order and discrete delivery experience for women in emerging markets to be able to have access to everyday essentials, won the Rwanda round of the Seedstars World competition in 2016, expanded to Kenya in 2019, secured $1m in funding in April 2020, another $1m in November 2020, and recently added an undisclosed amount of investment from Mastercard, the global financial services multi corporation. The company’s story, one of an African startup catching the eyes of international investors, is becoming more and more prevalent. TechCrunch data shows that Africa is set to crush historical records in terms of venture capital raised. The first half of 2021 had twice the funds raised by African startups as was recorded in the first half of 2020. Other sources say H1’21 has seen more funds raised by startups than in H1’19 and H1’20 combined. VC investments pouring into the continent’s innovation sphere are overshadowing the very gradual macroeconomic stabilisation, as Covid19 continues to roam various countries, and as most of the continent trails behind the rest of the world in terms of vaccination rates. Breaking records, one company at a time According to the African Private Equity and Venture Capital Association (AVCA), the entrepreneurial landscape in Africa is experiencing massive growth, and global VCs have a crucial role in the trajectory. The combination of a growing consumer base, external inflows of investment, and entrepreneurial business solutions addressing local needs and structural problems shared by billions have all accelerated VC investments in Africa to record-breaking highs. According to Disrupt Africa, which has been tracking the African ecosystem closely in the past few years, up to and including August 2021, a total of 303 African tech startups have raised a combined US$1,184,220,000, up 69 percent on the US$701,460,565 banked over all of 2020. The organization’s data shows that it has been smashed with 4 more months to go, as the sector passed the US$1 billion investment mark for the first time. A growing number of startups are responsible for the staggering figures. In 2015, only 125 startups secured investment. This figure grew to 397 in 2020, and 311 so far in 2021. Africa’s ‘Big Four’,Nigeria, Kenya, South Africa, and Egypt, maintained their status as the continent’s major investment destinations, with 80% of all startup funding. This growth can be attributed to various factors, with massive weight to be placed on an expanding focus on innovation and technology as desired engines of economic growth across the continent. A variety of countries have implemented policies that enable a conducive business environment for startups and small businesses, including Senegal and Tunisia that have recently enacted VC-friendly legislation. Ghana, and Mali are following suit, with similar policies in the works. At the forefront of the revolution Rwanda is slowly but surely setting its place on the innovation index both locally and globally, with multiple initiatives for ecosystem establishment. With various enabling regulations and innovation-led initiatives, Kigali is becoming a prominent place for international entrepreneurs and investors alike. The World Bank’s Doing Business 2020 report ranked Rwanda as the second-highest-rated African country, after Mauritius, and higher learning institutions are supporting entrepreneurs as well. Recently launched, the Rwanda Innovation Fund (RIF), which made it maiden investment last month, is another meaningful step towards an innovation economy. with the mission to back disruptive, innovative companies that deploy solutions to solve major sustainability challenges in Africa and provide answers to the dire needs of hundreds of millions of people across the continent. A core part of the fund’s mission is to support the formation of a mature innovation ecosystem that will contribute to society both locally and broadly. Through smart capital and professional guidance, the fund supports local entrepreneurs and tech-based companies focusing on sustainable development in their path to becoming pan-African ventures. RIF is also establishing the local ecosystem by collaborating with international companies that set their operations in Rwanda, promoting the country as a go-to innovation hub, and as a meaningful portal to the entire continent. Africa’s startups and entrepreneurs still have ways to go, but they are definitely on the yellow brick road. Startups across the continent have never had more access to capital than they do right now, and according to AfricArena, an ecosystem accelerator, 2021 will come to a close with investment into tech startups will amounting to anywhere between $2.25 and $2.8 billion, making it the best year in the history of tech investment on the continent. With must-have solutions for problems shared by billions, these growing numbers mirror exciting opportunities for impact on a different scale. Here is to an even better 2022. The writer is an investor in Ignite Power, a leading solar firm in Rwanda.

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Government initiatives, enabling regulation: Rwanda’s innovation sphere is booming