Ungana-Afrika has designed an African Social ICT Enterprise Initiative to encourage ICT enabled social innovation and entrepreneurship in Africa, with an emphasis on feasibile business models that accelerate technology adoption within under-served areas. We are currently approaching key partners and organisations interested in providing start-up finance to allow us to launch and further develop our future flagship initiative.

Contact us, if you are interested in the details of the initiative.

Click the diagram to open a full size version (200KB)

Context

“Development through Enterprise” is the slogan of the leading web-portal NextBillion.net that promotes an approach to tackle development problems. Instead of relying on traditional development aid and political reform, the idea behind the slogan is to enhance the implementation of business driven ideas within low-income communities. “Successful business models - inherently versatile, innovative, and driven by the profit motive - can sometimes tackle development challenges more quickly and effectively than government and aid mechanisms” summarises the reason why enterprise development is seen as an important development agenda by NextBillion.net and the community supporting the approach.

While many of the big industries can have a positive footprint within emerging markets and especially under-served communities, research suggests that information and communication technologies (ICT) play an extremely important role in the development of local economies, and an easier access to ICT based services as a poverty reduction mechanism should receive more attention than before. For example, a recent World Bank report '2009 Information and Communications for Development: Extending Reach and Increasing Impact' highlights the fact that ICTs can have even more important role in emerging markets compared to the benefits of OECD countries.

Many international institutions and developing countries have understood the potential of local ICT based innovation and entrepreneurship. As an example, the ICT Development Framework of South Africa is targeting to stimulate ICT-enabled growth of business across the economy as one of its goals. Several programs have been launched to support the success of growth oriented start-up enterprises with the aim to help these enterprises increase their competitiveness and growth. Alone, infoDev's global business incubation network consists of over 300 incubators in over 80 developing countries that are promoting ICT-enabled entrepreneurship through business incubation.

Statement of Need

While several support programs and initiatives have been established to support ICT-enabled innovation, long term concerns for their own self-sustainability often limit the reach of these efforts. Since resources are limited, the enterprises chosen to various innovation and incubation programs tend to either have products and services with very high growth and revenue projections (these enterprises are able to afford to pay for support services) or high export potential (often prioritised by government programs because there enterprises support the growth of national economies).

Therefore, the reality for those ICT entrepreneurs who are developing ideas targeting under-served and low-income market segments, is that there is still very little formal support because often the profit margins are lower and risks higher compared to more attractive business incubatees. Also, because social entrepreneurship is still a relatively new concept for the business development community, most of the business development services and products are still developed with the most profitable markets in mind, and ideas targeting people living in less attractive areas, with very low purchasing power, tend to be ignored.

In addition, many of the existing and successful companies that would actually have the resources to invest in R&D projects are not considering to expand their reach to low-income markets. “Because we have no idea what the needs are in that market segment we only focus on high-earning customers at the moment.” - a comment made by a mobile industry entrepreneur during a Mobile Monday networking event in Johannesburg early 2010, reflects the common issue existing companies face when questioned about their lack of interest toward the large customer potential of African low-income markets.

Apart from gaining a better understanding of the market, needs of the potential social ICT enterprises are numerous. Companies find it difficult to obtain the necessary financial resources to start-up their businesses even before more substantial capital for growth and scaling up is considered (which is also extremely challenging). Entrepreneurs lack capacity and experience either from managing a business or the technology skills are not enough to compete against global competitors, and high quality mentorship and support is difficult to obtain. There is also a large number of people who are aspiring to become entrepreneurs, but lack the knowledge what practical steps are needed or awareness how entrepreneurship compares to formal employment as a career choice. For some of the entrepreneurs the barrier is a lack of external encouragement or formal acknowledgement that the idea they have has potential to become a successful business.

Objectives and Structure

Overall Objective

As a part of the mission to catalyse scalable enterprises in emerging markets, Ungana-Afrika has designed a flagship initiative to encourage ICT enabled social innovation and entrepreneurship, with an emphasis on feasible business models that accelerate technology adoption within under-served areas.

Structure

The ICT Social Entreprise Initiative will be implemented annually, and is planned to have the following components:

• Training and Lectures

• Business Model and Business Plan Competitions

• Intensive Fellowship Program

• Venture Capital and Finance Forum

• Case Publication including relevant case stories and visualised business models

The diagram at the start of the page provides a visual overview of the program structure.

Goals

Through the implementation of the initiative Ungana-Afrika aims to reach the following goals:

• Higher awareness of the opportunities related to ICT enabled social entrepreneurship among potential entrepreneurs and future leaders, as well as financing institutions and other relevant stakeholders

• Potential and existing entrepreneurs will be able to innovate and design feasible business models that are essential to gain market entry and build the foundation for scalability and growth

• Top innovators will be offered a formal fellowship, which provides a risk free period to establish new start-ups and further develop and test ideas in a supportive environment

• Stakeholder interaction and collaboration will be encouraged by bridging promising entrepreneurs with potential investors and partners and encouraging face to face and online networking

• Innovative start-ups with a strong business case will be able to raise funding to support the growth of the enterprise

• New public-private-partnership initiatives will be established by engaging a mix of academic, government and business leaders throughout the program

• Bigger and formal business incubators with a comprehensive set of business support services such as office space will be able to attract high quality entrepreneurs

• Academic institutions with entrepreneurship programs will be able to attract students with high entrepreneurial drive

• Once the program is well established, the aim is to connect entrepreneurs to international opportunities

Key Partners

It is clear that a number of key partnerships will form the backbone of the initiative. These partners will need to represent leaders of the following identified clusters:

• Institutions providing higher education (especially those departments and programs focusing on entrepreneurship and enterprise development).
• Organisations and institutions that focus on the development of social entrepreneurship and social entrepreneurs.
• Organisations and institutions with a strong information and communication technologies for development focus.
• Science, Technology and Innovation cluster, including science parks, small business incubators, research institutions, etc..
• Business development service providers, including online support networks, consultants and SME service providers, etc..
• Finance organisations including business angels, public financiers, venture capital funds (especially those who invest 'patient capital'), and merger and acquisition departments of corporations who are active or planning to be active within the low-income markets.
• Organisations with experience in the activities this initiative will implement, who are willing to share resources and assist with the design, set-up and operational aspects
• Different media, but particularly those companies and sources that cover technology and start-up news.

Business Model and Sustainability

As one of the main areas of the initiative is to help new enterprises to design feasible business models, it is essential that the African Social ICT Enterprise Initiative is based on a business model that provides a foundation for long term sustainability.

The drafted business model relies on fees related to advertising and brand visibility during different activities made possible via different levels of sponsorship agreements. Additional revenue can be sourced by charging participant fees from the attendants of the Venture Capital and Finance Forums. There is also a possibility to harvest Corporate Social Investment opportunities where different corporates will sponsor individual entrepreneurs to take part in the fellowship program.

As a non-profit initiative, there are several possibilities to reduce costs by being able to receive pro-bono services from key partners including lectures, venue use and even marketing support.

Ungana-Afrika is also planning to use potential surplus from our consultancy activities to support the initiative.

A detailed feasibility analysis will be implemented as a part of the design and planning process.

Why Ungana-Afrika

During the last few years Ungana-Afrika has supported ICT innovation and concepts that specifically target the emerging markets and underserved areas, or have been based on business models beyond profit. This experience has become our niche area that most of the other innovation support organisations shy away from or lack the necessary understanding to be able to provide high quality advice in.

Since many of our recent projects have been done as consultancy assignments, we've realised that most SMEs or potential entrepreneurs lack the necessary funds to use our services. To be able to become a real catalyst of change, we would like to serve these smaller or new technology enterprises, and have been conceptualising this flagship initiative for technology entrepreneurs interested in the underserved markets. This is also well aligned with our non-profit identity and role within the ICT4D community.