Published: July 2012 – David South Consulting

African Innovation Eco-system Taking Shape

By David South, Development Challenges, South-South Solutions

How to increase the rate of innovation in Africa? And specifically, innovation that actually improves people’s lives and reduces poverty. It is a hard question to answer, but some are putting in place the building blocks of a 21st century innovation culture by riding the information technology revolution as it rolls across Africa.

The transformative story of mobile phones in Africa has captured the attention of the world. Technologies like mobile phone payment systems developed in Africa are now being rolled out around the globe.

But there is more to come as undersea cables increase the communications links between African nations and the rest of the world. New undersea cables including TEAMs, Seacom and Eastern Africa Submarine Cable System (EASSy) (eassy.org) are vastly increasing the continent’s Internet capacity and bandwidth (http://en.wikipedia.org/wiki/Bandwidth_%28computing%29).

These communications links will revolutionize the type and scale of innovation that can happen in Africa.

As websites like AfriGadget (afrigadget.com) amply prove, there is already an entrenched do-it-yourself innovation culture hard-wired into daily life on the continent. While impressively resourceful and able to make the most of often very little, this innovation culture is often confined to a narrow geographical area. And this is the difference the new information technologies will make: They will allow this energetic and resourceful innovators’ culture to develop businesses and business models that can reach beyond narrow geographical parameters.

New technologies will also accelerate the spread of new ideas and solutions.

Across the continent, ways and means are being stitched together that enable people to transcend borders and old divisions and obstacles to connect with like-minded collaborators, seek out funding and take ideas from dreams to schemes and eventually to continent- and world-straddling levels.

According to the Deloitte 2011 East Africa Private Equity Confidence Survey: Promising 2012, “Many investors see East Africa’s strong growth potential as a driver of better investment performance than in South Africa: This is a huge shift in private equity attitudes toward Africa, which have been historically focused on South Africa. East African investment potential is seen as roughly on par with West Africa, where similar growth dynamics are at play.”

Identifying the elements that are making this innovation culture flourish came under analysis in a recent post on the Afrinnovator website (afrinnovator.com). Afrinnovator is dedicated to “telling the stories of African startups, African innovation, African made technology, African tech entrepreneurship and entrepreneurs.”

While it is well known that new infrastructure, better governance, new policies, and new services like mobile phones and mobile money have made a big difference in shifting perceptions of Africa from despair to optimism, Afrinnovator found there were other key ingredients to this innovation renaissance.

Afrinnovator argues there are four elements that have come together to change circumstances for innovators on the continent: education, mentoring and incubators, funding, and showcase events.

Afrinnovator found education was critical to the quality of emerging technological innovations. Information and communication technology (ICT) education has moved from just computer science courses to a vast array of options, from bachelors degrees to masters programmes.

For mentoring and incubators, Afrinnovator found hubs and incubators are providing places for young educated people to go to and get down to work.

Examples include iHub (http://ihub.co.ke/pages/home.php), mLab East Africa (http://mlab.co.ke/pages/home.php), ccHub (Co-Creation Hub Nigeria) (http://cchubnigeria.com/about-cchub/), Lusaka, Zambia’s Bongohive (bongohive.com), iLab Africa (http://ilabafrica.ac.ke/) NaiLab (http://nailab.co.ke/) iBid Labs (http://ibidlabs.com/) and Uganda’s HiveColab (http://hivecolab.org/), among others. These places offer like-minded fellowship and access to mentors to take them on the journey from “idea to viable profitable business.”

According to Business Daily Africa, “There are more than 3,000 software developers who have come up with both mobile and personal computer-based software applications that are changing lives across the continent.”

A transformation in funding access has seen a renaissance in new thinking that is transforming tech start-ups into viable businesses. Kenya has the Kenya ICT Board (http://www.ict.go.ke/) and it awards US $50,000 through its Tandaa grant programme (https://sites.google.com/a/ict.go.ke/tandaa/).

Because of this enthusiastic local support, the World Bank is now committing a US $55 million grant targeting Kenya’s technology innovators to be distributed through the Kenya ICT Board.

East Africa also saw 16 new investor funds launch in 2011 alone. They include early-stage investor funds like eVentures Fund Africa (eVA) (http://www.eva-fund.com/), which calls itself “the first venture capital firm investing in African SME’s active in digital media.” Another is Kenya-based 88mph (http://www.humanipo.com/88mph), with its “focus on startups targeting the East African mobile and web market.”

In Kenya, the World Bank money will be used to help technology developers bring to market simple solutions in health and education.

According to the World Bank (http://tinyurl.com/cm3g2rf), “Kenya has put in place the second-fastest broadband on the continent (after Ghana), which has reduced the wholesale internet capacity prices by over 90% and increased internet penetration from 3% to 37% of the population in the past decade. Today, about 90% of Kenyan adults have or have the use of a mobile phone.”

And the final game-changer, according to Afrinnovator, is “showcase events.”

These events give investors and potential partners the opportunity to meet start-ups and explore their new ideas.

Examples include DEMO (http://www.demo.com/ehome/index.php?eventid=29414&amp😉 – which connects the idea people with the money people – and Pivot East in East Africa (http://pivoteast.com/). Pivot East provides 25 technology entrepreneurs with the opportunity to make a pitch in front of investors. DEMO is working with USAID, Microsoft, Nokia and others to launch DEMO Africa in Nairobi, Kenya from 21 to 22 October 2012.

Afrinnovator concludes: “This is the last virgin tech landscape left on the planet. The best time to become a player in the African technology innovation ecosystem is now.”

Published: July 2012

Resources

1) Read more about Africa’s evolving innovation system. Website: http://afrinnovator.com/blog/2012/06/13/the-innovation-ecosystem-in-eastafrica/

2) Southern Innovator: Youth and Entrepreneurship Issue. Website: http://www.scribd.com/doc/86451057/Southern-Innovator-Magazine-Issue-2

3) Southern Innovator: Mobile Phones and Information Technology Issue. Website: http://www.scribd.com/doc/57980406/Southern-Innovator-

Magazine-Issue-1

4) Notes from ‘Understanding Broadband Demand in Africa: Internet Going Mobile’. Website: http://www.oafrica.com/mobile/notes-from-understanding-broadband-demandin-africa-internet-going-mobile/

5) Deloitte Private Equity Survey 2012. Website: deloitte.com

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023

African Fuel Pioneer Uses Crisis to Innovate

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Crisis, as the old saying goes, is also a window of opportunity. And there is one African entrepreneur who knows this better than most. Daniel Mugenga has been on a journey of innovation that has led him to become a pioneer in the emerging new field of algae technologies. The story of how he got there is a testament to the power of using business to both solve problems and make profits.

Kenyan entrepreneur Daniel Mugenga has found a solution to the problem of high fuel costs for the transport sector in his country. He has been making money from turning waste cooking oil and inedible vegetable oil into biodiesel (http://en.wikipedia.org/wiki/Biodiesel). He then discovered that he could boost his production of biodiesel by using marine algae as a source for oil.

According to the body that represents the algae fuel industry, Oilgae (oilgae.com), algae are “plant-like organisms that are usually photosynthetic and aquatic, but do not have true roots, stems, leaves, vascular tissue and have simple reproductive structures. They are distributed worldwide in the sea, in freshwater and in wastewater. Most are microscopic, but some are quite large, e.g. some marine seaweeds that can exceed 50 m in length.”

The U.S. Department of Energy has been investigating algae as a fuel source since 1978, and it is being investigated as a potentially transformative fuel source around the world. His business, Pure Fuels Ltd. (http://www.purefuels.co.ke/), is currently seeking venture capital funding for expansion and innovation. Pure Fuels is “a commercial producer of biodiesel and also manufactures biodiesel processors, which we sell to budding entrepreneurs,” says Mugenga.

The Pure Fuels website educates readers on biodiesel as well as offering opportunities for investors and news updates. Pure Fuels was registered as a business in Kenya in 2010.

The business was born out of crisis: in 2008 there were frequent fuel shortages in Kenya and prices were volatile. That was bad news for Daniel Mugenga’s job, working for a transport company with a fleet of trucks. Rising or volatile fuel prices can destroy businesses in areas like trucking, where the biggest expense is fuel.

Mugenga began to do research into fuel alternatives in the crisis and came upon biodiesel. He then set about training in how to produce biodiesel. A period of testing, trials and research ensued between 2008 and 2010, which enabled Pure Fuels to build confidence they had something that was high quality. The company started producing 120,000 litres of biodiesel in 2010 and increased production to 360,000 litres in 2011 and 700,000 so far in 2012. In 2011, Pure Fuels had revenue of US $230,000 from selling biodiesel.

“We started off using jatropha oil, but when its price went up it was no longer profitable,” Mugenga told the VC4Africa website blog. “Having invested in the machinery, we switched to the next quickest alternative which is used cooking oil. We source it from several of the tourist hotels along the Kenyan coast.”

Turning to cooking oil for biodiesel at first was a good idea. The company was able to get enough waste cooking oil from Kenya hotels and tourist resorts to meet demand. But as demand rose, the thorny problem of Kenya’s tourism business being seasonal arose.

“For about five months of the year, many hotels in Mombasa temporarily shut down or operate at lower capacity. Of course this is affecting the amount of waste cooking oil,” Mugenga said. This is where algae (http://en.wikipedia.org/wiki/Algae) comes in.

Pure Fuels found a biotechnologist in Kenya to help develop a solution using algae as a source for fuel. While the company is keeping details of its innovation secret, it is currently hunting for investors to help increase the quantity of biodiesel it can make – and in turn, revenues.

Investor funds would be used to import non-edible vegetable oil and also to continue the company’s work on extracting oil from marine algae.

Pure Fuels make a bold statement on algae fuel development: it “may actually be Kenya’s next cash crop.”

Pure Fuels sells several products: there is the biodiesel itself, as well as a processing machine called the GXP-200, which can turn customers into biodiesel manufacturers themselves. The company also builds large, industrial-scale processors that can produce between 1,000 litres and 5,000 litres a day.

Pure Fuels currently sells fuel to truck, bus and tuk-tuk companies, and also operates biofuel stations.

The firm has patented its biodiesel and makes all its fuel go through seven quality checks for purity. An in-house laboratory ensures adherence to international standards, and the company is certified by the Kenya Bureau of Standards (http://www.kebs.org/).

Mugenga is a passionate advocate of biodiesel’s advantages: he believes it is cheaper, and better for engines and for the environment. He admits it does have a disadvantage: it gels below 13 degrees Celsius and must be mixed 50-50 with conventional diesel to stay fluid.

Pure Fuels encourages others to use biofuels for business, throwing in a home training kit with the biodiesel processors it manufactures and sells, complete with DVDs, manuals and a business plan. The GXP-200 biodiesel processor was developed after years of experience, and Pure Fuels hopes it will be bought by people who then set up businesses – especially youth, women and the disabled. As a further incentive, Pure Fuels promises to buy the biodiesel produced. The GXP-200 was recently awarded “Most Innovative Product 2012” at a small and medium business entrepreneurs event in Nairobi.

In Israel, there are a number of pioneers working on further developing algae as a biofuel source too. Isaac Berzin of Seambiotic (seambiotic.com) sees algae as a good source for biofuel because it does not compete with food crops like other biofuel sources (sugar, potatoes, corn etc.). Algae is among a group of so-called second-generation biofuels that includes jatropha, wood and castor plants.

The disadvantage of plant-based fuel sources is they need arable land and water. This seriously holds back their ability to meet the world’s demand for fuel since they would just take up too much land and water. Algae takes up less space and produces a higher yield per acre than conventional crops.

Seambiotic makes marine microalgae using the CO2 from electric power plant flue gas. It pioneered making large quantities of fuel algae in the United States, creating the first gallons of bio-diesel and bio-ethanol from marine microalgae.

Seambiotic is also working on a US $10 million commercial microalgae farm in China, partnering with China Guodian (http://www.cgdc.com.cn/), one of the country’s largest power companies. Another Israeli company in this field is UniVerve (http://www.univervebiofuel.com/). Its CEO, Ohad Zuckerman, runs the10-person company in Tel Aviv, Israel. It is developing a new biofuel from a special strain of algae that can grow quickly in a wider range of temperatures.

Published: July 2012

Resources

1) A website with all the details on biodiesel and how to make it. Website: http://www.biodiesel.org/

2) How to make your own biodiesel. Website: http://journeytoforever.org/biodiesel_make.html

3) Oilgae is the global information support resource for the algae fuels industry. Website: http://www.oilgae.com/

4) Algae as a superfood and cancer-fighter: Chlorella. Website: http://en.wikipedia.org/wiki/Chlorella