Rwanda and Uganda are emerging favorite destinations in Africa for investment in information and communication technology.
However, the main investor destinations in the ICT sector in sub-Saharan Africa – Kenya, Nigeria and South Africa – have seen a decline in investment flows.
According to new data, East Africa attracted $ 200 million in technology-based investments in 2017, with Kenya accounting for $ 147 million.
Rwanda and Uganda are starting to get some of the investment that has traditionally gone to Kenya, with a combined $ 52.7 million last year, of which $ 36.7 million went to Rwanda.
A new report from the GSM Association (GSMA), the global lobby for mobile operators, entitled The Mobile Economy in Sub-Saharan Africa, shows that 76% of the total funds from startups in Kenya, Nigeria and South Africa Africa region.
"However, the downward trend in the combined share of investments for the three markets, of more than 80 percent in 2015 and 2016, shows a growing interest from investors in other markets, notably Ghana, Rwanda, Senegal and Uganda," report.
Last year, 124 starting tech companies in Africa increased $ 560 million, an increase of 53 percent over the previous year. Of these, sub Sahara Africa accounted for about $ 515 million in more than 100 deals.
The range of funded tech start-ups and the growing volume of deals reflect the accelerated development of the ecosystem, with fintech and solar energy for 21 percent each. E-commerce and edtech accounted for 19 percent and 12 percent respectively.
"This underlines the growing interest of innovation and investors in solutions that address the region's greatest social challenges, such as limited access to financial services, education and energy for large sections of the population," the report says.
Last year, Ugandan solar start-up SolarNow received a loan of $ 6 million to reach more customers and expand access to pay-as-you-go solar energy.
A number of high-profile investments have already been made this year, including a $ 3.5 million investment in the Kenya-based customer feedback platform mSurvey to finance expansion to Nigeria and South Africa.
mSurvey gathers opinions via text messaging with the Voice of the Customer and Consumer Wallet products. The new financing round was led by TLcom Capital, with investments from Social Capital, Kapor Capital and Golden Palm.
Kenya also received $ 8.6 million Series A financing for mobile solutions start-up Africa's Talking, led by the International Finance Corporation, alongside Orange Digital Ventures and Social Capital.
The Africa & # 39; s Talking platform offers unified access through its API to more than 20,000 software developers in Africa. The company manages a cloud-based communication platform that virtualises telco infrastructure across the continent.
Nigeria received $ 1.1 million in starting capital for its startup Piggybank.ng, which offers online savings plans to Nigeriens with a low income and an average income for depositing small amounts on a regular basis.
The funding was led by a $ 1 million commitment from LeadPath Nigeria, with Village Capital and Ventures Platform each contributing $ 50,000.
Apart from the reduction in start-up funding, Kenya also sees fewer technology hubs in the country than its traditional competitors in South Africa and Nigeria.
In the past two years, Kenya has established only three new technical hubs in Nairobi, compared with 32 in Nigeria and eight in South Africa. Uganda has started four new hubs in the same period.
In June of this year, there were 355 active technical hubs in Sub-Saharan Africa, compared with 239 in 2016.
Almost half of all technical hubs in the region are located in four countries – Ghana, Kenya, Nigeria and South Africa – showing data from the GSMA Ecosystem Accelerator program.
In March of this year, Kenya iHUB launched the second phase of its six-month scale-up accelerator program with 27 startups from Kenya, Rwanda, Somalia, Tanzania and Uganda.
Three months ago, CcHub selected four startups in Nigeria to participate in the 2018 incubation program, giving them $ 25,000 in funding, free workspace, mentorship and other support.
CcHub has also partnered with Facebook to launch NG Hub in Lagos, the country's first flagship community hub space in Africa.
"Tech hubs are an essential part of the business start-up ecosystem, promote local ideas and collaboration and provide startups with business support resources and services to help scale them up," GSMA said in the report.
Technology giants Google, Facebook and Microsoft have also invested in the region, looking for its multibillion dollar broadband and technology companies.
In June, Google announced the second phase of the $ 3 million African accelerator program that will now be expanded to take advantage of tech startups from a further 12 African countries, while distributing the $ 3 million in free support.
"In the second class we now accept applications from startups in 18 countries across the continent, including Egypt, Tunisia, Algeria, Morocco, Zimbabwe, Rwanda, Cameroon, Botswana, Sénégal, Ethiopia, Ivory Coast, Algeria and the existing six – Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda, "said Folagbade Olatunji-David, the head of startup services, Launchpad Accelerator Africa at Google.