Bethelhem Dejene, a 23-year-old entrepreneur sits in workroom with 15 others for an icebreaking exercise. She is creating a business plan. Outside individuals work in offices getting an early start on their day while some gather in the kitchen to get their morning coffee boost. The office is blueMoon, an agribusiness focused business incubator and Bethelhem is part of the 2018 Bega-batch of startups to join the organization. Her idea is to produce paper from straw and bamboo instead of wood. She and a team of 5 joined blueMoon to gain knowledge on how to start their business and acquire investors. Betelehem expressed it was daunting to commit to a 4-month long incubation program but, 3 weeks in, she has found it enormously useful.
blueMoon is a collaborative work environment open to individuals or teams in need of temporary office space, young entrepreneurs, creative professionals in need of support and consultancy. blueMooon is not the first innovation hub of its kind in Addis but it is certainly the largest. Divided into co-working space and offices for companies or freelancers and incubation space for fresh startups, blueMoon caters to a diverse group of people.
While there is a global tech slowdown, African cities are highly investing in the market. iceaddis, the first innovation hub and startup incubator in Ethiopia began working in 2011. According to Markos Lemma, founder of iceaddis, there were maybe 5 or 6 hubs of this kind in the continent at that time. According to a recent survey by GSMA’s Ecosystem Accelerator, a program that works to enable partnerships between operators and developers in Africa, there are 314 tech hubs and incubation centers across 93 cities. Which compelled us to ask why these incubators and hubs have mushroomed in such as short period.
Markos points towards the conducive environment created by many local entrepreneurs understanding the requirement for youth involvement in the economy and the need for high tech solutions to local problems whether it is in health, transportation, agriculture or education. iceaddis, blueMoon and xHub Addis all accept applications from startups and accept business ideas. iceaddis focuses on technology and the creative industry while blueMoon looks for innovators combining agriculture and technology to improve agribusiness in Ethiopia. xHub Addis, founded by Tewodros Tadesse, began as an initiative of Center for African Leadership Studies in 2014 with the purpose of offering mentorship to young entrepreneurs, give back to the community and create something of lasting value. Social entrepreneurship and tech-based startups are accepted for a yearlong incubation process.
Coalescing between entrepreneurs, innovation hubs, telecom operators and giant tech companies is laying the groundwork for the rise of a thriving tech industry. The GSMA research found that the merging of these different sectors is driving innovation by facilitating funding, co-working spaces, skill sets, and more importantly a vast network to support startups. blueMoon founder Dr. Eleni Gabre-Madhin maintains innovative, big ideas are best nurtured in intensive, small programs, with lots of coaching and mentoring by high-level entrepreneur-advisors who themselves have gone down the same path, surrounded by equally ambitious and exceptional-minded peers, and linked into high power networks where things happen. These are the main staples of business incubators.
64% of Ethiopia’s population is below the age of 24. And while 70% of students graduate from STEM fields, the country is encumbered by high unemployment and lack of opportunities for the youth. Ensuring youth engagement in the economy means securing the future of our nation. Biruk Yosef, Incubator Coordinator at blueMoon states the importance of youth participation in agriculture. After all, 80% of Ethiopia’s population depends on agricultural production. “We are trying to make agriculture sexy”, he says. “We are tapping into youth creativity to raise the living standard and put Africa into the global economic playground.”
Betelehem’s co-entrees Nebil Khalifa and Tadesse Alemu are working on a hydroponic animal feed business. They are planning on producing high-nutrition organic Alfalfa in a controlled environment circumventing the long harvest time for most plants. Their hydroponic method produces full-grown plants ready for harvest in a week instead of the regular 2 months. Their experience at blueMoon has been ‘enlightening’. Nebil says their way of thinking has changed and blueMoon has opened their eyes to a new world. They have been learning to run a business, developed personally, understood the importance of image building and learning the value of ideas.
Ahmed Abdi, 26-year-old member of xHub Addis is working on an education program that focuses on reading and comprehension, communication training and memory art. His project is now in the pilot phase with the Norwegian Refugee Council training urban refugees from Somalia and South Sudan to understand Amharic and English. He has been at xHub for 3 months and has been able to collaborate with another education entrepreneur working in higher education to perfect their ideas and collaborate on this project. He ascribes the success of his project model to the international environment and efficiency of working at xHub.
Another unique property of these hubs is co-working space. There has been an international increase in the number of freelancers and people working from home or internet cafes. blueMoon, iceaddis and Bake and Brew offer office or desk space and internet access to these types of workers at daily, monthly or yearly rates. Estifanos Samuel is such a worker. He works from blueMoon when he’s in Addis. He doesn’t need a permanent office space since he travels to Germany regularly launching a German-Ethiopian Business Forum. “All you need is a laptop and internet .You can work from any remote area.”
Markos agrees with this assessment. “The digital nomad is slowly coming to Ethiopia.” The future office, like that of Google or Facebook may not require employees to come in to work. Workspaces will not be restricted to cubicles or enclosed offices. Office floor plans are increasingly open spaced and ensuring worker productivity by providing stimulating activities will surely define the future office.
Having various types of people in one office space engaged in different sectors can produce meaningful interactions and opportunities for collaboration. This is the type of interaction Gerar counts on. Gerar Creative Hub was established in 2017 with the aim of encouraging young people engaged in the creative industry and offering tools to be successful business owners. Gerar achieves this through business skill trainings, mentorship and experience sharing programs, upgrading talent/skills of members and endless consultancy. Members are in the Gerar program for 18 months, by which point they will have opened their own agency. Unlike the other incubators and hubs, Gerar does not have a permanent office space. Members float between the offices of other businesses in the Gerar network, receiving access to a desk and free internet connection. This induces members to frequently interact with each other and come up with initiatives together.
According to Seminas Hadera, founder of Gerar Creative hub, the largest assets startups have is ample time and specific skill sets. Incubation spaces offer entrepreneurs resources they can use as springboard to success. Having the opportunity to test out ideas before going to the marketplace is a great learning experience for startups in early stages. The biggest problem for startups anywhere, Seminas adds, is lack of information. Keeping creative individuals in touch and with access to necessary knowledge that can increase their skill is critical in entrepreneurship.
While local entrepreneurs are increasingly receiving support from both the private sector and government bodies the question then becomes one of sustainability. The sustainability of these hubs largely depends on the success and scalability of these startups. Can these hubs continue to operate and will the incubated startups become successful businesses? blueMoon has proven itself. 4 out of the 6 startups they hosted last year have received external investment. “We have an unmatched network, especially with the advent Dr. Eleni, we’re able to link startups with investors and introduce them to international networks and competitions.” Biruk says. He maintains the importance of understanding the psychology of the young people and ensuring they recognize what it takes to turn ideas into businesses. “There’s a difference between inventors and innovators.”
Creating a community that welcomes innovation goes a long way to ensuring the success of these startups. The founder of iHub, a tech hub found in Nairobi, Kenya, Erik Hersman in a recent interview with Techcrunch names location as a major factor in the success of these hubs. Access to universities, tech companies, media, entrepreneurs and financial sources makes for a great innovation hub environment. According to Disrupt Africa’s 2017 Funding Report, funding for African tech startups was close to 200 Million USD in 2017 with South Africa, Kenya and Nigeria top investment destination.
Building such hubs in secondary cities becomes more complex. That, however, is the aim of xHub, Gerar and blueMoon in the near future. Cities like Bahirdar and Hawassa have high potential youth eager to begin their own businesses. This will also open the door for increased international investment. Markos hopes the startups in incubation will become mega companies, demonstrating Ethiopian innovators coming up with local solutions and directly contributing to the economy. iceaddis now has branches in Egypt, South Sudan and Somalia. Biruk is certain the next job opportunities will come from the startups currently incubating in the blueMoon system.
The tech and innovation hubs not only offer space and services but also create a large community of stakeholders highly invested in the success of these ventures. These disruptive ideas need support from investors and consumers in the early stages. We are now seeing the snowballing of the co-working and incubation trend in Africa. Support is necessary in the country’s policy to encourage businesses that grow from these hubs, especially in regards to licensing new companies as social enterprises. With the newly launched Gobeze, programs by Reach 4 Change and Gebeya Net as well as collaboration between all these hubs the modern workplace is evolving. The rise of these innovation centers and business incubators in Ethiopia not only promises a brighter future for local entrepreneurs and the economy at large but also signals Ethiopia’s growing capability to compete in Africa and globally.
