African Deep Tech Centres

While much of the news reporting from Africa relates to conflict and corruption, there is also significant potential for economic and technological progress in the region. Demography is a main driver of human progress, and the Africa population is growing when much of the rest of the world is experiencing shrinking populations. This continent, which is even larger than North America and hosts twice as many countries, has significant regional variations in terms of stability, and the opportunities for economic and technological advancement.

From a historic perspective, the coastal cities of North Africa were for millennia a technologically advanced part of the world. Until modern western capitalism started forming in Italian city states during the Renaissance, the cities and surrounding regions of North Africa were agriculturally and industrially even ahead of much of Europe. During the Roman empire, for example, the provinces in North Africa were some of the most prosperous. Historically, also other parts of Africa, particularly those well-connected to international sea trade, were technologically advanced.

Musa I of Mali, who expanded a trade-focused nation in western Africa during the 14th century, has been suggested to adjusting for inflation having been one of the richest men in history. Part of the Mali wealth was created through mining and metal works, including goldmining. West Africa is not only rich in natural resources, but also has a tradition of mining and working with metals. The tradition of metal working, starting with copper, goes back nearly three thousand years in Africa south of the Sahara. Modern research can identify that the West African metalworks during the Middle Ages, including on imported metals, was based on an indigenous technology which differed from similar techniques in the Middle East. Historically, prosperity did not only come from African nations having metal resources, but also technologically advanced metal works sectors with long historical roots.

Ethiopia and other parts of Eastern Africa have also for long engaged in trade and industry, for millennia closely linked through trade to Europe, the Middle East, and India. Some 600 years ago, for example, Ethiopian travelers to places such as Italy and Portugal were fostering diplomatic relations, trade relations and technological transfer with European nations. This background is important, since history can guide in how the future is likely to unfold.

Today, the global pattern is that Africa is lagging North America, Europe and Asia in technological development, but catching up. African countries understandingly have a desire to climb the value chain, by having more technology in their productions. In order to better understand the patterns of technological progress, the twenty largest African nations in terms of population are compared, in terms of economic freedom, property rights protection and share of high-tech exports of all goods exports. These factors are relevant measures of how free countries are to business, how well investments are protected and how much of the manufacturing exports is focused on technological goods. Additionally, those African countries that host world-leading deep tech centers are pointed out. The deep tech centers mapping is from the Deep Tech Index. The Index, produced by the European Centre for Entrepreneurship and Policy Reform (ECEPR) with support from Nordic Capital, maps the leading deep technology centers, focusing on key, future-shaping technologies.

The level of economic freedom is based on comparing the Index of Economic Freedom scores of the countries to each other. Tanzania, Cote d'Ivoire, Madagaskar, Marocco and Ghana have the highest levels of economic freedom in the. In an international comparison, the Deep Tech Index finds that those countries which have stronger protection for private property, also tend to have a higher share of deep tech companies per million adults. In the comparison of African nations, it is Morocco, South Africa, Ghana, Kenya and Tanzania which have the strongest private property rights protections. Angola and Niger are the two countries with highest share of high-tech exports, of all goods exports, followed by Ethiopia, Burkina Faso, and Cote d'Ivoire.

African countries which host world-leading deep tech companies, namely Kenya, Egypt, Uganda and Nigeria, tend to be relatively average performers in terms of economic freedom, private property protection and high-tech exports share of goods. Population size and geography can explain this. Countries with higher populations tend to have more of economics of scale needed for technology companies rising to world-leading levels. Smaller African nations that are more open to free enterprise, and even have high levels of high-tech goods in their exports, may instead have more medium-sized rather than world-leading deep tech companies. It is a typical pattern that those countries that are smaller and more linked to sea trade, also tend to have amongst the strongest free market policies, but lack the economics of scale due to more limited populations.

African clean tech innovations are focused on handling the stresses of urban development on the natural environment. World-leading clean tech innovation centers exist in African urban regions such as Lagos, Abuja, Cairo and Kampala. Lagos also is a center for world-leading fintech development. Financial technology is a key for achieving growth in the economy, and can sometimes also play an important role in financing of new firms and firm growth. Nairobi is a world-leading center for development of photonic & electronic technology, as well as for robotic & communications technology.

Kenya has a relatively high level of economic freedom and stronger private protection rights than most other larger African nations. Its capital city Nairobi is where significant advances in deep tech in two important fields of technology is occurring. This allows for a future potential boost of high-tech goods share, which on a national level are lower than the rest of Africa.

Today, as earlier in history, there are several leading nodes in Africa, economically and technologically. The fact that no single country or group of countries is far ahead can lead to a beneficial institutional competition, where different countries compete to be leaders. Many African countries today have strong driving forces, and a clear will, to be ahead of their neighbors in development. This competition is perhaps the most important advantage that Africa, with growing levels of technological sophistication and a growing population, has for future development. In the long term, institutional competition creates the fertile ground for law and order, an expanded education sector, strong universities and growing economic activity. Those African countries that succeed will play a key role in economic development of the coming decades.

Nima Sanandaji, Director, European Centre for Entrepreneurship and Policy Reform (ECEPR)

Chart: courtesy Nima Sanandaji