An open economy, growing use of technology, political stability and location make Ghana a favourable centre for ICT development. For some time the country was not fully capitalising on these qualities, but recently its reputation as a start-up centre has risen.
Success Stories
There is a growing list of successful Ghanaian start-ups, some of which have now moved beyond the start-up phase. Software developer DreamOval is one of the latter and now supports start-ups itself. Its products include money management tools, a bulk messaging service and an e-ticketing system. Another is Farmerline, which provides software tools and agricultural information to farmers. In 2015 it won a $50,000 investment from Village Capital’s FinTech for Agriculture accelerator programme, which targets early-stage start-ups working in the sector. In 2013 Ghana’s Dropifi became the first African start-up to be adopted by 500 Startups, a Silicon Valley seed accelerator and investment fund. The company’s technology allows businesses to analyse incoming messages. Another recent success is Saya, a developer of messaging apps for feature phones, which are ubiquitous in West Africa due to their affordability relative to smartphones. Known as the “WhatsApp of feature phones”, Saya was acquired by Kirusa, a US developer of messaging apps focusing on emerging markets in 2014.
Mest Practice
Both Saya and Dropifi are products of the Meltwater Entrepreneurial School of Technology (MEST) in Accra, which has a central role in the development of Ghana’s start-up ecosystem. MEST operates both a school and a start-up incubator, with the aim of providing training, mentoring and investment for aspiring tech entrepreneurs who may go on to build companies with international leverage that can create jobs in Africa. MEST’s school offers 12-month, full-time and fully sponsored training programmes for graduate students from Ghana, Nigeria, Kenya and South Africa. The incubator was established in 2010, and provides seed funding, office space and support for MEST graduates. The companies typically receive $50,000 to $200,000 in seed financing, and spend 12 to 24 months in the centre.
Capital Boost
MEST takes a stake in incubated start-ups, usually 10-20%, depending on the level of seed investment. In 2015 it signalled a new support mechanism for start-ups with the impending launch of MEST Venture Partners, an Africa-focused venture capital fund. The fund aims to raise $50m and expand its presence in other markets.
A number of other institutions are increasingly active in the start-up ecosystem. The Accra-based Innohub offers an accelerator programme with up to $10,000 in funding in exchange for a 15% equity stake. The private Ashesi University in the Eastern Region is another; the university nurtured DreamOval, and in May 2016 it launched the Ghana Climate Innovation Centre, an incubator for clean tech companies. “The entire IT sector is moving pretty fast in terms of technology adoption,” Jonathan Tawiah, managing director of Ostec, an IT infrastructure provider, told OBG. “This is in part because universities in Ghana are doing much better at producing qualified graduates capable of handling sector demands.”
Challenges
There are, however, still factors holding back start-ups. First is a lack of capital, with commercial interest rates often in excess of 25% and many banks wary of lending to fledgling companies with little track record. Second is the relatively small size of the local market, and therefore the concept of starting in Ghana before expanding regionally and internationally. Third, industry insiders say that the government could be more proactive in its promotion of start-ups, through exemptions and incentives, as well as enact broader improvements to the business climate, making it easier to start companies. Lastly, infrastructure can be an issue, particularly in rural regions, though new cables are increasing capacity.
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