Africa currently has an estimated 2400 Ai companies, many of which are smaller start-ups, and yet only managed to secure $4 million in funding during Q2 2024, less than 1% of the global investment total of over $23 billion that was invested in Ai Tech companies worldwide.
Ai investment is growing rapidly with projected Ai investment for 2030 siting at a mouth-watering $1,2 Billion, and Africa needs to urgently address the issues preventing it from participation in this new Tech revolution.
Ai is busy redefining much in the way of processes, tech developments, computer software development, Financial transactions, investing, healthcare and so much more, and it would seem that Ai could offer Africa the potential of “Leap-Frogging’ other industries via Ai adoption and development, as well as positioning itself as a viable investment alternative. So why is there a distinct lack of Ai developments and investment happening in Africa?
What are the Barriers?
Africa has no lack of people or skill resources, as indicated by the strong growth in sectors such as Fin-Tech and Agri-Tech, that are developing at faster rates than many developed regions. There is also an ample skills base in areas such as Kenya, South Africa and Nigeria amongst others. So what are the hurdles facing the industry?
- The biggest challenge is a lack of available data. Large Language Models (LLM’s) such as Chat GPT all depend on deep data sources and in this respect this is where Africa has a massive challenge. Most Ai models so far have been developed by or in collaboration with major digital media groups who have access to the largest data available on earth today. The likes of Meta and Microsoft have for decades been gathering extensive data that is now forming the foundation for Ai development. The fact that Africa has not been successful in developing any central search engine specifically for Africa and also has not been active in developing any new exclusive social media platforms, such as Tick-Tock or We-Chat in China is now playing a role in restricting the ability of Africa to develop LLM Ai platforms. There is also a lack of data for industries and software in areas such as cyber security and these are critical sources for effective Ai and machine learning process development.
- Secondly, a critical issue is one of a lack of solid regulation that plays a role in deterring investors. Only a few African countries, such as Mauritius, Rwanda, Benin, and Senegal, have proper formulated AI strategies and regulations. This regulatory uncertainty can deter investors in a sector estimated to potentially contribute USD 1.2 B to the continent’s GDP by 2030 if it captures just 10% of the fast-growing global AI market.
- Lastly, but no less importantly, Cloud Infrastructure development needs to be accelerated in Africa to provide the vast computing power that these massive data and processing LLM Ai platforms require to be commercially viable.
While Africa has seen investment of $2.02 B promoting AI on the continent, most start-ups are still in their infancy, and international investors need to see quick returns, that they often have to wait a bit longer for in Africa and this must be solved or Africa will loose the opportunity to develop a healthy portion of the Ai Industry worldwide.
