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Space and economic development in Africa

By Sidney Nakahodo, General Partner, Seldor Capital

Space in Africa is developing at a fast pace. South Africa launched its first satellite in 1999 and has ambitious plans for an international effort to build the world’s largest radio telescope, the Square Kilometre Array. Since 2003, Nigeria has launched 5 satellites. The most populous African nation plans to send the first African country to send an astronaut into space by 2030. Ethiopia built the world-class Entoto Observatory and Research Center in 2015. The African space sector employs 8,500 people and might grow to USD 10 billion by 2024, a 40% growth compared with USD 7 billion in 2019. Out of the 41 satellites launched since 1998, 8 were placed in orbit in 2019.

The exponential growth of small satellites and their specific functionalities, innovative design, and lower cost have the potential to produce a massive impact in Africa. Such a trend can take advantage of the country’s booming entrepreneurial ecosystem: in 2019, nearly 97 African startups raised USD 1.24 billion. Fintech and transportation have received most of the funding, with investors showing increasing interest in AgTech. Following are some examples where New Space can seize the momentum and support the entrepreneurial ecosystem:

1. Financial inclusion. Companies such as M-Pesa pioneered the use of electronic financial transactions using feature phones. The service was launched in 2007 by Vodafone and Safaricom, Kenya’s largest mobile carrier. Last year Interswitch joined the select group of unicorns after receiving USD 200 million to provide integrated digital payments and e-commerce services. Connecting financial institutions and clients are the primary target of Starlink and other satellite internet providers.

2. Transportation. Local ride-sharing startups have become popular. Not only do they provide mobility solutions in urban areas, but they also support logistics. For startups such as Lori Systems, IoT will streamline operations by helping keep tracking trucks in real-time. As a marketplace that connects cargo owners to transport, the company addresses the challenge of moving goods, which corresponds to up to 75% of product costs. Some of the most exciting experiments using unmanned autonomous vehicles for delivery are taking place in the sub-Saharan region. Thanks to a friendly regulatory environment, the lack of infrastructure for ground transportation has pushed for creative ideas that will eventually rely on space-based solutions.

3. Agriculture. In the 1950s and 1960s, the introduction of new methods in agriculture helped save billions from starvation. Similarly, exponential technologies will impact agricultural productivity through autonomous machines, satellite imagery, data analytics, and IoT sensors will be part of the Green Revolution 2.0.

After adopting the African Space Policy and Strategy in 2016, the African Union approved a statute creating the African Space Agency 2 years later. The document lists as a primary goal ‘‘to exploit space technologies and application for sustainable development and improvement of the welfare of African citizens.’’ Such a framework creates countless opportunities for producing impact through New Space.

Mitigation and adaptation to climate change are two of the most promising areas. The Global Monitoring for Environment and Security and Africa, supported by the European Union, creates valuable public goods by promoting sustainable management of natural resources through earth observation. Institutions from 45 African countries have been developing solutions focusing on the continent’s water and natural resources. In particular, space could support extractive industries such as the mining sector to identify mineral reserves, monitor risk, and assess environmental impact.

Communications is another area where space would play a vital role. African countries are well-positioned to pioneer large-scale wireless access using satellite internet rather than relying on terrestrial infrastructure. Ubiquitous access to the internet will produce social benefits across multiple sectors, including providing connectivity in remote regions, facilitating distance learning, promoting telemedicine services, and tracking displaced populations and refugees.

Social impact also happens by fostering an open and innovative ecosystem. A young population, a rising middle class, a large contingent of underserved customers, poor infrastructure, and less restrictive regulations create conditions for testing new approaches. Matternet has experimented with the use of drones to deliver medical samples in Rwanda. Before the initiative was terminated in January 2021, Google’s parent company Alphabet span-off Loon and used balloons to provide internet access in remote regions and areas affected by a disaster. The same ‘‘out of the box’’ approach could affect other concept projects that depend on the space infrastructure, from spectrum usage to autonomous vehicles.

Space might catalyze entrepreneurial activities. Clusters— concentrations of interconnected companies in a common segment located in a particular area—are vital components for economic growth in the modern world. African nations might take advantage of the infrastructure built to serve the commercial space segment. For instance, satellite constellations require various ground stations that will require skilled labor for construction and maintenance. Eventually, there will be innovation hubs formed around them. Spaceports aspire to become centers of economic development ahead of launch activities and could also help foster entrepreneurship.

New Space can set the stage for paradigm shifts, spur innovation, and positively support the neediest. Developing countries in Africa and elsewhere should adopt a bottom-up strategy, focusing on activities that directly impact the lives of local populations while creating a space culture.

Note: this post is an updated version of an extract from the article "Should Space Be Part of a Development Strategy? Reflections Based Upon the Brazilian Experience," published at New Space: The Journal of Space Entrepreneurship and Innovation.

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