From Silicon Cape, South Africa, to Silicon Savannah in Kenya, the continent’s technology experts are working on discoveries they hope will be as big as Google or Facebook have been to the world. Local experts tell CNBC Power Lunch hosts Alec Hogg and Gugulethu Mfuphi that the big inventions to come out of Africa are more likely in areas that will play a meaningful role in improving quality of life – like the medical field. We are also very good at financial services-related technological advancements. Entrepreneur Stafford Masie, of Thumbzup, say much more work is needed to make South Africa a much friendlier place for tech-savvy business players. Dr Nicolaas Duneas of biotechnology firm Altis Biologics says he has received support from the government, but acknowledges much more could be done to stimulate the generation of new technologies, protect intellectual capital and facilitate the commercialisation of ideas. – JC
ALEC HOGG: Welcome back to Power Lunch, coming to you from the JSE for the first time. Africa has shown that it’s not just about natural resources, but has been pushing forward in manufacturing, technology, and telecoms. Joining us now to take the discussion further and to give us some insights into perhaps whether the Silicon Savannah is going to become like Silicon Valley or similar things in South Africa are going to be kicking up, are: Stafford Masie (the Founder of Thumbzup) and Dr Nicolaas Duneas (Chief Executive of Altis Biologics). Stafford, you and I are friends going back a long time. The last time you were in this studio, Thumbzup had done its deal with Absa and you were looking at Australia. Go back a little bit, though. As you often say, rewind or step away from it. Why is it that Thumbzup is so unusual? That we don’t have many Thumbzups in this country?
STAFFORD MASIE: I think the pressure and the current in the water when you’re an inventor is to leave South Africa. We’ve had many offers to forklift the company and take it to the United States, or even take it to Australia. It’s difficult. The environment here is not conducive to true invention/true innovation. Rules and protections around intellectual property are frowned upon in the international arena. It’s just a difficult environment in which to do business. As much as it is difficult to do business here, the notion that if you do it here you can do it anywhere is very true. We are respected from a technology perspective globally. South Africans are well respected. Elon Musk is South African. Mark Shuttleworth is South African. We have great reputations, but every single one of the great technology folks we’ve had have always left.
They’ve always taken their intellectual property out. I guess that if you’re looking to drive scale…if you’re looking to get to an incremental customer base very soon, the African continent still has its challenges around people adopting technology. In the United States, so many people have Smartphones. So many people are connected. Here, we’re still seeing those genies being released out of the bottles and we are seeing some great things here, but there are business challenges. However, if you make it work here, it’s very easy to go to other countries and make it work there.
GUGULETHU MFUPHI: Nicolaas, you have a slightly different approach with regard to Altis, but as Stafford says: why stay here in South Africa?
DR NICOLAAS DUNEAS: We’ve been very fortunate in South Africa. As a start-up biotech company, we’ve received tremendous support from government, so we won the Innovation Fund Award and that sparked a five-year development plan for our lead product – Osteogenic Bone Matrix – so our experience has been very good.
GUGULETHU MFUPHI: Hold on. Let’s water that down slightly. Some people don’t completely understand what it is your business does. You delve more into innovation with regard to the healthcare sector as well as surgery.
DR NICOLAAS DUNEAS: That’s correct. We focus on skeletal regeneration. We developed and are currently manufacturing a biomaterial, which is a bone graft substitute.
ALEC HOGG: Nicolaas, you are a highly complex business. I was struggling to understand – and I’m sure that’s what Gugu was getting at – what it is exactly, that you’re doing. It is in a very complex field. You got support from government, but government can’t support all companies and to get back to Stafford’s point, many South African innovators do leave to go elsewhere.
DR NICOLAAS DUNEAS: That’s correct and it’s a pity that they do leave. In our sector, it is very challenging. Biotechnology requires a lot of money, so you have to be very frugal and you need to have a very good strategy plan. As a small biotech company, how do you leverage the minimum resources and try to break out into the international arena? Intellectual property management is actually the key issue for us. That can springboard you into the international arena and harness your intellectual property to generate interest in a big company.
ALEC HOGG: Nicolaas, do we have the brains here? Do we have sufficient intellectual capacity to be able to take these little companies into the global arena?
DR NICOLAAS DUNEAS: I’ve seen many very talented young companies – very talented. I think we are lacking in policies and procedures, both at university level and at government level that would stimulate the generation of innovation, taking IP and commercialising it. An example is the Bahy-Dole Act of the United States. This Act was specifically drafted to assist with intellectual property protection and harnessing of IP.
GUGULETHU MFUPHI: Stafford, are these cries perhaps falling on deaf ears, with regard to sorting out our legislative process here in South Africa?
STAFFORD MASIE: Yes, we have a legislative process. Just to circle back to the question Alec posed, which was ‘do we have the intellectual capacity? Do we have the folks here?’ We absolutely do. It is incredible. I’ve said this before and I’ve said it on air. Black economic empowerment and the rules etcetera… The bad side to that is that it has actually resulted in an enormous skills pool of Caucasian males in South Africa that were trained in the defence…the old government. We have engineers working for us who were Rooi Valk helicopter engineers. They built for Missile Detection Systems. We have a legacy of investment in human beings and that latent capital does exist, so if you are smart – you have to be savvy in this market – and that’s that I think the dynamics. The message is yes, there are challenges, but if you navigate your way around those challenges in this environment, it’s easy to go to the States.
It’s easy to go and start something there, but as easy as it is to start something there, it’s easy for the other guy to do it as well. If you can make it work here, you can take it anywhere because you have all the challenges for example human capital and the skillsets etcetera, but in our technology field, skills don’t come from educational institutes only. It’s people driven by passion who adopt technology tools. They show competency, they show acumen, and they deliver. It’s not necessarily a university degree or a formal education that makes you successful here, so those dynamics do add and they help. From our perspective at Thumbzup, we don’t have a great product. It’s the team. It’s an incredible team. When people/investors overseas look at the team, and us they are shocked at how anaemic we are, relative to what we’re delivering.
For them, that’s anaemic and I just think we have a different economic environment to operate in, so it forces you to be a little bit more inventive. It forces you to be a little bit more creative when you are executing as a business.
ALEC HOGG: The Americans are also sucking in a lot of talent because, as with sport, if you’re good at something the Americans will find you and they’ll give you a scholarship to a university and make sure you stay there. Roelf Botha is a big name in America. In fact, I was sitting next to one of the co-founders one of the big tech companies, who said to me ‘oh, South Africa. Jeepers, you guys punch above your weight in the tech field’ because of all the South Africans he knows in Silicon Valley.
STAFFORD MASIE: When I go to Australia and I talk about what we’re doing in the banking sector in South Africa, it shocks them. When I go to the United States and I show people what I can do on my mobile phone/tablet phone from a banking perspective, it shocks them. I think that we look at ourselves, sometimes we do shed a negative perception of us, but when you travel and look overseas, it’s incredible – the technology we have, that we leverage, that we expect from our institutions, that we use on a daily basis, and which the first world countries don’t even have today. We are head in many spheres. We are building technology. That’s where the trick is. How do you create something that has international attraction and how do you scale relative to that demand? Does the legislative framework from an intellectual property protection perspective, and a commercialisation perspective, stand out? That’s the challenge.
ALEC HOGG: How are we going to keep these guys in this country?
DR NICOLAAS DUNEAS: Firstly, I would say generate policies that encourage innovation, protects inventors’ benefit sharing, and look after our staff scientists at universities. Make sure that they are well resourced to take their innovations/discoveries into the commercialisation pipeline and push out more commercialisation.
STAFFORD MASIE: I’m moving towards keeping government away. I think we need less government. I think we need less legislation. I think we need more freedom.
ALEC HOGG: But he’s being funded by government, Stafford. If Steve Jobs were born in South Africa or Nairobi…would he have built Apple here on the continent?
STAFFORD MASIE: Let me answer it this way. I think we won’t see the next Facebook, Google, or Yahoo! in Africa. What we will see is the Facebook of healthcare. We’ll see the Google of manufacturing. We’ll see the Yahoo! of agriculture. I think what you’ll see emerging from Africa, simply because connectivity is finally here… During the last five years, we’ve gone from being in an environment where – from a telecommunications perspective – we were the most expensive, most prohibitive, and least penetrative in the world. Suddenly, we’re seeing data bundles. We’re seeing technology catching up and this Moore’s Law concept where everyone is connected, it’s very affordable, and in Africa, we have immense latent human capital, which is now being unlocked by this connectivity. My prediction is ‘watch Africa from here on in.
I think in the next five to ten years, you will see a medical start-up arise here because of the conditions here. You’ll see a start-up arise here that works in water purification, that will change the world. I think that’s what we’ll see here. When people are looking for that next Twitter, that next Facebook, I don’t think you should be looking for that. You should be looking for entrepreneurs working on things that truly matter, leveraging technological tools and doing it in environments that are very difficult, but solving human problems. The solving of human problems in Africa will have an international effect globally. That’s my prediction.
GUGULETHU MFUPHI: What about African collaboration maybe, from your perspective? Why not harness talent from Nairobi, as well as Lagos?
DR NICOLAAS DUNEAS: It’s a difficult question because traditionally, we’re not networking enough on the African continent. I was in Lagos recently and our discussions are very encouraging. I think we should definitely look more into the African continent, do more collaboration, and support each other with specific problems because that’s where the business arises from – solving problems.
ALEC HOGG: So it will come naturally, now that we have bandwidth, and now that we are connected.
STAFFORD MASIE: Yes, but I think if you look at Africa, we’ve gone up into Kenya. We’ve engaged with the financial institutions there and in Nigeria, Zambia, and Ghana. To be honest with you, they’re ahead of us. They are less risk-averse. They wrap themselves around failure. They want to catch up. There’s a desire. There’s a conviction to move, to do things, there seems to be capital, and there seem to be frameworks that are technology-friendly from an inventive and entrepreneurial perspective, arising. Kenya…Google made its hub there. It has all its engineering there. There’s a lot of investing by the government, so we have to be careful. It’s not just about Nigeria suddenly becoming the biggest economy. I literally think the warning signs are that Ghana, Nigeria, and Kenya…these places will surpass us from a technology and innovation perspective.
GUGULETHU MFUPHI: Quite clearly, we need to pull up our socks. Gentlemen, thank you so much for joining us today. That was Stafford Masie – the Founder and Chief Executive of Thumbzup – and Dr Nicolaas Duneas, Chief Executive of Altis Biologics.
