It is certain and undeniable that during the covid-19 pandemic there were not a few technology companies that saw their business soar.
Of course, in Mozambique, the scenario was, and still is, a little different. And to say little is, in reality, to note how much is taken up by the enormous distance that separates the few, and still small, companies operating in the area of innovation in the country.
In an interview with DE, Alexandre Coelho, director-general of VOID – a Mozambican technology company specialising in innovation management and digital transformation that works with projects to develop solutions that fit in with the emerging challenges of the African context in the area of retail tech, agritech and fintech – looks at the Mozambican context and explains why, in the opinion of those who live inside this market, the profitability of most start-ups working in technological innovation is still low or null.
And he places the problem in the market in a central issue: the lack of investors and mechanisms for injecting capital into Mozambican start-ups which, because of this, and a market that is not yet prepared, in terms of consumption, for what they propose, are struggling with problems of financial sustainability, especially after the pandemic, a period when many hoped it would serve as an opportunity, as happened in other countries.
How do you look at the issue of sustainability of startups, after the covid-19 pandemic in Mozambique?
There are two perspectives to this: I usually do a lot of mentoring work with entrepreneurs in the area of technology and I am always very realistic with startups in Mozambique. What I say is that there are no investors, there is no investment capital upfront, so you need the company to be sustainable. And that takes a long time, unless the product that the startup has is highly scalable, goes viral quickly and can expand quickly. If not, it’s going to take a long time to get any sustainability at all. That’s why most startups eventually ‘die’.
“In fact, it wasn’t a period where technology or those working in the area can say they felt a giant positive impact”
But that wasn’t the case for you, why?
Yes, but I can’t say it was easy, far from it, because the company was formed in September 2019 and in December a global pandemic started, which here, in Mozambique, only in March 2020 starts to tighten a bit more. All the plans and strategies we had set up were completely changed. We felt, then, a very big impact on what our strategy was, being that, for example, our product UBI (first product of the company, an information platform about the city and everything that happens in it, allowing interactivity between users, and composed of an ecosystem of applications and interactive kiosks placed in the avenues of Maputo city) was very focused on events, and we suffered a lot because these practically ceased to exist.
So in the first two and a half years we had to adapt and readapt. It is curious that, despite everything, our market has a great thirst for innovation and technology, but we still have a lack of digital education on the part of our leaders and decision-makers, which creates some retraction. The pandemic worldwide was a giant driver of technology, but we see that here in our market it was not in the same way. Just to give an example: several e-commerce platforms “exploded”, but in Mozambique, as much as innovations have emerged in that area, they have not had the same impact because we have a very specific context.
“This area of technological innovation has its difficulties and limitations and we also have a somewhat addicted market, and it is necessary to know the ways well”
In fact, it was not a period when technology or those working in the area can say they felt a giant positive impact. Perhaps for those who work with network infrastructure, and because companies sought to strengthen their entire digital area more for the development of solutions and a few small websites. But for us, who work with the development of more complex business solutions, we didn’t have that experience. This area has its difficulties and limitations, and we also have a somewhat addicted market, and it is necessary to know the ways well.
And how do you clear those paths?
It was indeed very difficult to sustain the business during the pandemic. Twice I had to analyse whether it would be possible to inject more partners, since it is a sole proprietorship, which is me. I had to make supplies to the company to be able to sustain the operation for some periods, but as the pandemic dissipated, some opportunities also began to arise, because, during the pandemic, things were also very dispersed, there was a lot of attention to the health area, and much of the investment went to this sector. Small opportunities arose, but we can’t say that they gave sustainability to the company.
“It was actually very difficult to maintain the business during the pandemic. Twice I had to analyse whether it would be possible to inject more partners, since it is a sole proprietorship, which is me.”
Then we also took the opportunity to reposition it. And it was at that moment that we decided to put the UBI platform on standby and do a rebranding and a repositioning transforming it into what VOID is today, since it was always the UBI product that was at the forefront of the company. The strategy was thus to pull more towards VOID, moving it away from one of its products. We have specialised in innovation management and digital transformation and have achieved projects in that area.
We are working with at least two of the 50 big companies in Mozambique. One is the biggest chicken production company and the other is one of the biggest companies that covers various areas from cars, real estate, etc. In these companies, we provide support for digital transformation processes. For us, it was a winning bet in that sense because, after the pandemic, with the issue of focus having moved away from the health area, I think many weaknesses that exist at the level of our IT infrastructure at a global level came to light and, as a result, a set of injections of funds was announced here in the country. As an example, the World Bank announced an injection of USD 500 million for a set of digital transformation programs, and we have several other organisations that are also investing in digital transformation programs.
Do you note that the private sector is realising the urgency in investing in technology and innovation as a driver of their business?
Yes, the private sector is moving in that direction, even seeing much more relevance in having an IT infrastructure, for example. We also made a choice to work on certain specific technologies, which is not common in a company like ours. We are talking about micro-service architecture technologies, normally directed at banks or telecommunications companies. We actually managed three major projects with this and fortunately, after this journey through the desert, the company has gained a certain sustainability.
“What happens is that many of these opportunities go to companies that are already consolidated, with 20 years of experience in the market, and small and medium technology startups end up not having as many opportunities in these specific digital transformation programmes”
Do you believe that funding from entities such as the World Bank, African Development Bank or EU for the area of digitalisation is fundamental to boost this segment?
I think it is inevitable that it will happen. We just have to break with some of the problems we have, which are often the types of programmes that are then allocated to companies that already have a certain name in the market and, in fact, there are some that, without taking away their merit, have all the value, but many times, at some time, have not adapted to the new global context.
What happens is that many of these opportunities go to companies that are already consolidated, with 20 years of experience in the market, and small and medium technology startups end up not having as many opportunities in these specific digital transformation programmes. But I want to believe that there will be opportunities for everyone.
Is there an association that you are affiliated with to present your issues together to policy makers to change this scenario?
It’s curious to talk about that, because I’m currently in the process of joining the Association of Small and Medium Enterprises (APME) to take on the vice-chair of the Technologies and Innovation portfolio at the outset, and eventually then the chair of the portfolio, even to influence policies that can benefit technology SMEs. I have already designed some actions, data and plans to follow this path.
I assure you that we have also been designing this at the VOID level, in an innovation programme, which is called “innovators club”, which we will launch soon, and which serves to generate debate and knowledge around what innovation is. This is because we found that, in our market, there is a lot of talk about innovation, and this is a word that is on the agenda, but most people do not know what innovation is and do not know what innovating is. We are not just talking about technology, we are talking about innovating in a broader sense and what is needed, what are the steps, the frameworks to manage innovation, how to manage change and what results innovation brings.
As such, it is something we think is pertinent: involving a set of people interested in innovation, who will be able to discuss and generate debate and ideas around this concept.