Africa EO Private Sector Multiplying, New Report Says

According to a new report from a study conducted by Kenya-based LocateIT, on behalf of the African Union Commission, private establishments are becoming participants in the African space sector – specifically Earth Observation – at an unprecedented rate. Since 2010, there have been incorporations of large numbers of private companies, with 58% of the companies being nine years old or less and 50% of them less than seven years old. These statistics indicate a growth rate of 156% between 2000 and 2010 and 96% after 2010. If this trend continues, the presence of Africa Private EO and geospatial firms will be more than double the current number by 2030 and multiply it about 4 to 5 times by 2040.

Impressively, a large percentage of these private African based EO companies are under African ownership. 91% of them have African owners while a massive 76.69% belong to Africans nationals, and a higher percentage of them -72%- being nationals of the countries where the companies are registered. This enormous growth could connect to favourable government policies, local presence of several UN bodies, a rapidly growing EO user communities, and capacity-based centres and facilities which they could make use of.

More than two-thirds of these private African EO companies operate within the national sphere, but a good number of them are active beyond. 46% are busy at the regional level, 30% at the continental level and 20% at the global level. Apart from exploring opportunities within and beyond countries, having a large client base has been a growth factor. 88% of their clients are governmental agencies, 78% NGO, 67% Non-EO and geospatial organizations, 63% academic institutions, 62% other private EO and geospatial organizations, 61% international organizations and 56% civil society organizations.

These companies focus on land-based products and services, they dominate planning in terms of land use markets, be it rural, urban or spatial and are thriving in other markets. Moreover, a more significant percentage of the market these companies serve is in Agriculture and Food Security. Others are aerospace engineering, civil engineering, defence and security, land-use planning, disaster management, education and research, to mention a few.

The bulk of the products of these companies are on-demand from their diversified clients base, with innovation at the core of their business strategy as they develop new products and add value to existing products and services. Social media, clients, suppliers and consultants have been their primary sources of ideas for designing new products and processes.

Networking, being one of the critical strategies for tapping into business opportunities that would have remained otherwise unknown, has been fairly leveraged upon by these companies. The African private EO companies have diverse partners within their countries and beyond. Academia, industry, and not-for-profit foundations rank top three of significant partners while African Union institutions, United Nations agencies and communities of practice outside Africa rank among the least three. African Union institutions which scored lowest, 1.89 out of 5, have only experienced interaction with 8% of the private companies. The challenge may be because a majority gathering of these bodies are expert-based and do not provide excellent networking opportunities for these private firms. Moreover, networking is most reliable among companies within the same country at a percentage of 74.83%, 45.58% for companies within Africa and Europe comes third with 42.28%.

A commercial partnership is ranked highest among the nature of their associations with other organizations. Governmental organizations are the major clients of these private companies at a percentage of 52.38%; coming up close is another commercial partnership with international organizations/NGOs at 44.9%, and business partnership with universities/research organizations at 29.93%.

Due to the diversity of national policies that govern EO and geospatial sectors in Africa, support to the industry is deemed ineffective. Variety in the industry due to cross-functional activities and variation in national policies is a challenge from a business point of view. Despite the limited access to opportunities and little or no government support, these companies have been leveraging on internal funds for development and innovation. Domestic funding has a score of 3.85 out of 5 and at least doubles any other source of funding; this explains in part, why provisions of products and services are demand-driven.

African private EO and geospatial companies employ an overall number of 3, 482 people. The companies have an average size of employed staff given that; 20% have less than five employees, 43% have employees between five and ten, 18% between eleven and twenty employees and 20% have over twenty employees. This results in an average staff size of twenty-two. As expected, EO/geospatial technologies have a more significant percentage – 30% of full-time employees, compared to 16.5% in software development and programming and 10.9% in business and marketing.

The rapid progress of the African private EO sector cannot be viewed as independent of other areas. African governments have covered EO and geospatial activities with a mixture of legislative frameworks, even at the national level. Also, training and hiring programs rank high in the support provided to EO and geospatial companies by several African countries. EO/GIS labs and training rooms are the most available government type facilities for the use of private firms. 61% of the government/government institutions admitted having these facilities for private companies. Another way African governments engage and connect with private companies is advertisement through different outlets.

Academia has also played a significant role in the development of the private sector through research and translation of analysis used by policymakers. Policy levers made available to governments, provision of facilities and building business opportunities known to their members, which consist mainly of the private sector, have equally proven effective.

© Space in Africa 2020

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New Report: The 2020 Edition of African Space Industry Annual Report is now available. It presents data and analyses on projects, deals, partnership and investments across the continent. It also provides analyses on the growing demand for space technologies and data on the continent, the business opportunities it offers and the necessary regulatory environment in the various countries.

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