Is Technology Over-Expensing Its Buy-Ins for Industries in Eastern Africa?

Short answer:

• Yes, in Some Niches. Certain overhyped segments—like profitless metaverse platforms or quick-win crypto projects—have indeed overspent compared to tangible output. This can lead to layoffs, project cancellations, or investor pullbacks, even in Eastern Africa’s budding tech ecosystems.

?

• No, It’s Not Universally Too Expensive, overall, tech remains vital. Technology in Eastern Africa has proven its worth from?mobile money?(M-Pesa, MTN Mobile Money) to?agri-solutions?(Twiga Foods, Hello Tractor) Cloud Computing & Open-Source Software mean Startups can rapidly prototype using free or low-cost services from AWS or Microsoft Azure, etc. building solutions that tackle local problems (e.g., digital lending or health diagnostics) at relatively modest cost.
• Smartphone Penetration and falling handset prices and improving 4G/5G coverage make a great open the door for new apps in telehealth, e-commerce, and fintech.
• We get high ROI When Deployed Correctly: There is a great experience in Productivity Gains Even if initial tech investments feel steep. Solutions like digital payment gateways or inventory management software often save money and broaden customer bases. There is also the Leapfrogging Effects ?right past extensive legacy infrastructure, like the landline network, Eastern Africa can leap directly to technology-first services—witness how M-Pesa revolutionized financial inclusion in Kenya.
• Highly Impacted Fields like clean energy tech (solar home systems in off-grid areas), AI-driven logistics (drone-based crop monitoring), and digital finance (microlending platforms) clearly address pressing challenges. These projects continue to attract investors and development partners thanks to measurable returns.

?

“Over-Expensing” is brought about by Over-enthusiasm when excitement surpasses near-term feasibility. Globally, we’ve seen it in the dot-com and crypto eras. Regionally, smaller-scale versions appear in pilot projects for VR-based learning or untested blockchain apps that do not yet match users’ realities.

1. Dot-Com to Crypto In the late 1990s, dot-com valuations ballooned without stable revenues. Similar trends appeared in early African crypto ventures, where decentralized apps struggled with regulatory questions and low digital literacy, leading some startups to fold.
2. Investor Psychology When capital is cheap (and grants, impact funds, or accelerators pour in), promising concepts—like extended reality (XR) in education—can raise money quickly. As soon as global or local economic conditions tighten, investors ask hard questions about profitability, leaving speculative projects vulnerable.
3. Corrective Cycles Markets eventually self-correct. Ventures lacking practical use cases or realistic growth plans lose funding. This weeding-out process helps direct capital to the most impactful ideas—like off-grid solar kits or digital marketplaces that actually meet community needs.

Examples & Indicators

• Metaverse Slowdown: A handful of startups tested virtual reality “experience centers” targeting tourism and e-learning. While intriguing, many faced low adoption and pulled back investments in 2024.
• Crypto Winter(s): In 2022–2023, numerous African alt-coins launched with fanfare, only for values to plummet when hype fizzled and regulators signalled caution (e.g., central banks warning about unregulated digital currencies).

Why Tech Still Matters in Eastern Africa

• Essential for Growth Even in remote areas, people embrace cost-effective digital services. Farmers use drones or phone apps to monitor the weather, place orders for seeds, and connect with markets thus improving yields and income.
• Hardware-Intensive Sectors While manufacturing or advanced healthcare equipment can be expensive, the payoff in higher efficiency (or saved lives) often justifies the cost. Projects like blood-delivery drones in Rwanda show how strategic tech investments can solve critical infrastructure gaps.
• Boom-and-Bust Is Natural Every tech ecosystem experiences cycles of hype and correction. East Africa’s “Silicon Savannah” (centred in Nairobi) has seen flurries of investment in fintech, edtech, and Agritech. Those solving real problems endure; hype projects fade away.

Context-Specific Challenges

• In hardware-intensive or heavily regulated sectors (e.g., manufacturing, healthcare, mining), upfront costs are often substantial. These expenses stem not only from acquiring advanced equipment but also from navigating complex regulatory requirements, meeting safety and compliance standards, and addressing high import taxes on technology due to limited local production. Such hurdles add layers of cost and complexity.
• Additionally, regions with patchy power grids, limited broadband connectivity, or low digital literacy face further challenges. Investing in infrastructure, training, and capacity-building increases initial costs but remains critical for unlocking the long-term socioeconomic benefits of technology.
• The lack of locally manufactured tech solutions means businesses must rely on imports, incurring high shipping fees, customs duties, and longer lead times, all of which can strain project budgets. Overcoming these barriers often requires strategic incentives (e.g., tax breaks or grants), financing mechanisms, and partnerships to make tech integration viable and impactful.

Yes, some high-flying concepts can become over-expensed particularly if local realities (infrastructure, digital literacy, or regulatory frameworks) aren’t ready. However, Ultimately, each “correction” phase weeds out speculative or over-engineered initiatives, allowing more grounded, ROI-focused ventures to flourish. Far from making technology obsolete, these market shifts underscore the importance of focusing on tangible solutions—like more robust e-health platforms in rural communities or streamlined e-commerce channels for small businesses. After every cycle of hype, Eastern Africa’s tech scene consistently shows that well-chosen innovation delivers results that are worth every shilling.

?What technologies do you think are not worth the ROI promised on acquisition?