It is the value, not the number of business hubs that counts

In Africa there are more than 643 entities specialising in providing early startup business support in one form or another. This is according to a February 2020 report by the most reputable industry network body, AfriLabs (Nigeria).=

Further, the report states that South Africa, Nigeria and Kenya are hosts to the largest number of such entities at more than 50 each. These entities go by a variety of names, including innovation labs, technology labs, co-working spaces, business incubators, hives or simply hubs.

Despite the variations in naming, these entities' main goal is to support entrepreneurial initiatives from idea to market. In Kenya hubs started cropping up about a decade ago.

A significant number of research studies have since been done to establish whether these entities are actually achieving their intended mandate. The findings have been as diverse as the number of studies themselves. I conducted a detailed study on Kenyan university-based business incubators in 2017, detailed findings of which I will share another day.

It is undeniable that hubs have greatly contributed to creation of superb entrepreneurial and innovation ecosystems. They have accomplished this through holding networking events, training and ensuring constant social media interactions with concerned players.

However, there is doubt in some quarters whether hubs have actually churned out profitable and sustainable startups. In fact, the sustainability of hubs themselves is also being questioned, reasonably so. Some of these hubs do not have a sustainable business model.

They make their income by constantly writing grant proposals, begging for donations, charging rents to the incubated startups or training fees from the various training sessions they hold. They then stop being business incubators and become realtors and colleges.

This is unlike the desired scenario where the hubs should make their income from royalties and shareholder dividends from those startups that they have successfully incubated and transitioned into profitable enterprises.

As a country we therefore need to proceed with caution and confirm that hubs are actually providing the benefits they were anticipated to provide initially. Let us not be excited by the high number of hubs but rather be more interested in the value of their output.