Building a Sustainable Edtech Business in Africa

Edtech or education-technology, like the name implies, refers to the use of technology in Education. Forbes defines Education technology (EdTech) as the industry that combines education and technological advances, revolutionizing the conventional landscape of education. This includes e-learning platforms, enterprise, admin & data management systems, learning and study tools, teacher tools, assessment analytics and so on and so forth.

According to market research, the global edtech market received $7.0 billion global education venture capital funding in 2019. Even more, telling is the stunning rate of growth from $0.5 billion of edtech VC funding in 2010. The tripling of investment in edtech over the next decade is predicted.

As a whole, Education is very early in the technology adoption stage. The US set the pace for the prior five years and now Asia, led by China and India, are experiencing the world’s fastest growth in investment into the Education sector. In Africa, it’s also a rapidly growing industry and naturally, as internet penetration grows and populations increase, data costs become cheaper and technology solutions – both hardware and software are predicted to become more common to everyday problems. 

Globally, edtech isn’t without its own unique challenges. Wrong product-user fit, low retention rates, lower profit margins and so on often lead to the impression that edtech is a less profitable venture – especially in Africa. One of the foundational issues is that education is largely underfunded in many parts of the developing world and so creating a profitable edtech business, especially targeted at primary and secondary school learners is often tricky, regardless of the target user. The education sector is also largely influenced by the government on all levels.

FlexiSAF has successfully navigated these terrains for the past 10 years, managing to grow a highly profitable edtech business and scale to a customer base of over 500 schools in two African countries, despite these challenges. Although no two businesses are the same, these are some of the business approaches that have helped us over the years:

  • Listen to your customers above everything else – First of all, you need to truly care. Identify the real pain points and who these problems affect. Then talk to them and find out how they’d like it to be solved. Building solutions for education is a different ball game altogether; you need to understand how the system works before you can creatively identify real business opportunities. For us, the majority of our customers are administrators and school owners, end users are mostly teachers – this is a unique group especially in Africa and most likely everywhere else as they usually have low willingness to pay for technology and most times aren’t necessarily a technologically savvy group. Discovering their needs is a constant process for us because the dynamics are constantly evolving.
  • Get your business and pricing model right – If you’ve handled #1 correctly and already understand your market, then by now you should be halfway towards deciding on the right pricing model. A study conducted in the US which is the world’s largest edtech market showed over 50% of solutions in the industry were under the enterprise SaaS category. An example of this is our school management software – even though it benefits teachers as well by lessening their manual workload, it wouldn’t make much sense used by individual teachers in a particular school so it has to be marketed to the school. This meant that we had to add other strategic features to make it more appealing on that level. There are many hidden opportunities. Take ScholarX for example, they’re a startup helping people identify scholarship opportunities. We also have seen several online tutoring sites and so on. Basically your business model should depend on the service you are offering but also the willingness to pay for the different user groups. University students have a low willingness to pay for educational solutions so you’ll need a creative revenue model if they are your target market like with a JAMB practice app for example. While products intended for primary or secondary school students must be made appealing to their parents. The decision on whether or not to adopt a monthly or termly subscription payment or one-off payment can also be key to sustainability. We’re aware that some software providers offer one-off school management software but we identified that most schools needed support and staff capacity building and decided to make that an essential part of our solution.
  • Be ready to adapt – Like we mentioned earlier, customers’ needs are always changing. Although the education sector isn’t adopting technology as fast as other sectors, it’s growing pretty fast. We have grown significantly in the last few years and the demands of now aren’t the same as before. Your solution should stay relevant and move with industry standards and changes. Most tech companies in other industries understand this well enough. A good example for us is when we started, internet penetration was still very low compared to now; which was the biggest problem with adoption and even retention of existing users – we had to provide an offline solution which they could regularly back-up whenever they were lucky to get internet access, just to allow users the functionality they needed. As the internet situation improved, we quickly reverted to full cloud and now these days, everybody has a smartphone. Our products now also have Android and iOS apps. Staying adaptable is key.
  • Care about their problems – This is similar to the first point but slightly different. Beyond the problem your solution solves, you might notice other underlying issues standing in the way of your customer adopting your product – not that they aren’t interested or there isn’t a need. Such problems may seem unrelated to your business but will ultimately affect adoption and retention rates for your product. For example if you notice a skill/capacity gap in the industry, address it. Certain infrastructure gaps? Provide them alternative solutions or collaborate with others who are willing to provide.
  • Collaborate & ask for help – At the end of the day, education is a critical sector which requires community effort to make an impact. People are typically not used to what you’re providing so it’s up to you to do the majority of the work. Like most customer groups, teachers, school leaders, even parents want to know that they can trust and rely on you  to meet their educational needs. Look out for partnerships with other private organisations, government agencies etc that could help you grow and take your product further – you can’t win in this game as an island.
  • Word of mouth is still the best way to build – If you have limited marketing resources, invest initially in making your existing customers happy and turning them into bonafide fans and evangelists about your company. The traction from this alone could be responsible for your first few hundred adoptions. If this works then you’re ready to scale. And when you start to grow, don’t relent. They’re the real lifeline of your business.
  • Don’t compare – One very difficult but noteworthy point is not to compare yourself or your progress with tech companies or startups in other industries. Picture this: the global edtech industry was worth $18.66billion in 2019 according to Market Insider. For fintech that’s $127billion in 2018. Already you can see a wide gap. In Nigeria, for example, sources cite edtech funding in 2018 at only 2.7% of total startup funding compared to fintech at 32.6%. This alone should let you know that education technology itself is still in a growing stage. There are long term opportunities but if your current benchmark for success is based on the number of users or revenue of startups in another industry, then you’ll always fall short. Try and find relevant industry benchmarks for your business projections – but also take into account the effects of your immediate environment and tailor your expectations accordingly. Simply put, identify your edtech success metrics correctly.

Author: Ada Okoli

Outreach and Communications at FlexiSAF Edusoft

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