Developing Durable Funding Sources –
Funding remains a major challenge in the growth and sustainability of Digital Innovation Hubs (DIHs). A survey conducted by Africa Technology Business Network (ATBN) among DIH leaders in Ghana, Nigeria, Tanzania, and Uganda, found that 62% of surveyed hubs were less than 2 years old and had a turnover of less than USD 50,000 annually. The study also found hubs that provided a commercial offering created a strong brand and formed strong partnerships were successful.
On 19th October 2022, ATBN in partnership AfriconEU hosted our monthly webinar for DIH leaders. The webinar focused on ‘Durable funding sources for Digital Innovation Hubs.’ Speakers included Eunice Baguma Ball (Director and Consultant, ATBN), Richard Zulu (Founder and Lead consultant, Outbox), Daniel Nang (Executive Director, Dansyn Innovation Social Organisation), and Gideon Brefo (Co-founder, Hapa Space).
Below are the main takeaways from the event.
Digital Innovation Hubs need to identify their revenue niche
Some of the common revenue models employed by Digital Innovation Hubs include offering business and technology support services, market research and consulting services, training and skills development, recruitment services, and renting out office space. It was noted that not all these models are conducive to every market. A key point that emerged from the discussion was the need for Digital Innovation Hubs to identify the model that works in their environment and tailor it to fit within their context. This is the revenue niche. This personalization can be supported with tools such as SWOT analysis, Business Model Canvas, and Minimum Viable Product.
Richard shared their experience of exploring various funding models at Outbox, a digital innovation hub based in Kampala, Uganda. They initially relied on donor grants to fund its activities. As donor funds became unsustainable, Outbox incorporated the provision of Business and Technology advisory services to its members. Services included brokering market relationships, building business cases, and supporting transactions with financial institutions. Richard and his team had found their revenue niche. This model has provided sustainable revenue for their Digital Innovation Hub.
Partnerships are key to raising sustainable DIH revenue
Partnering with like-minded organizations can also provide much-needed revenue for DIHs. Collaboration and strategic partnerships are vital to advancing business outcomes, growing market share and increasing business relevance. Partnerships are not only beneficial for businesses but also for hub members and employees. Members are provided with a wider range of service offerings, while employees have greater access to development opportunities through exposure to new perspectives and expertise.
Daniel shared their experience at Dansyn ISO, a non-profit organization aimed at supporting youth entrepreneurship and IT capabilities in Ghana. The Digital Innovation Hub was formed through a partnership with Dansyn Ghana Ltd, a business development support and consultancy company. The two organisations created a mutually beneficial arrangement that would support each of their objectives. Through such strategic partnerships, Digital Innovation Hubs can incorporate sustainable revenue models that allow them to unlock opportunities within their ecosystems
Digital Innovation Hubs need to strategically diversify their income streams
Although Digital Innovation Hubs have traditionally relied on donor funding to survive, this funding model has not been sustainable in the long term. Additionally, large portions of donor funds are often earmarked, preventing DIH executives from pursuing new prospects within their ecosystem. It is therefore crucial for hub leaders to identify a variety of alternative funding sources.
Gideon from HapaSpace, a Digital Innovation Hub in Kumasi, Ghana, shared how they have been able to offer a number of technology and business consultancy services as well as renting office space in order to augment their grant revenue. He emphasised the need for DIHs to be strategic in order to make their services competitive. For example at HapaSpace, they moved their location to a more central business location in order to attract larger, corporate clients. Identifying unique strengths and opportunities within their market is key to enabling DIHs to build more diverse and sustainable revenue streams.
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