Context: The Data Scarcity Issue

Emerging markets face a critical challenge in accessing comprehensive and reliable data. This data scarcity impedes both economic and social development, as local entrepreneurs and NGOs require relevant market intelligence for effective operations.

• Locally, the lack of data hinders economic progress and social initiatives. Entrepreneurs need access to precise data to make informed decisions, while NGOs and humanitarian organizations rely on data for effective program planning and execution.
• Globally, the shortage of localized data affects the quality of AI models. Particularly in Africa, the absence of Afrocentric data results in biased AI models and products, as most AI systems are trained on Western datasets. This disparity can lead to growing discrepancies between developed countries and emerging economies. Poor-quality data can have severe consequences, including biased results, inaccurate predictions, flawed decision-making, and potential harm to marginalized populations.

Problem Statement

The Data Gap Issue

Emerging markets face a severe data gap due to several factors:

1. Infrastructure Issues: Limited infrastructure in underserved areas restricts the collection and dissemination of data.
2. Highly Informal Economy: A large portion of economic activities occurs informally, making it difficult to track and analyze market data.
3. Lack of Awareness: The value of data is often under-appreciated, leading to missed opportunities for leveraging data for economic and social benefits.

The Funding Gap Issue

In emerging markets, the funding gap for startups and NGOs presents a significant challenge to economic growth and innovation. Despite the surge in venture capital investments, particularly in tech hubs like Lagos, Cape Town, and Nairobi, many businesses and organizations are left struggling to secure the necessary funding.

This is primarily because traditional venture capital models, which are well-suited for asset-light, high-growth startups, often fail to meet the needs of the majority of businesses in these regions. Many of these businesses are asset-heavy and lack the exponential growth potential that venture capitalists typically seek.

Even with capital venturing, skilled founders find themselves to dilute their equity and ownership over their project, which can lead to an adjustment of their business models to align with venture capital criteria, often from other countries, and not realist regarding what’s happening on the ground. This leads to some funded successes, but leaves many companies underfunded and struggling.

The financing gap is particularly pronounced among small- and medium-sized enterprises (SMEs), which constitute a significant portion of the economic activity in emerging markets. Conventional financing options like commercial banks and microfinance institutions either carry high administrative costs or are not scalable for larger loan amounts, while securing more significant funds from donors can be challenging.

Opportunities and Assessment

Emerging markets are witnessing the rise of innovative ecosystems. The Ubuntu mindset prevalent in Sub-Saharan Africa, where collaboration and sharing are valued, presents a unique opportunity for open innovation.

However, three main challenges must be addressed to fully harness the potential of data for economic and social advancement:

1. Suboptimal Capital Allocation: Impactful organizations often rely on grants but lack the support to integrate open-source frameworks. This shortfall leads to missed opportunities for collecting and leveraging valuable data, resulting in donors funding that yields only temporary effects instead of a lasting impact on targeted communities.