The Silicon Rush?
History Doesn't Repeat Itself, But It Often Rhymes – Mark Twain
In the heart of the 1800s, young Elijah, hailing from a distant land, found himself drawn to the tales of shimmering fortunes on the West Coast of the United States. San Francisco, California, a beacon of hope and dreams, beckoned adventurers from every corner of the globe for a chance at the shiny new thing: Gold. As the California Gold Rush surged, Elijah was swept up in the tide of ambition and opportunity like thousands of others. This monumental event not only reshaped the destiny of California, ushering it swiftly into statehood but also paved the way for America's bold westward expansion. And while the glittering allure of gold may have dimmed after a few fervent years, its legacy lives on today.
California’s Economy
Today, California’s economy boasts a diverse and thriving array of sectors, with finance, business services, government, and manufacturing reigning as the largest industries. However, other crucial sectors include technology, agriculture, tourism, entertainment, and trade. The state is home to some of the world's most valuable and innovative companies, especially in the tech sector. Silicon Valley, located in the San Francisco Bay Area, is a global tech innovation and development hub. Prominent companies born in this region include Apple (the most valuable company in the world), Google, Nvidia, Facebook, Tesla, and Uber. As a result, California now stands as the world's 5th largest economy! Although it has come a long way from the Gold Rush age, it is still filled with opportunity.
Source: Bureau of Economic Analysis, World Bank
So, should I move to Cali?
However, California’s economy faces some challenges in the 21st century:
Income and wealth inequality: According to the 2023 Silicon Valley Index, the top 10% of households in Silicon Valley hold 66% of the wealth. Eight individuals in Silicon Valley have more wealth than the bottom 50% combined. This gap reflects the uneven distribution of income and opportunities among different workers and residents. Thus, many people struggle to afford the high cost of living and are excluded from the region’s innovation and prosperity.
Housing and transportation crisis: The demand for housing in Silicon Valley far exceeds the supply, resulting in soaring prices and rents that make it unaffordable for many workers and families. The median home price in Silicon Valley reached $1.53 million in 2022. Unaffordable housing also contributes to mass homelessness, displacement, and long commutes. The region’s transportation system is inadequate and congested, causing traffic problems, pollution, and stress.
Regulatory and competitive pressures: The tech giants that dominate Silicon Valley’s economy are facing increasing scrutiny and regulation from governments, media, and public opinion. They are accused of engaging in anti-competitive practices, violating privacy and security, exploiting workers and consumers, and evading taxes. They are also challenged by emerging competitors from other regions and countries, especially China, that may offer cheaper or better products and services.
Environmental and social issues: Silicon Valley is vulnerable to various environmental risks, such as droughts, wildfires, earthquakes, floods, and climate change. These risks can damage the region’s infrastructure, resources, health, and safety. Silicon Valley also faces social issues like poverty, crime, education, health care, and inclusion. These issues affect the quality of life and well-being of the region’s population and its social cohesion and stability.
Entering the Silicon Savannah
Picture yourself as Elijah for a moment: you are ambitious and seeking opportunity. The trendy opportunities are in tech. The West appears to be the land of opportunity once again, but there are more obstacles to overcome this time around. There are regulatory roadblocks, tough competition, high living costs, and major companies moving away from San Francisco. In this situation, what should Elijah do?
Fortunately, new regions like Kenya and Tanzania have recently emerged as possible tech innovation and development hubs, with Nairobi even earning the moniker “Silicon Savannah.” The Silicon Savannah is known for producing successful tech companies and solutions, such as M-Pesa, one of the world’s leading mobile money technologies. Tanzania offers some incentives to attract foreign direct investment in Zanzibar, especially in the Free Economic Zones (FEZs). The Zanzibar Investment Promotion Authority (ZIPA) states that companies operating in FEZs can enjoy benefits such as exemption from corporate income tax, withholding tax, value-added tax, excise duty, and customs duty on imported raw materials and capital goods.
How can I take advantage of this?
Cost of living
San Francisco is notorious for its insane cost of living, with the AVERAGE rent around 3300 USD. In contrast, Rent Prices in Nairobi are 89.1% lower than in San Francisco. Simply put, it’s easier in San Francisco to make $250,000/year yet spend $250,000, whereas in Kenya and Tanzania, you can make $250,000/year and keep $200,000.
Opportunities
Like the Gold Rush of the 1800s, Africa, in this case, Nairobi and Tanzania, seems to be brimming with opportunities. Not only is Foreign Investment exponentially rising every year, but Africans themselves are creating more and more opportunities.
While still early, tech investment and companies have grown in Kenya and Tanzania. Google, Microsoft, and IBM have established offices in Nairobi, recognizing the innovation potential. As opposed to more developed parts of the world, innovation is necessary for growing markets; thus, there is much more opportunity. In addition to the technology sector in itself, tech can support other growing fields such as agriculture, finance, and tourism.
You should check out TechSafari for more: a newsletter that discusses everything African tech, from independent startups to government initiatives.
Entrepreneurship
The FEZs and Silicon Savannah are the perfect hubs for burgeoning entrepreneurs to create the next Apple, Tesla, etc. The respective governments are trying to create an environment similar to the roots of San Francisco, where many major tech companies are based. Successful startups in these areas include Twiga Foods, an agri-tech startup that connects farmers and vendors through a digital platform; Wasoko, a B2B e-commerce platform that delivers goods to small retailers; and KopaGas, a pay-as-you-go cooking gas service that aims to make clean cooking affordable and accessible for low-income households.
Also, as a diaspora member, you have the unique opportunity to collaborate with local entrepreneurs. Combined with your global perspective, their on-ground insights can create a potent mix, leading to innovative solutions for local and international markets.
Diversify Your Investments
Consider directing some of your investments to startups or tech ventures in these regions. With lower valuations than their Silicon Valley counterparts, they may offer significant growth potential.
Remote Work
If you're employed with a tech company, consider the feasibility of working remotely from Nairobi or Tanzania. This way, you maintain your salary but benefit from a lower cost of living, potentially accelerating your savings and investments. You can also be directly surveying these cities' prospects for better opportunities.
Challenges on the Horizon
However, it's essential to be realistic about the risks and challenges of investing in emerging markets. Just like any burgeoning hub, Nairobi and Tanzania have their hurdles. Infrastructure development still lags behind more established tech cities, and political instability, corruption, and regulatory inconsistencies can sometimes hinder business growth. Additionally, while tech literacy is improving, there's still a skills gap compared to Silicon Valley.
The Gold Rush of yore reshaped landscapes and destinies. Nairobi and Tanzania, with their promise and potential, challenge the longstanding dominance of places like Silicon Valley. Remember, as the world grows increasingly interconnected, the epicentres of innovation and opportunity are no longer confined to one region or country. By staying agile, open-minded, and proactive, you can position yourself at the forefront of the next big tech revolution.
What is Silicon anyway?
"What is silicon anyway?" Elijah wondered, gazing at the gleaming black rock in his hand. This magical mineral - purified and etched with microscopic circuits - was the key that unlocked the potential of the information age. Silicon, a shiny, grayish metalloid, is the 14th element on the periodic table and the Earth's second most abundant element after oxygen. But why's it in the spotlight? When refined and used in computer chips and transistors, it becomes the brain behind our phones, computers, and all things tech. So, the next time you scroll through your phone, remember you're essentially swiping on a silicon savannah (or valley).
Interested in the cost of living between Nairobi and San Francisco? Read this:
