African Union to unveil new fund for investment in Biotech & AI startups

The leaders, convened by the African Union and AfroChampions, hope to create the next homegrown unicorns based in Africa, hiring Africans and building products and services focused on Africa's unique problems and challenges so that the continent stops being overdependent on imported technology.

During the pandemic, Africa's overdependence was manifested through shortages of personnel protective equipment, ventilators, vaccines and therapies, among others. 

Leading African Union (AU) agency heads are poised to announce the ambitious plan at a virtual summit dubbed the Boma of Africa on 8th July to launch an initiative called 4D. The Agency Heads will sign a pact to mobilise tens of millions of dollars to boost the initiative at the Boma.

The 4D Pact will lead to a new framework for channeling massive resources being raised by African Union agencies from development finance institutions and international aid organisations to more agile innovators such as startups, university spinoffs, and SMEs who today struggle to raise finance for areas critical to development.

Resourcing these more agile economic actors is expected to have a significant impact on major developmental contexts where Africa still lags behind such as health, trade, local manufacturing, and job growth.

The AU institutions at the forefront of this ambitious push to shift more resources to innovators to tackle neglected development sectors are: the AfCFTA Secretariat, Africa CDC, AUDA-NEPAD, Africa Civic Aviation Commission, and the Africa Capacity Building Foundation.

The key problem that the AU 4D Pact is solving is bridging the current gulf between private funding for innovation and traditional development financing for Social objectives, which unfortunately continues to widen.

This chasm has led to large amounts of private funding going to agile innovators for useful economic activities like fintech and e-commerce but with limited applicability to the surrounding development infrastructure that will make Africa economically resilient. 

Many of the venture capital and private equity-funded products and services struggle to scale and most fail to expand into critical sectors like health, agriculture, education and natural resource value addition due to weak infrastructure, institutional support and government incentives.

To address this gap, the 4D Initiative adds a special layer of venture building, scaling and support systems to the financial commitments to improve the prospects of success for the Innovative entities that qualify for success.

According to the Deputy Chairperson of the African Union Commission, Monique Nsanzabaganwa, the details of the 4D Initiative are still being worked out, but the underlying model was built on the Trillion Dollar Fund (TDF) initiative launched in 2020 by the African Union Commission at the instance of the Assembly of Heads of State, the supreme policy organ of the African Union. 

Phase one initial pledges for the TDF and 4d have collectively crossed the $1 billion. 

“Most of the resource commitments are linked to existing commitments in vaccine manufacturing and genomics across different agencies. What is changing is that the Pact will shift more of these committed resources to new actors in Kenya and other major centers of African innovation; and such actors include Startups, University Spinoffs, Accelerators, Incubators and Intellectual Property (IP) commercialisation entities,” said Nsanzabaganwa. 

Development Finance Institutions being mobilised by the AU include BADEA, AFC, AfDB and Afreximbank.

4D Stakeholders will now drive the African Union strategy to expand investment in Africa into local production of advanced technologies with critical social impact such as medicines, vaccines, medical devices, gene therapies, biotech, artificial intelligence and biomaterials.

Whilst the Trillion Dollar Fund initially aimed to boost trade in African-made goods under the AfCFTA (African Continental Free Trade Area), the scope will now expand to manufacturing and technology development. With a strong focus on biotech innovation, digital health, artificial intelligence, and the green economy.

To ensure that the mobilized funds make a significant social impact, the initiative has already established an innovation marketplace and common digital platforms. These platforms will enable startups to rapidly scale up their services. Among the platforms are the AfCFTA Hub, ProPer, PanaBIOS, and Transforma. Additionally, the initiative will support the commercialization of research at African universities by fostering spinoffs.

At its core, the 4D Initiative envisions an innovation-driven marketplace that encourages cross-border collaboration to shape a greener continent and generate climate-smart jobs.

On the occasion of Africa Integration Day, influential stakeholders from across the continent, convened by the African Union and AfroChampions, are virtually coming together to articulate a groundbreaking action plan for the 4D roadmap.

The plan aims to leverage the power of technology as an enabler, foster a culture of collaboration, and propel scientists, startups, and innovators to new heights. Africa, with its potential four trillion-dollar market, offers abundant opportunities in sectors such as biomedicine, vaccines, biopharmaceuticals, e-genomics, and biosecurity, just waiting to be tapped into.

By signing the 4D pact, continental integration will receive a much-needed boost, leading to job creation and the establishment of robust knowledge economies. This endeavor aligns with the Africa Union's Agenda 2063, which outlines the vision for the desired future of the continent.

During the summit, Tidjane Thiam, an esteemed international banker, will deliver a keynote speech on positioning Africa for global relevance. The Boma event will also be attended by various Presidents and business leaders, including the Presidents of Ghana, Ethiopia, and Comoros, with the latter currently chairing the African Union.