Juliet Ehimuan is Director, Google W. Africa, and Founder, Beyond Limits Initiative. She focuses on innovation, transformation & leadership.
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Startups are on the rise as a result of significant growth in digital technology and innovation, redefining what is possible for individuals, states and societies. They generate jobs, hence lowering unemployment rates, creating solutions and facilitating growth and development. More than just business as usual, startups help with inclusion, giving their beneficiaries access to financial products and services, world-class education, healthcare and a myriad of facilities that can transform lives.
Startups benefit their home countries, too, as their innate ability to innovate helps ensure speedy and efficient development for their economies. This has been of immense advantage in Africa, as startups across the continent have gained increasing attention all over the world. The rapid growth and substantial valuations that a number of them have achieved are a reflection of the considerable opportunity that Africa offers and a validation of the scale and urgency of the need that these startups are addressing.
Nigeria’s OPay and Flutterwave are among the earlier African organizations to have reached unicorn status—startup businesses valued at $1 billion—with Senegal-based mobile money application Wave not far behind. Nigeria’s Paystack sold for $200 million to Stripe in 2020, and Uganda’s mobile payments platform Eversend has also proven very successful. In the agricultural sector, Kenya’s Komaza has raised millions, and in the tech-health space, Nigeria’s Reliance Health is changing the way healthcare and its information are managed on the continent.
Successes aside, there is still plenty of room for improvement. Startups across Africa today face limitations in these major areas: talent acquisition, leadership skills, financial access and policy, infrastructure and regulation limitations.
Talent Acquisition
There is undoubtedly talent in Africa, but compared to the size of the opportunity, it is clear that the shortage is for highly skilled talent. In contrast to ecosystems like Silicon Valley where the availability of skilled experts can be taken for granted, in most of Africa, some training intervention is required to build human resources that are fit for purpose.
The growth of the technology ecosystem has been instrumental in spurring an increase in the developer population on the continent. According to findings from Google and the International Finance Corporation, there are nearly "700,000 professional developers across Africa, with more than 50% concentrated in five key African markets: Egypt, Kenya, Morocco, Nigeria, and South Africa," as Business Insider reports. The findings showed that in Nigeria, for example, at the end of 2020, there were 85,000 developers, 72% junior developers and 28% senior developers.
These numbers, however, do not begin to address the substantial need for skilled talent, both technical and non-technical, which is essential to the maintenance of the startup ecosystem on the continent. Africa needs more training, mentorship, access and inclusion; and while organizations such as AltSchool Africa, EduOne and Edves are already helping bridge the talent gap with training initiatives focused on developing talent for the local market, it is clear that this is an effort that startups cannot bear alone.
Leadership Skills: The Positive Impact Of Mentors And Well-Trained Leaders
The presence of mentors and positive leadership often leads to huge leaps in progress. Experiential knowledge from running established organizations can prove invaluable when broaching new territories. Kent Nutt writes, "Founders that surround themselves with the right people—at the right time—can be instrumental as their venture grows and begins to move toward long-term sustainability."
He adds that mentors "can help startup founders avoid critical pitfalls" while staying focused on goals. They hold founders "accountable to their vision for the company" and can "help a fledgling entrepreneur think through strategies, crunch numbers" and more.
They do this through coaching, effective communication, building the character and value systems of the founders and the organization as a whole, and leading the corporate vision in problem-solving. Given how helpful they can be, the fact that demand outstrips supply shows a dire need for accelerator programs, mentor-mentee matching schemes and capacity-building initiatives for startups in Africa.
Financial Access
In recent years, there has been a boom in African startups attracting funding from local and international investors, with some attaining unicorn status. Most of these benefiting startups are in the growth phase, leaving two funding gaps in the market: the early stage (pre-seed funding) and series A/B funding.
Pre-seed funding is typically challenging because investors are skeptical about the feasibility of early-stage startups. Secondly, while many startups do not know where to go for funding, many investors similarly do not know where to begin their search for viable businesses. To counter this, investors will need to place more bets on startups and create networks that focus on matching investment needs to the working capital needed to facilitate growth. In addition, the organizations facilitating these connections and helping to channel coaching and financing resources to businesses need to better coordinate and engage with one another.
Policy, Infrastructure And Regulation
The policy space remains one of the most challenging areas for businesses in Africa. Utilizing policy to drive infrastructure growth and enable greater ease of doing business can significantly accelerate business transformation.
Thankfully, we are starting to see positive movements toward the creation of enabling policies across the continent. As more governments recognize the viability and profitability of the startup ecosystem, their interest in helping to create an enabling environment for startups will likely also grow.
The future for Africa is now. I believe the next decade will bring remarkable growth across the continent, driven by remarkable startups bringing innovative solutions that transform challenges into opportunities. With a supportive business environment, sufficient funding flows, strong connections and even stronger policies, Africa can become a superpower for startups; as leaders, we must work together to help create it.
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