The Continent is a Natural Home For Startups

By Samuel Gebre & Antony Sguazzin

Ikeja computer village market in Lagos, Nigeria.

AFRICA’S STARTUP scene is booming. The startup sector attracted a record $5 billion last year and saw the creation of five unicorns, companies that have achieved a pre-market valuation of more than $1 billion, including Nigeria’s Flutterwave. There were more than 500 early-stage deals in Africa last year, most valued at less than $5 million, setting the stage for a jump in demand for new capital, according to research provider Briter Bridges.

This year is looking even more promising. Investment bankers plan to set up a special purpose acquisition company, or SPAC, to target technology companies in Africa and Swedish unicorn founders have committed to a growth fund to back startups across the continent.

Africa is ripe for startups. The continent is under banked, paving the way for innovative fintech companies. Poor service delivery by governments and underdeveloped commercial sectors present opportunities, including providing solar-power solutions, cooking fuel and connecting informal traders with suppliers.

For now, the activity is confined to the relatively developed markets of South Africa, Nigeria, Kenya and Egypt. That’s poised to change as businesses secure more capital and use improved technology to expand.

Implementing the Africa Continental Free Trade Area and a new cross-border payment and settlement system will help to quicken expansion.

And as long as governments fail to provide the basic services that those in developed nations take for granted, startups will try and fill those gaps. www.bloomberg.com/news/ newsletters/2022-02-04/next-africa-the-continentis-a-natural-home-for-startups