Sylvia Duruson
Sub-Saharan Africa is home to some of the world’s fastest-growing economies and an expanding young population brimming with talent and potential. However, the region’s startup and innovation ecosystem significantly trails its global counterparts according to the Startup Genome’s recent report, which stated, “The startup ecosystem in Sub-Saharan Africa ranks lowest globally,” underscoring the region’s immense unrealised potential. “Urgent, coordinated action is required if Sub-Saharan Africa is to cultivate innovation, attract investment, and thrive on the world stage.”
This highlights the pressing need for coordinated action to nurture entrepreneurship, attract investment, and elevate Sub-Saharan Africa as a rising hub of groundbreaking ideas and ventures. The report revealed the region’s total ecosystem value from late 2020 to 2022 was just $24 billion, dwarfed by North America’s over $5 trillion. “This massive valuation gap shows the monumental obstacles facing African startups,” emphasised report author Anna Smith.
With such limited ecosystem value, it’s no surprise that early-stage funding in Sub-Saharan Africa is also dwarfed by other regions, totalling a mere $2 billion compared to North America’s $139 billion and Europe’s $67 billion. “Limited funding structures, risk-averse investors, and lack of awareness of African markets’ high returns have worsened this capital shortage,” explained Smith.
However, there are signs of progress. “Early-stage funding increased 227%, and deal count grew 43.8% from 2018-2022,” noted Smith. But barriers persist, as “the region’s $2 billion exit value remains the lowest globally, indicating major obstacles to startup success.”
To drive change, Smith urged, “Governments must streamline regulations to enable innovation and investment. Financial education is also critical to develop entrepreneurial skills and mindsets from a young age.”
Echoing this, venture capitalist Kenya Njoroge stressed investors’ role in unlocking the region’s promise through increased early-stage capital. “With proper support, these ventures can disrupt the status quo and ignite economic growth,” he said.
This potential is already being proven by Sub-Saharan startups like Andela, Flutterwave and Paystack succeeding globally, as Njoroge highlighted. “The potential is immense. Recognising Sub-Saharan Africa as a hub of groundbreaking ideas, not just a consumption market, is vital.”
Multi-sector collaboration will be key to future success. “Partnerships can stimulate innovation,” said Smith. “Mentor networks provide invaluable guidance as startups scale.”
In Njoroge’s view, “By actively fostering entrepreneurial ambition, enabling early funding access, and coordinating support, Sub-Saharan Africa’s startup ecosystem can ascend. The foundation is being laid to unlock the region’s dynamism and brilliance.”
