The investments of venture capitalists from both local and international investors in Africa have graduated from $400 million in 2015 to $4.7 billion in 2021. And in 2022, the continent is on track to break the $7 billion mark set by industry experts. Also, the number of startups and investors coming out of Africa is fast rising; creating fierce competition for growth and financing.
Why this is happening
African startups are presenting residents living across the continent with a unique set of solutions to the very problems affecting their daily lives through the use of technologies such as mobile, big data and artificial intelligence. This is in contrast to startups in developed countries like the United States, United Kingdom, China, etc. where emerging companies’ layer on existing solutions.
- For example, Flutterwave helps business owners create online stores without building a website, while Paystack provides businesses and customers with financial services, such as processing payments.
- In general, these startup companies focus on innovative solutions that create value and opportunities for people. Furthermore, African startups have a desirable urgency and commitment to succeed from the get-go.
On a broader scale
Despite being the second most populous continent in the world, with presumably a large user base, Africa remits little revenue to international and local investors compared to other continents. Hence, the reason Africa ranks low on the priority list for expansion.
According to Statista, in the fourth quarter of 2020, Facebook earnings from the US and Canada were twenty times more than Africa’s contributions.
International companies with operational bases in Africa primarily establish branches on the continent to represent multiplicity, establish a working relationship with the home government and locals, and create a team of non-technical workers. Sadly, these non-technical employees are easily disposable, as seen with Twitter.
Reports say the personnel laid off by Twitter’s owner, Elon Musk, globally include content moderation, curation, safety and truth, and communications teams; all mostly non-technical staff.
In between the lines
Undoubtedly, African startups have the potential to generate significant profits for investors with its ever-growing network of technically skilled professionals and improved assistance from the government. Africa has the potential to become a major player on the global stage and help transform the world.