This article was contributed to TechCabal by Oswald Osaretin Guobadia.
While the vast wilderness highlights the lion’s imposing presence, it is the agile leopard that truly excels when it comes to surviving the complex dynamics of the jungle. Leopards have a slender, muscular build that gives them stealth and agility. They are excellent climbers and can move effortlessly through dense vegetation. Their spotted fur provides excellent camouflage, allowing them to effectively stalk their prey.
In contrast, lions are larger and stronger, but less agile and faster, better suited to short bursts of speed in the open. The jungle requires agility, stealth and adaptability – qualities that resonate deeply in the fast-paced world of start-ups and innovation, especially in Africa’s dynamic business environment.
The Startup Sphere: Africa’s Economic Outlook
With a population of over 1.4 billion people, Africa has a huge potential market, but with this opportunity comes unique challenges: Africa is a jungle.
Agility and flexibility are not just buzzwords. They are the drivers of successful entrepreneurship, especially in environments characterized by fragile, insecure, non-linear and incomprehensible (BANI) dynamics. Africa’s blend of opportunities and challenges epitomizes this challenging environment. To succeed in such an ecosystem, entrepreneurs must embody the leopard spirit and navigate complex situations with tact and adaptability.
Understanding market dynamics is paramount. Many startups aim for a seemingly vast total addressable market (TAM) but often overlook important nuances. Factors such as mobile phone affordability, data costs, network speeds, and digital literacy significantly impact market accessibility. Conducting thorough market research will reveal your true TAM, which may be a small fraction of the total population.
Despite Africa’s large population, digital literacy rates range from 10 to 40 percent, generally low compared to other regions of the world, highlighting subtle differences across the continent depending on the level of investment in technology infrastructure and education initiatives and the need for targeted solutions.
According to the data presented below, Africa’s GDP is expected to grow by 3.5% in 2024, a modest increase given the backdrop of a slowing global economy, deteriorating financial conditions, and heavy debt burdens. While this projected growth rate is positive, it must be contextualized within the broader scope of African economies, where countries such as Nigeria are projected to grow by 2.5%. While such figures are encouraging, they do not uniformly indicate a rapid escape from poverty. Multidimensional poverty still afflicts up to 80% of the population in certain regions, directly impacting market penetration and the affordability of products and services.
For startups operating in this environment, it is imperative to strategically align their offerings with the economic realities of consumers. Startups need to be agile in navigating this economic landscape, creating innovative and accessible products and services for a mass population that struggles with limited disposable income amid competing life priorities.
This juxtaposition requires innovative pricing strategies that respond to the economic realities of target markets. It requires recalibrated business models, deep consumer insights and value propositions that address immediate needs. Investing in local innovation and engaging in community-based problem solving can also ensure that startups are recognized as businesses and become integral to the social fabric. Collaborative policy development, effective execution, flexible regulatory management and infrastructure development beyond profit centers are essential. A pan-African approach will create synergies, harmonize regulations, expand TAM across borders and leverage Africa’s vast potential.
Innovation can be defined as the implementation of an idea that addresses an ill-articulated problem.
Within the African innovation paradigm, it is clear that true ingenuity lies not only in the specifics of what is being done, but also in the delivery pathways of how and why it is being done. While some solutions mirror efforts elsewhere and may be articulated as well as solved, the essence of African innovation lies in the unique approaches taken to tackle pressing challenges. It is the resourcefulness, adaptability and resilience woven into the execution of ideas that differentiates African innovation, and that is why the stealth and agility of the Leopard is king in the African innovation arena.
Digital platforms must also be pervasive and user-friendly, ensuring that technology becomes a bridge, not a barrier, to inclusion. Digital literacy and inclusion play a vital role in sustainable development. Policies that promote access to education, encourage digital skill development, and foster an entrepreneurial environment are essential to drive growth. In a continent with a growing young population, bridging the digital divide is essential to unlock Africa’s full potential.
Ongoing support and training for founders is essential to closing the social gap. Many aspiring entrepreneurs lack experience and need mentors to help them navigate challenges effectively. Support systems such as incubators and accelerators are essential in providing practical advice on business development and expansion. Additionally, funding through avenues such as microfinance and venture capital tailored to African markets can accelerate startup growth. Secondly, strong support networks must be built to increase startup success rates and stimulate economic growth. Through these resources, founders can learn from experienced mentors, connect with critical networks, tailor their products to market needs, and turn potential into tangible success.
BANI Dynamics’ High Hurdles
However, Africa’s entrepreneurial journey is not without its challenges. The continent’s business environment is often characterized by BANI dynamics (fragile, insecure, non-linear and incomprehensible). This instability creates complex and unpredictable conditions, contributing to high failure rates for African startups. A closer look at different countries within the continent reveals different contexts of startup success and challenges.
According to a Statista study, the average survival rate of African startups in 2020 was 75% after one year, 46% after three years, and 25% after five years. These figures are slightly lower than the global averages of 78%, 50%, and 33%, respectively. The study also found that startup failure rates vary by African country. Ethiopia and Rwanda had the highest failure rates at 75%, followed by Ghana at 71% and Uganda at 70%. Meanwhile, Kenya had the lowest failure rates at 24%, followed by South Africa at 28% and Nigeria at 29%.
Weak infrastructure and regulation: Weak infrastructure, limited access to capital, and rapidly changing regulations can quickly frustrate even the most promising startups. It is therefore essential to strengthen financial and regulatory frameworks to support SMEs. Unsettled markets: Economic instability and consumer anxiety over limited disposable income can make it difficult to establish a loyal customer base and secure funding. Non-linear growth: Traditional growth models are often ineffective in the BANI environment. Unanticipated events and disruptions can rapidly change market trends and customer needs. Hard-to-understand ecosystem: Navigating Africa’s complex network of stakeholders, cultural nuances, and informal economies can be daunting for new ventures. Engaging with local communities and understanding the informal sector can provide a competitive advantage for new businesses.
The dominance of the leopard in the world of BANI
Adopting a “leopard mentality” can increase entrepreneurs’ chances of succeeding in this challenging environment. Leopard agility allows them to quickly pivot in response to changing market conditions. Leopard resourcefulness allows them to find creative solutions with limited resources. Leopard stealth allows them to navigate complex regulations and find new opportunities.
Africa needs more “Leopards” – agile, adaptable entrepreneurs with a deep understanding of the continent’s unique challenges and opportunities. By embracing the Leopard spirit and nurturing a supportive ecosystem, Africa’s tech jungle can thrive and realize its full potential.
Uncontrollable possibilities await
Africa’s tech industry is a land of vibrant possibilities waiting to be explored. In Africa’s startup jungle, the symbolic choice is clear: to be a lion or a leopard. Agility, adaptability, problem-solving abilities, investment in the ecosystem and support for founders are crucial. By harnessing the leopard’s traits of stealth, agility and resourcefulness, entrepreneurs can overcome challenges, seize opportunities and create a sustainable impact. Africa’s wild potential awaits those ready to embrace the leopard mentality.
Maybe these leopards will stumble upon a global unicorn or a local camel. A real treat.
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Oswald is the Managing Partner at DigitA and is one of Africa’s leading digital evangelists.
