Startups In-depth: Africa’s leading entrepreneurs are transforming the way business is conducted.
Earlier whenever someone talked about Africa, they felt petty and used to talk a lot about poverty and how the economic condition degraded in the country with the constant suffering of the people. Now the condition is very different and it would be safe to say that the impact of globalization can be seen without any doubt. This impact is inevitable as people of Africa are now defying the isolation they were in for the last 30 years and are willing to make required changes in their society. The major part of this exponential development are different local startups which have evolved in the continent with a special aim to serve the people of the continent and in some cases to the rest of the world as well.
The sole purpose of the different new startups is to fill the gap which is there in the lives of the people or for any particular industry. The need to fill the void in society is the major reason for the development of any startup in any country. Africa was in need of many basic as well as fancy facilities which will enable them to compete with other countries on the same level. According to a study, Africa grew 50% over the past few years with major changes coming in Tech, E-commerce, Banking sector, Entertainment Industry, Agricultural developments, Consultancy services, Retail Sector, Manufacturing industry, etc.
In this article we will discuss in depth about how Startups evolve in different industries and what goes into developing and organizing established companies with the help of the Africa Model and different tactics used by African Entrepreneurs.
1. Inception of an Idea — Initial Project Phase
The first stage of the construction of any building is its basics. When we talk about starting a new company, the idea behind the same forms the basics and it is very important to have very strong basics. According to a recent study, only 1 out of 10 startups make it to their 5th year of working, which means the majority of them are now able to actively function after some time. There can be many reasons behind this. Dr Maavi Norman, The founder of IRIS International Consulting from Liberia quotes that it is mandatory to have laser focus ideas before starting any business whether it is online or Offline. During the early 21st century, Africa was going through a major set back in terms of Technical developments as compared to other countries. Many of them saw this opportunity to introduce their own modified and affordable tools which will attract the African people. This tactic saw great response from the people. By the year 2019, Nigeria witnessed the development of 85 tech hubs, which was followed by South Africa with 80 Hubs.
2. Dynamic Role of Founding Members
It is imperative to have to have dynamic roles allocated to the founding members of any startup. A company is defined by the people working in the same company. Many entrepreneurs accept the fact that having a distributed work environment is beneficial than having a centralized working environment. Decisions made by the collective interest always make a difference in the profit in a positive way. Jason Njoku, founder of iROKO Partners from Nigeria told in the interview that his individual decisions made many mistakes and yielded negligible profit. He started to develop when his decisions were mentored and a collective interest was made before making any humongous decisions.
3. Pitching & Public Attention Level
Mobile banking and Online shopping took a major shift in the speed of advancement in Africa. This was only possible because of the presence of the Internet. Though the prices of the data for the internet were high initially but slowly they were normalised so that everybody can have access to the basic internet facilities. This major change came because of the Public Attention and effective pitching and advertisement by the companies and Startups in the industry.
4. Role of Venture Capital firms & Angel Investors
Initial funding for the birth of any Startup is mandatory. Without any investment you cannot have a budding idea turning into a profitable income. This is where Venture Capital Firms and Angel Investors come in the picture. Building up a trustable relation between the investor and the image of the company is very crucial in the process. Earlier many African entrepreneurs struggled in building this trust with the investors because of the image of the continent but gradually this improved with the help of the African Government. Many MNCs are now investing in the local Startups and also in the established companies with promising results.
5. Maintaining a Constant Competitive Environment
Being competitive is necessary to remain alive in the field. Many times we see companies getting sold to the already established companies just because they cannot function independently anymore and need a parent company for its functioning. Africa’s most valuable company Naspers and largest e-commerce company Jumia developed in this way only. Their aim of expansion and diversification was the important factor in the success they achieved over these years. In the same way MTN, Africa’s largest telecom operators became the second largest company on the local exchange market within a few months.
6. Role of Growth and Importance of Expansion
Monitoring of growth rate after a successful establishment of a small scale company is important. This is a mandatory step in order to convert the small-sized company into a medium-sized company. Expansion and accordingly maintaining the number of workers is important and African entrepreneurs are surely keeping this point in mind. Expansion is confirmed by the investment made in the startups. In 2018 African Tech Startups got a funding of USD 1.163 Billion compared to USD 700 Million in 2017. Constant growth rate should be the basic goal of the budding startups.
Evolution is important but building upon what has come out of that evolution is equally important and maintaining the constant level of development ensures that you remain evergreen in the industry you are working on. Starting a new company means you have to dedicate your every second of your life to the service you are providing. African entrepreneurs are able to make that dedication in reality and that is the main reason for the recent developments that took place in the continent over the last few years.