Magazine article African Business

Startup Africa: Much Hype, Not So Much Impact? African Startups Are Attracting the World's Attention, but Fragmented Markets, Lack of Funding and Unfriendly Business Environments Pose Problems for the Continent's New Entrepreneurs

Magazine article African Business

Startup Africa: Much Hype, Not So Much Impact? African Startups Are Attracting the World's Attention, but Fragmented Markets, Lack of Funding and Unfriendly Business Environments Pose Problems for the Continent's New Entrepreneurs

Article excerpt

Africa's startup scene is buzzing. Dozens of tech hubs, "accelerators" and "incubators" have sprung up across the continent in recent years.

So trendy are African startups that even Silicon Valley has taken notice. In August 2016 Facebook's Mark Zuckerberg visited Nigeria and Kenya, his first time on the continent, in what is seen as a watershed moment for tech in Africa.

In his wake US investors have warmed to the idea of deploying capital in Africa. It has also acted as a catalyst for members of the diaspora to head back to the continent, armed with their iPads, laptops and innovative thinking, eager to tap into this emerging opportunity.

The conference circuit is red hot, with TechCrunch, the de facto chronicle of the global startup movement, hosting its first ever "Startup Battlefield Africa" competition in Kenya in October. Fifteen startups from across the continent competed for $25,000 of funding, with Kenyan logistics firm Lori Systems taking home the prize.

The buzz is palpable, but amid the hype it is not obvious how much impact this is having. The space is dominated by internationally backed startups like Nigeria-based e-commerce firm Jumia, as well as global market entrants like Uber and Airbnb. Local markets remain fragmented, awash with small-scale and largely unprofitable startups. It is also dominated by just a few cities, with the vast majority of activity concentrated in Lagos, Nairobi and Cape Town.

Funding levels in Africa are trivial when compared to other regions. …

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