This article was contributed to TechCabal by Oswald Osaretin Guobadia.
The sprawling wilderness may glorify the lion’s majestic presence, but the agile leopard truly excels when it comes to thriving in the jungle’s intricate dynamics. Leopards are built for stealth and agility, with a lean and muscular build. They are excellent climbers and can navigate dense vegetation with ease. Their spotted coat provides excellent camouflage, allowing them to stalk prey effectively.
In contrast, although larger and more powerful, lions are not as agile or quick and are better suited for short bursts of speed in open areas. The jungle demands nimbleness, stealth, and adaptability — qualities that resonate deeply in the fast-paced world of startups and innovation, particularly in Africa’s dynamic business landscapes.
The startup terrain: Africa’s economic outlook
With a population of over 1.4 billion, Africa presents a vast potential market, yet this opportunity comes with unique challenges. Indeed, Africa is a jungle.
Agility and flexibility are not just buzzwords; they are the heartbeat of successful entrepreneurship, especially in environments marked by Brittle, Anxious, Nonlinear, and Incomprehensible (BANI) dynamics. Africa’s blend of opportunities and challenges exemplifies this demanding terrain. To flourish in such an ecosystem, entrepreneurs must embody the spirit of the leopard, navigating complexities with finesse and adaptability.
Understanding market dynamics is paramount. Many startups aim for a total addressable market (TAM) that appears vast but often overlooks critical nuances. Factors like mobile phone affordability, data costs, network speeds, and digital literacy significantly influence market accessibility. Conducting in-depth market research would unveil the true TAM, which may be a tiny fraction of the total population.
Despite the high population, digital literacy rates in Africa hover within 10–40%, generally lower compared to other regions of the world, with subtle variations across the continent varying with the extent of investments in technology infrastructure and education initiatives, highlighting the need for targeted solutions.
According to the depicted data below, Africa’s GDP is expected to grow by 3.5% in 2024, a modest uptick when considered against the backdrop of global economic slowdown, heightened monetary conditions, and substantial debt burdens. This forecasted growth, while positive, must be contextualised within the broader spectrum of African economies, where countries like Nigeria have projected growth rates of 2.5%. Such figures, albeit promising, do not uniformly indicate a swift elevation from poverty; multidimensional poverty still plagues up to 80% of populations in certain areas, directly impacting market penetration and the affordability of products and services.
For startups operating within this environment, this necessitates a strategic alignment of their business offerings to meet the economic realities of their consumers. They must navigate these economic waters with agility, crafting offerings that are innovative and accessible to the populace who grapple with limited disposable income amidst their competing life priorities.
This juxtaposition necessitates innovative pricing strategies that resonate with the economic realities of the target market. It calls for recalibrated business models, deep consumer insights, and value propositions that address pressing needs. Investing in local innovations and engaging in community-based problem-solving can also ensure that startups are seen as businesses and integral to the societal fabric. Collaborative policy development, effective execution, flexible regulation management, and infrastructure development beyond profit centres are imperative. A pan-African approach unlocks synergies, harmonises regulations, and expands the TAM across borders, tapping into Africa’s vast potential.
Innovation can be defined as executing an idea that addresses an unarticulated problem.
Within the boundaries of African innovation, it’s clear that true ingenuity lies not just in the tangibility of what is being done but also in the delivery path of how it is done and why it was done. While some solutions may echo endeavours elsewhere and not only articulated but solved, the essence of innovation in Africa thrives in the unique approaches taken to tackle pressing challenges. It’s about the resourcefulness, adaptability, and resilience woven into the execution of ideas that differentiate African innovation, which is why the stealth and agility of the Leopard is king in Africa’s innovation space.
Digital platforms must also become more prevalent and user-friendly, ensuring that technology becomes a bridge rather than a barrier to inclusion. Digital literacy and inclusion play pivotal roles in sustainable development. Policies promoting education access, incentivising digital upskilling, and fostering entrepreneurial environments are essential growth drivers. In a continent with a growing youth population, bridging the digital divide is crucial for unlocking Africa’s full potential.
In bridging societal gaps, continuous support and training for founders are non-negotiable. Many aspiring entrepreneurs lack prior experience and need mentorship to navigate challenges effectively. Support systems like incubators and accelerators are crucial, offering practical advice on business development and scaling. Additionally, access to funding through measures such as microfinancing and venture capital tailored for African markets can catalyse the growth of startups. What follows should be a strong support network that improves startup success rates and stimulates economic growth. Through these resources, founders can learn from experienced mentors, connect with important networks, and adapt their products to meet market needs, turning potential into tangible success.
The high hurdle of BANI dynamics
However, Africa’s entrepreneurial journey is not without its hurdles. The continent’s business environment is often characterised by BANI dynamics — Brittle, Anxious, Nonlinear, and Incomprehensible. This volatility creates a complex and unpredictable landscape contributing to Africa’s high startup failure rate. A more granular look at different countries within the continent reveals a varied landscape of startup success and challenges.
According to a study by Statista, the average survival rate of startups in Africa was 75% after one year, 46% after three years, and 25% after five years in 2020. These numbers are slightly lower than the global average of 78%, 50%, and 33% respectively. The study also found that the startup failure rate varied across different African countries. Ethiopia and Rwanda had the highest failure rate of 75%, followed by Ghana with 71%, and Uganda with 70%. On the other hand, Kenya had the lowest failure rate of 24%, followed by South Africa with 28%, and Nigeria with 29%
- Brittle Infrastructure and Regulations: Fragile infrastructure, limited access to capital, and rapidly changing regulations can quickly derail even the most promising startup. Therefore, strengthening the financial and regulatory framework to support small businesses is essential.
- Anxious Markets: Consumer anxieties about economic instability and limited disposable income can make it difficult to establish a loyal customer base and secure funding.
- Nonlinear Growth: Traditional growth models often prove ineffective in BANI environments. Unforeseen events and disruptions can rapidly alter market trends and customer needs.
- Incomprehensible Ecosystems: Navigating Africa’s complex web of stakeholders, cultural nuances, and informal economies can be overwhelming for new ventures. Engagement with local communities and understanding the informal sector can provide a competitive edge to new businesses.
The leopard’s advantage in a BANI world
By adopting the “leopard mentality,” entrepreneurs can increase their chances of success in this challenging environment. The leopard’s agility allows them to pivot quickly in response to changing market conditions. Their resourcefulness empowers them to find creative solutions with limited resources. Their stealth helps them navigate complex regulations and identify new opportunities.
Africa needs more “leopards” — agile, adaptable entrepreneurs who deeply understand the continent’s unique challenges and opportunities. By embracing the leopard spirit and fostering a supportive ecosystem, Africa’s tech jungle can flourish and unlock its full potential.
The untamed potential awaits
Africa’s tech landscape is a land of vibrant possibilities waiting to be explored. The symbolic choice between being a lion or a leopard in Africa’s startup jungle is evident. Agility, adaptability, problem-solving acumen, ecosystem investment, and founder support are pivotal. Embracing the leopard’s traits — stealth, agility, and resourcefulness — enables entrepreneurs to navigate challenges, seize opportunities, and drive sustainable impact. Africa’s untamed potential awaits those ready to embrace the spirit of the leopard.
Who knows, these leopards might even stumble on some global unicorns and regional camels — a feast indeed.
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Oswald is the Managing Partner at DigitA. He is one of Africa’s foremost Digital Evangelists.
