The African francophone startup ecosystem has a lot of catching up to do when compared to its anglophone counterpart. Can a copycat approach help close this distance?
The year is 2016, and the Nigerian fintech ecosystem is much smaller than the over 300 fintechs we have now. Few startups exist, and even fewer are prominent. But Paystack’s acceptance into Y Combinator changed everything. Pitching themselves as the “Stripe of Africa”, the startup promised that it would do what Stripe did for payments, but in Africa. While their acceptance into YC helped create validation for the ecosystem, their eventual acquisition by Stripe (for $200 million in 2020) solidified it. This is the approach that some francophone startups have been inspired by, copying the business models of successful startups in English-speaking African countries.
There are many opportunities for businesses to thrive in francophone African countries. For starters, the region’s currency, the CFA, is used in 14 countries and accounts for 12% of Africa’s GDP. It is also pegged to the Euro and does not fluctuate, providing the kind of FX stability that’s not available elsewhere on the continent. A corollary effect of this is that barring internal conflict, most francophone economies are stable. Last year, Miishe Addy, the CEO of Jetstream, a Ghanaian logistics startup, told TechCabal that her startup was expanding into francophone Africa to mitigate the effects of Ghana’s turbulent inflation.
The region is home to some of the fastest-growing cities and economies in Africa. According to the IMF, six out of the seven fastest-growing economies in sub-Saharan Africa are francophone countries. The stretch of West African coastline, which begins in Abidjan and runs through Lome, Accra, and Cotonou before ending in Lagos, is projected to be home to 51 million people in a decade. By the end of the century, it will be home to 500 million people. Similar currencies, language, and cultures in francophone Africa lend its tech ecosystem a crucial advantage: the ease of regional expansion.
Copying is a shortcut for francophone startups
For the francophone tech ecosystem, the opportunity for growth is clear. As such, major players such as governments, startups, and venture firms are trying to advance the ecosystem by copying what has already proven successful in the Big 4 (Nigeria, South Africa, Egypt, and Kenya). By following a successful blueprint, there is some assurance of market validation and customers willing to pay. Leslie Ossete, the co-founder of Mstudio, an Ivorian venture studio, told me in Abidjan that her studio chose this copycat approach because it “gives us a higher chance of success”.
“We look at countries that have similar markets, economies, industries, ways of doing things, and an informal market as well because that is our focus. We try to see which startups and trends do not exist in francophone Africa and can be replicated here,” she added. When asked if this copycat approach could work, Mathias Léopoldie, the co-founder of Juluya, an Ivorian fintech, asserted that it is “a proven strategy because the markets are very similar in terms of demographics (low-income, young population) and economies (20-25% primary sector, 25% secondary sector, and 45%-50% tertiary sector).”
However, a copycat approach does bring some problems. Take, for example, Jumia, long since heralded as the “Amazon of Africa”. However, the ecommerce giant has struggled to attain profitability, proving that what works in one market might not translate well in another. A copycat approach that does not take pertinent details into account may not lead to success. Anglophone countries differ from their francophone counterparts in terms of the law they practice (anglophone countries have common law, while francophone countries have mostly civil law). The language barrier is also a huge factor to consider (I could only communicate in Abidjan with the help of AI).
Copying blindly will not work for francophone startups
English-speaking startups that have expanded into francophone Africa have found it difficult to find success. When Wasoko raised $125 million last year, its CEO told TechCrunch that it was expanding into Senegal and Cote d’Ivoire because of their “solid year-on-year GDP growth.” However, the startup is now closing its offices in the region. Sendy, a Kenyan logistics startup, has placed its Ivorian subsidiary in liquidation. But Wave, a Senegalese fintech, is currently making a killing in Cote d’Ivoire.
There are “some deep cultural differences in terms of doing business,” according to Léopoldie. “Francophone Africa is not the same as Nigeria or Kenya; you’re going to have specificities; the persona might be different; they do not purchase the product in the same way, or they did not experience the problem in the same way,” Ossete added.
“From my experience in mentoring, investing, and building startups in sub-Saharan Africa, it’s easier for francophone startups to expand east (to English-speaking countries) than the other way around,” Axel Peyriere, the CEO of Auto24 and an angel investor, told TechCabal.
If what works in Anglophone countries cannot be successfully replicated in francophone countries by the founders of those solutions, how can a copycat approach work? One way to make this work is by innovating and applying the home-ground advantage to create tailor-made solutions. Some English-speaking startups have taken the route of acquisition instead of expansion. Autochek (Nigeria) and Chari (Morocco) are recent examples.
Léopoldie told TechCabal that he believes a “francophonised” approach to bringing innovation from anglophone markets to francophone markets could work. “It is interesting that many anglophone late-stage startups are actually struggling to enter francophone markets,” he added.
Innovation is not always about creating something entirely new; it can also mean bringing something that did not exist before to the market. By copying what has proven successful in neighbouring countries and applying the home-ground advantage, the francophone tech ecosystem could very well have a cheat code and blueprint for success on its hands.