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Policy in Context

A healthy startup ecosystem that works for founders and investors remains key to growing new African horizons. 

Government policy plays an important part in creating an ecosystem for innovation and venture capital to thrive. Silicon Valley, Israel, and Singapore are examples of planned ecosystems.

Compare that to the African startup ecosystem, which has risen by necessity to meet the demands of people underserved by existing institutions. 

FinTech companies meet underbanked customers where they are: relying on their phones to manage their finances. Our partner Amitruck created a logistics marketplace to bring reliable shipping to companies expanding across East Africa. Matter Industries uses small IoT sensors to monitor water pipelines and other essential infrastructure, which are otherwise dependent on legacy technology to diagnose issues.       

Although sub-Saharan Africa represents only 0.2% of the global startup ecosystem’s value, a tripling of funds raised between 2020/2021 highlights its trajectory as the world’s fastest-growing fundraising ecosystem.  

“The technology revolution may have started in Silicon Valley but the raw entrepreneurial energy on the continent indicates that the future of that revolution is in Africa.” – Justin Ziegler, Angel Investor 

Broader integration efforts across the continent are opening massive markets. Increased infrastructure spending and regulatory harmonisation are connecting countries like never before.  

Among the most significant of these interventions, the African Continental Free Trade Agreement, aims to stimulate and facilitate intra-African trade. This is one of the tailwinds fuelling investor confidence, particularly in the consumer goods sector. Strong growth in consumer spending, rural-urban migration, and digital penetration are likewise laying down a strong foundation for Africa’s new digital economy. 

The first waves of African startup acts have been designed to create pro-startup legislation that will spur innovation, create jobs, and build mutually-beneficial relationships between governments and entrepreneurs. Industry players and policymakers on the continent are increasingly aware that priorities must shift to capitalise on the world’s most entrepreneurial population and to support the goal of a $300B digital economy by 2025.  

Given sub-Saharan African countries’ relative position at the foot of the World Bank ease of doing business index, it’s imperative that the continent’s leaders address the root causes of high set-up costs, silos in policy, and over-complicated regulations. By enacting clear and strong protections, including intellectual property and data, governments can help to mitigate the risks posed to both startups and powerful incumbents.  

In an ecosystem propelled by the bold vision of startup founders, momentum will come from favorable policies that attract new opportunities for innovation and investment. A robust response to a looming global downturn must put innovation and transformation at the heart of new policy, creating an enabling environment for entrepreneurs who are more critical to Africa’s future success than ever before.