The bustling landscape of Sub-Saharan Africa is fast emerging as a compelling destination for African startups.
Several factors have reshaped the region’s entrepreneurial landscape, including increased internet and mobile penetration, untapped markets, niche opportunities to innovate, interest from investors, and the growing urban population.
This article will explore how African startups have achieved success through innovation. We'll also delve into the factors that make the Sub-Saharan region an appealing destination for these startups and discuss their significant role in shaping the region’s future.
Sub-Saharan Africa has witnessed a significant surge in tech startups looking to innovate. McKinsey predicts that the revenue earned by African fintech startups will increase from 4b USD in 2020 to 30b USD in 2025.
According to the GSMA report, Nigeria, Kenya, and South Africa are the countries with the most advanced startup ecosystem in the region, thanks to the emergence of over 600 tech incubators, accelerators, and tech hubs. Here are two African startups that have been pioneers in the Sub-Saharan region in their industries.
Launch Date: Paystack was founded in 2015 by Shola Akinlade and Ezra Olubi.
Innovation: Paystack revolutionised online payments in Nigeria by developing a platform to send and receive payments. It simplified payment processing for businesses, making it easier for them to accept payments online.
Success: Paystack received global recognition and success, leading to its acquisition by Stripe, in 2020 for a staggering $200 million. Today, PayStack powers 50% of Nigerian businesses with over 60,000 customers.
Launch Date: SolarTurtle was founded in 2012 by Lungelwa Tyali and James van der Walt.
Innovation: SolarTurtle operates in the renewable energy sector and provides innovative solar power solutions. They have designed and built mobile solar kiosks, known as "Turtles," deployed in off-grid and remote areas. People use these solar kiosks to charge devices, power lights, and get clean and sustainable energy access in areas without reliable electricity grids.
Success: SolarTurtle's innovation in mobile solar power has brought renewable energy solutions to rural communities in South Africa, promoting sustainable development and reducing reliance on fossil fuels. SolarTurtle won the first prize in the Nation Builder Challenge a few years after its launch.
Sub-Saharan Africa is appealing to entrepreneurs for the following reasons.
Sub-Saharan Africa is experiencing rapid growth in the use of mobile phones and the Internet. According to a report, smartphone adoption in Sub-Saharan Africa will increase from 51% in 2022 to 87% in 2030. This access to mobile devices has made the region a fertile ground for African startups that can provide their products/services to these users. Twiga, a Kenyan startup, is a standout example of how startups can use mobile penetration to their advantage.
Twiga released an app that allows farmers to connect with a network of buyers, including wholesalers, retailers, and restaurants. This has cut the intermediaries from the scene, allowing farmers to receive a fair price for their produce. The app also guides farmers by providing real-time information on where they can sell their apps or the current market prices for different crops.
Sub-Saharan Africa consists of several untapped markets and niche opportunities. The region faces several challenges that warrant tailor-made solutions from startup founders looking to make a significant difference.
For example, although the region has abundant renewable energy sources, many areas don’t have electricity 24/7. Entrepreneurs can use this opportunity to launch startups specialising in renewable energy generation and off-grid power systems to provide clean and sustainable power to underserved segments.
Office Hub is a South African startup recognising the need for more flexible office space solutions nationwide. Noticing the popularity of remote work, Office Hub built an online platform that allows businesses to search, compare, and book office spaces. These include co-working spaces, meeting rooms, virtual offices, and serviced offices.
International and regional investors and venture capital firms are increasingly interested in investing in African startups. African startups raised more than 3 billion USD in 2022. This capital is a game-changer for many startups. They use these funds to accelerate business operations, access mentors and networking, and attract top talent.
For instance, In 2020, Flutterwave raised $35 million in a Series B funding round – one of the largest funding rounds for an African startup. This substantial funding allowed Flutterwave to expand its services, enhance its technology, and extend its reach across the continent. Flutterwave operates in 34 African countries, has processed more than 400 million transactions, and served 1 million customers.
Less than 20% of the Sub-Saharan population lived in cities 50 years ago. By 2022, these figures have doubled (41%), and the trend will continue.
The Sub-Saharan region is experiencing rapid urbanisation as millions of people move to cities. As a result, the middle class grew considerably and increased purchasing power. The young African generation is also eager to use technological solutions to meet their needs, making them an appealing target for tech startups.
Yoco is a South African startup. Yoco offers point-of-sale (PoS) solutions to small businesses. Yoco enables small businesses to accept online payments, a growing preference in urban areas. As more people move to cities, startups like Yoco can benefit from meeting their urban needs.
African tech founders can contribute positively in the following ways.
African founders can create jobs with their startups. Their expanding ventures, whether in technology, agriculture, or healthcare, can hire local talent. This can help to minimise unemployment rates in the Sub-Saharan region and improve livelihood throughout various communities.
African founders are well-positioned to introduce new technologies and trends to the Sub-Saharan African region. The latest technologies, such as edtech, healthtech, agritech, and fintech, can present groundbreaking solutions for local issues.
For example, if there’s no school in a remote African region, an edtech startup can educate children in those regions via an online app. Similarly, innovation can boost other sectors, too, improving the overall quality of life in the region.
Not all startups are driven by profits. Many founders are genuinely looking to make a positive impact in serving the society. They can create ventures that address pressing local issues, such as energy access, clean water, and affordable housing. For instance, mWater is a startup in Rwanda that allows people to collect and analyse water quality data using their phones. This way, it will enable people to drink safe and clean water.
African founders can promote inclusive growth. They can develop solutions accessible to marginalised and underserved populations, including those in remote rural areas. For instance, Tugende is a Ugandan startup that offers lease-to-own financing for motorcycle taxis (boda bodas), enabling drivers to own their vehicles and improve their livelihoods. This service supports underserved individuals' financial inclusion and provides economic empowerment opportunities.
African startups aren’t only competing with local startups. They can also achieve international recognition and compete globally. They can boost the region’s competitive edge in the worldwide tech industry by demonstrating their capabilities, innovation and impact. Successful startups attract foreign investment and foster a positive image of African entrepreneurship, encouraging further international collaboration and partnerships that can benefit the local community.
Sub-Saharan Africa is well-poised to experience the entry of more African tech startups. The region’s growing middle class, youthful population, and untapped potential make this a fertile ground for company founders.
We understand the dreams and aspirations you have for your startup. With the help of Founders Factory Africa, these can become a reality.
Click here to start your journey and launch your business with our resources and support. We’ll be your partner every step of the way and ensure that your startup can bring a positive change in the Sub-Saharan region.
