While the spotlight often shines on saturated global markets, the African ecosystem offers unmatched entrepreneurship opportunities today. Africa as the next Silicon Valley? It's closer than you think.
With an expected consumer spending of $2.1t by 2025 and the world's largest workforce by 2035, the African market is teeming with ample opportunities for startup Founders. However, the first step lies in recognising the business opportunities that have growth potential.
Here, you'll learn how to identify the perfect entrepreneurship opportunity, understand the kinds of business opportunities available, and master the steps to uncover them.
As a bonus, we'll inspire you with several African success stories that turned business opportunities into gold.
As an African Founder or would-be Founder, you might be well-versed in the success stories of tech startups that identified a demand-supply gap in the market and effectively bridged it.
For example:
All these are examples of businesses capitalising on market opportunities. These businesses created value in the market by addressing specific demands or overcoming particular challenges while still securing a profit.
Thus, entrepreneurship opportunity involves offering unique and helpful solutions to meet the demand of your target audience.
The right entrepreneurial opportunity lets you fulfil your entrepreneurship dreams while enabling you to contribute to the economic growth and development of your community. You help local economies, create jobs, or address pressing societal issues like access to essential services (e.g., healthcare or education).
But how do you know whether the business opportunity you've thought of is a good one after all?
Well, even if there's no fixed formula, you could use the metrics below as a good rule of thumb:
Observe how Twiga, a Kenyan food retail company, clearly describes the market need it fulfils:
"We’re using a mobile-based, cashless, business-to-business (B2B) supply platform to access distribution into the millions of small and medium size vendors in African urban markets. This allows us to drastically lower their daily costs of goods by exploiting latent value in broken, informal, value-chains and wholesale providers. Nairobi alone has at least 18,000 small and medium size vendors buying $55 a day in stock, our goal is to be their single source of supply."
Look at how LipaLater, a Kenyan Buy Now Pay Later platform for online and offline merchants, addresses the market demand they satisfy:
"Only 5% of Africans have access to credit cards or any form of credit. We are on mission to bridging this gap by making credit accessible, enabling Africans to live a dignified life."
Consider how Egyptian agritech startup Fresh Source realistically describes the challenges faced by Egyptian agricultural producers. With facts and figures, they show exactly how they help solve the problem.
"...roughly 30% of Egyptian crops are lost due to poor post-harvesting, storage, and transportation, jeopardizing the country’s food security. These producers oversee the majority of Egypt’s agricultural production, but due to the high number of middlemen in the supply chain and a lack of transparency, they lose approximately 80% of their potential income. FreshSource handles the complete fresh food value chain such as, transportation, storage, and packing in cold storage and packing facilities. We provide producers with better consistent pricing and sell to the market at a reduced rate."
Check out the mission and vision statement of the South African medical technology company Envisionit Deep AI. It shows how they want to help their community while making a mark for themselves by becoming a leader in their field:
"Our mission is to democratize access to diagnostic healthcare for all. Our vision is to become a worldwide leader in medical imaging AI."
For example, Kenyan healthtech startup Zuri Health started with the vision, "...quality, affordable and on-demand healthcare for all with a simple swipe. We are creating an all-inclusive service that caters for all individuals with a mobile device, regardless of their location, health history and social status."
Currently, Zuri Health is rapidly expanding across Africa.
Now that we know how to recognise a good entrepreneurial opportunity let's explore the most common types of business opportunities you can find.
Seizing an opportunity in a new market: Identifying emerging markets within Africa, such as the growing tech and ecommerce sectors, presents opportunities for you to offer innovative products and services.
Taking advantage of untapped resources: Africa is rich in natural resources, making ventures related to agriculture, mining, and renewable energy lucrative opportunities.
Meeting an unfulfilled demand: Addressing unmet needs, such as financial inclusion through mobile banking solutions, can lead to significant business growth. Identifying gaps in existing markets and offering superior products or services can give African businesses a competitive edge.
Leveraging technology to bridge resource gaps: Applying technology to bridge education, healthcare, and communication gaps is a promising avenue for business development in Africa.
Partnering and collaborating strategically: Collaborating with local and international partners can open doors to new markets, resources, and knowledge sharing.
To understand whether your business idea is viable, you must analyse it at different stages. Consider these steps when determining whether your business opportunity is worth pursuing:
Conduct thorough research on local consumers' needs, preferences, and behaviour. Gather feedback from potential customers and the groups you aim to serve for better understanding.
Use surveys, focus groups, and social media to engage with African consumers and learn from them. These can unveil areas for improvement or potential innovations to address their issues.
In an episode of Founders Factory Africa's (FFA) Not So Secret Sauce podcast, Phakamani Mbatha (referred to as PK), a former product manager at FFA and currently with Trigerrise, said,
"I think building the right product is not necessarily having the right idea. Building the right product is essentially about having the right information, validating some of these assumptions and the information that you've gathered through experimentation…"
To be a successful entrepreneur, you must build products or services tailored to African markets, ensuring your offerings align with local values and affordability. Leading African brands like Lipa Later, Twiga, and Fresh Source built their products while adhering to these principles.
Test your theories in the context of your target audience and their challenges. In the aforementioned Not So Secret Sauce podcast episode, PK highlighted the effectiveness of the Double Diamond design process in product development.
He explains that this process aids in understanding the target audience's problems. As a result, it helps in building products well-aligned with market needs, which improves the likelihood of achieving product-market fit.
He also notes that often great ideas fail due to "educated" and "leap of faith" assumptions. The Double Diamond process encourages insight gathering and validation, deemed crucial for successful product development.
Check out the Secret Sauce Podcast S1 EP2 (Building from scratch) here
To gauge the demand for your products or services, engage with local communities. Also, research existing market players to understand your competitors' strengths and weaknesses.
A Harvard study on 200+ senior executives from Africa's rapidly growing fintech industry revealed that, unlike many failing US startups, successful African fintech entrepreneurs prioritised market acceptance over investor pitching.
They emphasised direct-to-customer communication and crafted marketing materials for target customers. Additionally, they leveraged communal societies and relationships with other firms to acquire resources and progress beyond the idea stage.
Stay informed about economic shifts, trade policies, and legal and governmental regulations in African countries of interest. For instance, the Startup Act adopted by many African countries and AfCFTA have significantly supported African businesses.
The Startup Act in South Africa aims to ease visa restrictions for foreign workers, while AfCFTA unifies the tech startup markets across all African countries. Adapting to social and cultural norms ensures your products and services resonate with local consumers.
For example, M-Pesa, a mobile money transfer service, leveraged Kenya's widespread mobile phone usage and catered to the local need for a simple solution. By aligning with the social fabric, where many lacked access to traditional banking, M-Pesa provided a service that resonated with local consumers, achieving widespread adoption.
Track relevant scientific and technological advancements and integrate them into your business models. To illustrate, Twiga Foods employed advanced technology to streamline the food supply chain by optimising the grow-to-grocery cycle for farmers and food retailers.
In these case studies, you will see how understanding the local market and analysing the potential gap in demand and supply can help your company find the right business opportunity and thrive while serving the community.
Yoco, a South African fintech company, recognized a significant hurdle for local entrepreneurs: the difficulty in accessing card payment tools. This gap was stifling growth for small businesses as they struggled to accept card payments both offline and online.
Yoco introduced simple card machines and online payment tools, making card payments accessible for many for the first time. This initiative attracted over 200 000 business owners, indicating a substantial demand for such payment solutions.
By understanding the local market's needs and providing a straightforward solution to meet the demand, Yoco accelerated its growth and contributed to economic upliftment.
Having raised over $100m from global tech investors, Yoco demonstrates how tailored solutions can help African entrepreneurs succeed.
The Kenyan asset financing firm, M-KOPA, harnesses digital micropayments and GSM connectivity to easily access critical assets like smartphones and motorbikes. The robust financing platform has deployed $1b in products and credit, aiding the financially marginalised.
With a clientele of 3m, M-KOPA's lending model emphasises inclusivity, flexibility, and fairness. Customers obtain quality products with an ID and an initial deposit without collateral or income proof.
During payment difficulties, lenient penalties and alternative arrangements ensure continuous product usage. The transparent pricing and return policy addresses market gaps, showing how tailored solutions contribute to economic betterment in Africa.
Africa is alive with entrepreneurship opportunities. Just look at the paths paved by Twiga, Yoco, and M-KOPA. Each found a unique way to fill a gap in the market.
If you're a founder with a vision for tech in Africa, there's never been a better time to step forward. Keep your eyes open, do your homework, and find that gap only you can fill.
And while the journey is yours, you're not alone. Organisations like Founders Factory Africa are championing and supporting the growth of startups on the continent (many of whose stories you read here). With our support and resources throughout the entrepreneurial process, we ensure that Founders like you have the mentorship and tools you need to thrive.
You'll find Africa's vibrant tech scene easier to navigate with the right partners believing in your vision. Let's innovate together.
