East Africa The Cheapest Region To Start A Business – Savannah Fund

  VENTURES AFRICA – Startups can easily get their footing in East Africa as the cost of setting up a business in the region is the lowest in sub-Saharan Africa, a recent research by venture capital (VC) group, Savannah Fund has revealed.
According to the research, infrastructure is cheapest in the region. Administrative costs and human resources also come cheaper than in competing regions including West and Southern Africa. South Africa is seen as the most expensive country in Africa for startups.

The survey considered six countries regarded as ‘key’ on the continent, comparing costs of startups in their first year, including administrative costs (sales, business, permits, legal, accounting and travel), office space, as well as hiring of staff.
Savannah Fund found that South Africa had the highest first year cost, averaging at $70,000 across the indices used. Infrastructure cost was highest at $30,000, but administrative cost was reported as the lowest among the six African countries at $4,000. Entry level engineers in South Africa are highest paid, with an annual salary of $17,000, while engineers with three to five year-experience get paid $45,000.
Experienced engineers in Nigeria ranked second cheapest in the survey, with an average of $15,000 annual salary, $5,000 lower than Kenya’s $15,000. The cheapest charge comes from Uganda, where experienced engineers, according to the research charge $12,000 per year, while rookie engineers go as low as $2,500. Entry level engineers in Nigeria and Kenya both command pays of $4,000.
Hiring costs are high in Ghana and Tanzania, with $30,000 reported for experienced engineers in the two countries and $10,000 for entry level engineers.
Savanah Fund wondered if the pay for engineers was due to better education systems in the regions where engineers are highest paid.
Ghana followed South Africa, with an average cost of $55,000. Fellow West African country and Africa’s largest economy, Nigeria was reported to have mid-level costs, averaging at just below $40,000.
Costs in East African countries, Uganda and Kenya were lowest overall, with average total costs slightly below $30,000 in Uganda and $35,000 in Kenya. Tanzania however recorded $50,000 average cost.
The research sought to link the costs of hiring engineers to the standard of educational systems in the countries listed, a report by HumanIPO suggested.
According to the research, “Administration costs are pretty even, Although Kenya and South Africa are lowest.”
The venture capital fund in the research asked hubs and about three startups per country for their first-year startup costs. Savanah fund however admits that its small sample size may mean some variables would see numbers change.