It is easy to understand why many startups are shooting up from all around Africa. Lots of its inhabitants have gained middle income status and therefore have more disposable income for non-food items, the region itself experiences steady economic growth year on year, and investments just keep pouring in.
“The entrepreneurial landscape in sub-Saharan Africa is absolutely excellent. It’s on the increase because Africa, at last, has been emerging and the economies are booming; several countries are starting to really increase entrepreneurial activity and
move to opportunity entrepreneurship, rather than necessity entrepreneurship. Opportunities abound and a positive spirit is emerging amongst the population of these countries,” says Mike Herrington, Executive Director of Global Entrepreneurship Monitor (GEM) and Professor at the University of Cape Town, South Africa.
Most importantly though, Africa is filled with young people below the age of 30, young people who are tech savvy and connected like never before, young people who have decided to collaborate creatively and drive an unprecedented startup surge. From Ushahidi to Perk.co.za, these startups provide solutions, sprinkled with innovation, to everyday problems.
The successes of these startups will spur more Africans to join the entrepreneurial bandwagon; for those who decide to do so, it will be necessary to engage a systematic process to decide where on the continent would be most suitable to float their idea. Below is a quick list of five questions to ask in this regard.
Which country offers the most enabling fundamentals and raw materials for your idea? Answering this question correctly can get you through 60 percent of the selection process because of its central nature. It’s simple, if your idea involves lots of importation, you might want to set up shop near cities with ports like Mombasa, Dar es Salaam, Lagos; if you have to do lots of mining, you may consider Zimbabwe or South Africa which have large deposits of minerals; if you want to float a tech company requiring significant internet and mobile penetration, the likes of Kenya, Ghana, South Africa and Nigeria will likely be good bases. This first step requires some regional analyses before diving in.
Where is all the money going? After deciding what country or region to set up within, find out where all the money in the economy is going as this can provide huge insights into demographics and customer preferences.
For instance, the most purchased items in Nigeria two years ago, according to the National Bureau of Statistics, were: Recharge Cards, Soap & Washing Powder, Real Estate Rents, Kerosene & Petrol, and Electricity. This clearly shows that the top sectors in the country are likely to be telecommunications, Fast Moving Consumer Goods (FMCGs), Real Estate and Oil & Gas; the implication will be that new startups around these areas are likely to enjoy rapid acceptance, more funding opportunities because of large potential demand, and of course a greater opportunity to scale up sooner than later.
Is there a support system or an entrepreneurial ecosystem? Incubation hubs are rapidly becoming the “in” thing for the African entrepreneurial space. These provide opportunities for peer-to-peer networking, mentorship and, yes, funding. Kenya has the iHub and Nailab while Nigeria’s Co Creation Hub (CCHUB) has experienced some significant success in incubating startups too; these sort of support systems will further help you as you get ready to launch.
What is the intensity of competitive rivalry? This will begin to matter as more startups populate the continent.
A balance would need to be struck here; too much competition is bad for business, plain and simple, but too little competition isn’t exactly lovely either as it could indicate a very unattractive market or heavy government interference or regulations.
How does your final choice help strike a work-life balance? Having gone through the four questions above, a choice may be ringing loudly in your head already. Just a last consideration: does the location offer opportunities for recreation and leisure? Though seemingly unimportant, this factor matters because the startup life will be challenging, the very act of having to introduce something new to a market with different biases, preferences and dispositions is tiring and frequent “get-aways” will be required every now and then to allow you refresh and recharge. Consider areas with unique tourism potentials, great weather and numerous “chilling” spots such as beaches or waterfalls.
The world has literally gone flat and physical barriers are reducing every year, so even though you set up physically in one location, be free to target investors, customers and talent from every and all region(s). Startups will typically start as lean organizations with lots of outsourcing, so you can design in Africa and manufacture in China or Mexico where production costs and access to labour are optimal, you can engage teams all over the world and create a startup that is African at heart but global in reach.
By Emmanuel Iruobe
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