2023 is here. Experts, investors, and stakeholders in the African startup ecosystem are already predicting how the year 2023 is going to be judging from the past two years. 2022 had its ups and downs, especially in the area of funding for many startups other than FinTechs. In this article, I discuss the ten predictions that would take place in the ecosystem.Read more about Business
Increased government support across the continent
Many African governments are starting to recognize the importance of startups in driving economic growth and job creation. As a result, we can expect to see an increase in government support for startups through initiatives such as tax breaks, grants, and incubator programs. In November of last year, Muhammadu Buhari of Nigeria signed the Startup Bill to law, encouraging the Nigerian startup ecosystem.
Continuous growth in fintech
Fintech startups are already making a big impact in Africa, with companies such as M-Pesa and Jumia Pay leading the way. This trend is set to continue, with fintech startups offering innovative solutions for financial inclusion, such as mobile banking and peer-to-peer lending.
Rise of agtechs
2023 will see a rise in agtechs, especially as the continent moves into the farming season. Moreover, Africa is home to a large and growing agricultural sector, and agtech startups are starting to take advantage of this. From precision farming to crop insurance, there are many opportunities for startups in this space to make a positive impact in 2023.Sign up for the Connect Nigeria daily newsletter
Increased focus on sustainability
Sustainability is becoming an increasingly important issue for businesses of all sizes, and this trend is likely to continue in Africa, especially in 2023. Sustainable Energy grew by 20% on the continent. Some African countries are already pioneering electric vehicles with hydrogen, recently entering the development nexus at a time that global capital is moving to green energy on a large scale. The investment is projected to reach USD 1.4 trillion in 2022 alone. This trajectory is likely to continue. Also, in October 2022, the African Development Bank’s Sustainable Energy Africa Fund for Africa provided $2.5 million to increase the penetration of renewable energy across the continent. Therefore, African startups that can demonstrate a commitment to sustainability – whether through the use of renewable energy or the development of eco-friendly products and services – are likely to see increased success.
Growing interest in healthcare
Experts and various studies have predicted increased interest in MedTech and healthtech solutions by governments, entrepreneurs, investors and other stakeholders. However, Africa’s healthcare sector is facing several challenges, including a lack of access to quality care and a shortage of trained professionals. Therefore, startups that can through innovative solutions – such as telemedicine and the use of AI – are likely to be in high demand.
Expanded e-commerce
Although e-commerce has already taken off in Africa, with companies such as Jumia and Konga leading the way, the continent is highly underserved. As more consumers gain access to the internet and mobile devices, we can expect to see continued growth in this sector.
Increased investment from within, the Diaspora and the West
As the African startup ecosystem continues to mature, we can expect to see increased investment from both local and international investors. This will be especially true for startups with proven business models and a track record of success.
The growing importance of data
Data will continue to be a key driver of business success in Africa, and startups that can effectively collect, analyze, and use data will be well-positioned for success. Startups like HealthTechs and fintech will have to take note of data and design their operations around data.
The emergence of new sectors
As the African startup ecosystem evolves, we can expect to see the emergence of new sectors and industries that are ripe for disruption. This could include areas such as renewable energy, edtech, or even space technology.
Greater collaboration
As the startup ecosystem in Africa continues to grow and mature, we can expect to see increased collaboration between startups, investors, and other stakeholders. This will be especially true for startups that can demonstrate the potential for long-term growth and impact.Register to attend the CN Business Mixer
China’s growing interests
In 2019, three companies – Opay, Palmpay, and Lori Systems – brought in a total of $240 million in venture capital funding from 15 different Chinese investors, who’ve become increasingly active in Africa’s tech scene. Active Chinese investors in Africa include Hillhouse Capital, Meituan-Dianping, GaoRong, Source Code Capital, SoftBank Ventures Asia, BAI, Redpoint, IDG Capital, Sequoia China, Crystal Stream Capital, GSR Ventures, Chinese mobile-phone maker Transsion and NetEase. According to Jakes Bright, “In previous years, the country’s [China] interactions with African startups were relatively light compared to deal-making on infrastructure and commodities. Chinese actors investing heavily in African mobile consumer platforms lends to looking at new data privacy and security issues for the continent.” However, experts point out that China’s investments in the African tech ecosystem are likely to increase.
Conclusion
“The continent’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population — which makes fintech Africa’s most promising digital sector,” Jakes Bright notes. All around, the future looks promising for startups in Africa, with a range of opportunities for innovation and growth as well as challenges too. With the right strategies and support, these startups have the potential to make a significant impact on the continent’s economic and social development.Featured Image Source: CoinMarketCapGot a suggestion? Contact us: editor@connectnigeria.com
