Africa Financial Industry Summit (AFIS) 2024: Building African Unicorns (and Gazelles) for Continental Economic Growth (By Aigboje Aig-Imoukhuede)
Excerpted from the speech of Aigboje Aig-Imoukhuede CFR, Chairman of Access Holdings&Coronation Group (www.Coronation.ng)
gazelle. camel. elephant. In the language of venture capital, we have a whole menagerie to describe the growth process of a startup. Over the past decade, however, the ultimate aspiration has remained the unicorn: a private company valued at more than $1 billion. Globally, there are approximately 1,200 unicorn companies in various industries, and although the number of unicorn companies in Africa is smaller, it is still growing. As of February 2023, the seven identified African unicorns operate primarily in the fintech and digital space, solving payments challenges across the continent.
For many startups in Africa, achieving unicorn status remains a distant dream due to structural challenges. To bridge this gap, governments and the private sector must foster ecosystems that foster innovation and entrepreneurial growth at all levels.
In an ideal world, gazelles – fast-growing companies that are critical to economic growth and employment – can mature into unicorns. These unicorns can, in turn, evolve into elephants: giant companies that dominate the market. But the key is to breed gazelles first. Across Africa, there is a clear need to focus on five imperatives that drive this transformation:
- Talent Catalystschange
Talent is Africa’s greatest asset, but its potential is hampered by continued skilled migration. Education systems must promote a culture of innovation while ensuring local talent remains competitive. Startups cannot thrive without nurturing our intellectual capital. - infrastructure development
Without reliable infrastructure, it’s difficult for startups to scale. Basic internet and energy access are taken for granted elsewhere but remain a challenge in many areas. The fintech industry is booming precisely because pioneers have tackled Africa’s underdeveloped payment systems head-on. Addressing similar gaps in logistics, transportation and energy will create opportunities for other industries. - Startup support system
Government-funded accelerator and incubator programs have proven effective in nurturing SMEs. Egypt is a good example, with 40% of startups in the country taking advantage of such initiatives, driving rapid growth in the technology industry. Replicating this success in more African countries will boost innovation. - Get venture capital
Venture capital funding is critical to the innovation economy. It complements traditional bank loans by providing startups with the resources to expand and innovate. However, in order to attract investors, a legislative environment that reduces investment risks is needed. - Policy as a catalyst
The right policies can intentionally stimulate demand, grow successful businesses and strengthen the economy. From tax incentives to startup-friendly regulations, a policy framework must be in place to nurture gazelles and unicorns.
this private sector also plays a vital role. Africa’s world-class banking sector has proven its ability to drive growth, whether through financing, strategic partnerships or economic advisory. Partnerships with governments can provide startups with the support they need to achieve scale and sustainability.
However, achieving unicorn status comes with its own challenges: high revenue expectations, intense scrutiny from regulators and competitors, and demands on board dynamics. Recent economic events, including the pandemic and the “Great Market Reset” in 2021/2022, have further highlighted volatility. African startups must adopt a disruptive approach not only to achieve and maintain unicorn status globally.
Successful startups exhibit three key attributes: a clear value proposition, a scalable business model, and an unparalleled understanding of the target market. Coupled with visionary leadership capable of executing plans at scale, these factors enable African companies to compete globally.
To significantly increase gazelle numbers, and thus the likelihood of unicorns, stakeholders must work together to overcome existing barriers. Governments, private sector players and policymakers all have a role to play in redefining industries, creating jobs and building economic resilience in Africa. The road to success is challenging, but with deliberate effort, Africa’s unicorns and elephants can reshape the future.
Distributed by APO Group on behalf of Coronation Group.
