Africa Financial Industry Summit (AFIS) 2024: Building African Unicorns (and Gazelles) for Continental Economic Growowth (By Aigboje Aig-Imoukhuede
𝘛𝘰 𝘷𝘢𝘴𝘵𝘭𝘺 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘦 𝘵𝘩𝘦 𝘯𝘶𝘮𝘣𝘦𝘳 𝘰𝘧 𝘨𝘢𝘻𝘦𝘭𝘭𝘦𝘴—𝘢𝘯𝘥 𝘣𝘺 𝘦𝘹𝘵𝘦𝘯𝘴𝘪𝘰𝘯, 𝘵𝘩𝘦 𝘭𝘪𝘬𝘦𝘭𝘪𝘩𝘰𝘰𝘥 𝘰𝘧 𝘶𝘯𝘪𝘤𝘰𝘳𝘯𝘴—𝘴𝘵𝘢𝘬𝘦𝘩𝘰𝘭𝘥𝘦𝘳𝘴 𝘮𝘶𝘴𝘵 𝘸𝘰𝘳𝘬 𝘵𝘰𝘨𝘦𝘵𝘩𝘦𝘳 𝘵𝘰 𝘰𝘷𝘦𝘳𝘤𝘰𝘮𝘦 𝘦𝘹𝘪𝘴𝘵𝘪𝘯𝘨 𝘣𝘢𝘳𝘳𝘪𝘦𝘳𝘴
𝗝𝗢𝗛𝗔𝗡𝗡𝗘𝗦𝗕𝗨𝗥𝗚, 𝗦𝗼𝘂𝘁𝗵 𝗔𝗳𝗿𝗶𝗰𝗮, 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟬, 𝟮𝟬𝟮𝟰 - Culled from remarks by Aigboje Aig-Imoukhuede CFR, Chairman, Access Holdings & Coronation Group (www.Coronation.ng)
Gazelles. Camels. Elephants. In the language of venture capital, we have a full menagerie to describe a startup’s growth progression. However, in the past decade, the ultimate aspiration remains the unicorn: privately held companies valued at over $1 billion. Globally, there are approximately 1,200 unicorns across various industries, and while Africa’s list is smaller, it is growing. As of February 2023, the seven identified African unicorns predominantly operate in the fintech and digital sectors, addressing payment 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 nurture innovation and entrepreneurial growth at all levels.
Under ideal circumstances, gazelles—fast-growing companies essential for economic growth and employment—can mature into unicorns. These unicorns, in turn, can evolve into elephants: mega-companies that dominate markets. However, the key lies in cultivating gazelles first. Across Africa, there is a clear need to focus on five imperatives that can drive this transformation:
𝟭. 𝗧𝗮𝗹𝗲𝗻𝘁 𝗖𝗮𝘁𝗮𝗹𝘆𝘀𝗮𝘁𝗶𝗼𝗻
Talent is Africa's greatest asset, yet its potential is being hindered by ongoing skills migration. Educational systems must promote a culture of innovation while ensuring local talent remains competitive. Without nurturing our intellectual capital, startups cannot thrive.
𝟮. 𝗜𝗻𝗳𝗿𝗮𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁
Startups struggle to scale without reliable infrastructure. Basic access to internet and energy, which is taken for granted elsewhere, remains a challenge in many regions. The fintech sector has flourished precisely because pioneers tackled Africa’s underdeveloped payment systems head-on. Addressing similar gaps in logistics, transportation, and energy will unlock opportunities across other industries.
𝟯. 𝗦𝘁𝗮𝗿𝘁𝘂𝗽 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 𝗦𝘆𝘀𝘁𝗲𝗺𝘀
Government-sponsored accelerators and incubator programs have proven effective in nurturing small and medium enterprises. Egypt provides an excellent example, where 40% of its startups have leveraged such initiatives, fueling rapid growth in its tech sector. Replicating this success across more African nations will bolster innovation.
𝟰. 𝗔𝗰𝗰𝗲𝘀𝘀 𝘁𝗼 𝗩𝗲𝗻𝘁𝘂𝗿𝗲 𝗖𝗮𝗽𝗶𝘁𝗮𝗹
Venture capital funding is vital to an innovation economy. It complements traditional bank loans by providing startups with resources to scale and innovate. However, a legislative environment that mitigates investment risk is necessary to attract investors.
𝟱. 𝗣𝗼𝗹𝗶𝗰𝘆 𝗮𝘀 𝗮 𝗖𝗮𝘁𝗮𝗹𝘆𝘀𝘁
The right policies can deliberately stimulate demand, develop successful businesses, and strengthen economies. From tax incentives to startup-friendly regulations, policy frameworks must be tailored to nurture gazelles and unicorns alike.
The private sector also has a crucial role to play. Africa’s world-class banking sector has already proven its ability to facilitate growth, whether through funding, strategic partnerships, or economic advisory. Collaboration with governments can provide the support startups need to achieve scale and sustainability.
Yet, achieving unicorn status comes with its own challenges: lofty revenue expectations, intensified scrutiny from regulators and competitors, and demanding boardroom dynamics. Recent economic events, including the pandemic and the “great market reset” of 2021/2022, further underscore the volatility. African startups must adopt disruptive approaches to not only achieve but maintain unicorn status on a global scale.
Successful startups demonstrate three critical attributes: a clear value proposition, a scalable business model, and an unmatched understanding of their target market. Combined with visionary leadership capable of executing plans at scale, these factors allow African companies to compete globally.
To vastly increase the number of gazelles—and by extension, the likelihood of unicorns—stakeholders must work together to overcome existing barriers. Governments, private sector players, and policymakers each have a role in redefining industries, creating jobs, and building Africa’s economic resilience. The path to success is challenging, but with deliberate efforts, Africa’s unicorns and elephants will reshape the future.
Distributed by APO Group on behalf of Coronation Group.
SOURCE
Coronation Group