In the last 15 months we have been enthusiastically observing a pleasant trend of private capital increase directed at startups on the African continent. In 2021 it was 4.9 Bi$ and 2022 promises not to be much different as after 4 months it has already reached a fundraising of around 2.0 Bi$. The fintech sector is the most prominent and it is not difficult to understand why, countries in Africa have, by nature, serious difficulties in providing conventional banking services to the population, fintechs are part of the solution, especially when we are talking about financial products aimed at the people young people, who make up the vast majority of the continent and are growing rapidly.
Although the indicators are apparently encouraging, heavy regulation, the digital skills gap, limited funding and fragmented markets mean that Africa represents only 0,2% of the value of global startups. It is estimated that the startups segment on the continent could attract around 90Bi$ by 2030 if adequate benefits are taken from the ZLCA – African Free Trade Zone and other favorable conditions in the region.
We already know that the future is digital, we also know that this transformation will essentially take place through mobile phones and similar devices in the context of the African continent. What is little said is that this transformation must also happen with a change in society's mentality, since the current and conventional models of companies, public services and even consumption have their days numbered. We therefore need to reflect on this new era around the corner, on how we are going to prepare or prepare ourselves for it.
For this reason, many countries have put topics such as: development of the startup ecosystem and digital transformation on their priority lists. About this second one, it is necessary to clarify that it is much more than creating a page on the internet, it is about a new way of being and living, a social metamorphosis. For governments, this change means: greater service efficiency and information-oriented decision making, for entrepreneurs: new technology-based business models, for consumers: competitive market and solutions oriented to efficiency and consumer satisfaction. Startups play an extremely important role in the success of this social and digital transformation, not only because of their ability to scale and availability of innovative services, but also because of their democratization and digital inclusion.
In the field of public policies, some governments have sought to create new diplomas and mechanisms that simplify the emergence of startups and strengthen their ecosystems. For example, the European Union, concerned about competition from the United States of America and China, proposed a set of measures to its member countries. This is the case of the $12Billion Future Fund launched by the German Government to support innovation and technology companies in the coming years. The Government of India is developing partnerships with its accelerators to support 300 local early-stage startups by providing them with financial support, mentoring and other benefits. Among these benefits and policies, we can mention the example of Tunisia and Senegal, which in 2018 implemented a mechanism that allows entrepreneurs (employees of others) to “abandon” their formal jobs to focus on their startups for 1 year and return at the end this period if they so wish. Countries like Nigeria, Rwanda, Kenya and Ghana are already developing their own versions of this same concept. Many young people are "imprisoned" to their jobs because of the salary, however they have a vocation for other innovative businesses that just don't advance because they don't have time for them. Here it is good to remember that time is money, too!
And Angola, what measures has it taken in this field? What has been the position of the public and private sector?
This is a theme that has emerged more frequently in political discourses and it is presumed that due to influencers the startup ecosystem begins to be included in political analysis. The emergence of initiatives such as Angotic, Angola Tech Hub Forum (scheduled for 17/05/2022), Startup Summit Angola (12/05/2022 – 14/05/2022), LISPA (Laboratory of Innovation of the Payment System of Angola ) of the BNA and the incubator digital recently inaugurated by the President of the Republic are proof of that. Regarding the events, they are important because they serve to publicize the initiatives that young Angolans have developed and are also a networking space between the promoters themselves.
According to the news, the digital It is supposed to act as a startup incubator to support SADC youth, but the reality is that its website does not clearly reflect its true purpose in this domain. Regarding this issue, my opinion is that an incubator of this nature does not necessarily need to be linked to the Government when there are other local institutions, private ones, quite capable, which have been trying to assume this role with great effort (for years), perhaps it would do more it makes sense to integrate them for the management of this infrastructure. And if the central theme is really incubating, it may be that an analysis of the INAPEM incubator will allow us to have a more realistic sample of what is intended to be done. Perhaps it would be opportune to present some of the work that has been done by this institution, especially in the interaction with startups.
It is necessary to be careful not to convert startups into a kind of showcase of emotions where they are called when there is a “promotional” event to say that we have. We have same thing is to identify existing startups, their areas/sectors of action, map their main difficulties, define incubation programs for them, financial support (simplified) and, if possible, integrate them into projects where they can validate their value proposition . The main supports that a startup in its initial phase needs are: a work area with internet access, seed capital (money to pay basic expenses such as staff salaries), computers, training and mentoring. Not providing this type of services and resources is delaying the country's development in this field, under the penalty of reducing the emergence and resilience of startups in the country, when the rest of the world is experiencing their massive emergence.
And regarding this downward trend, I remember Unitel's initiative (Go Challenge) which has also sought to boost the sector, however, for its competition this year, rumors have emerged that it has been difficult to find startups with potential, this is a signal that needs to be properly interpreted. What will be better? Capture new startups or help the few existing ones to survive? Maybe the 2 things, I say.
There are structures in the Angolan State designed to generate a significant impact in this field, but it seems to me that they are very far from the startup ecosystem. FACRA – Fundo Angolano de Capital de Risco, has existed for many years, how many startups has it supported so far? It is one of the most suitable instruments to identify and support new business models with venture capital, this is its function principal.
Is FADA – Fundo Angolano de Desenvolvimento Agrícola working with a strategic startup for the agribusiness sector? Or do you intend to take on this role of developing the rural environment from Luanda on your own?
How many startups will have participated in the economic relief program approved in 2020 that allocated 4 billion kwanzas to support startups, the results of this initiative have not been heard. How many startups benefited?
How many startups will have participated in the economic relief program approved in 2020 that allocated 4 billion kwanzas to support startups...
In the field of public policies, what types of incentives, from tax and administrative, have been created so far to foster the startup ecosystem?
The investment of 2 million dollars made in a new infrastructure for the digital perhaps it would be better applied if shared (in part) with the existing startups that still subsist in a very sacrificed way and have not “turned off the server”. It is a matter of time before startups from other countries (which have received important support) begin to expand in our region, when they penetrate Angola the most likely is to eliminate the “local competition” that is suffering a lot, it is a question of time…
Unlike what happens with conventional companies, startups do not seek bank credit, startups are not companies, they are technology-based disruptive ideas using innovative and flexible business models that need to be validated in an environment of great uncertainty and risk (recall the ranking of Angola on the business environment?). Therefore, it is not recommended that startups do this exercise using bank loans, this is the principle used almost everywhere in the world. To fill this financial support gap there are important figures for the ecosystem such as: the angel investor, development and innovation funds, venture capital funds, etc.
In conclusion, this is a topic that should be analyzed by specialists with a strategic vision for the future of the country, we need to carry out an inclusive exercise with the main stakeholders / partners in order to identify potential opportunities where startups can add value to the economy and society angolan. The main actors: promoters/startupers, government, banking – commercial and development, investment and risk funds, must assume their responsibilities in this process and find objective solutions focused on results and efficiency gains. Otherwise, we will continue to see millions of dollars being invested in reinforced concrete infrastructures while the creators of high social and economic impact solutions beg for an almost impossible penny.
This article was written by Wanderley Ribeiro, originally published on your Linkedin page and republished on MenosFios with the author's permission.
