Investors are failing African entrepreneurs — it’s time for a change

Solar panels in the African country of Zimbabwe. Photo by Shutterstock/Sebastian Noethlichs

Despite the global economic slowdown caused by COVID-19, the case for investing in Africa is stronger than ever. Africa will remain a competitive investment destination for decades to come because of its improving relative risk profiles, regional integration and strong economic fundamentals.

However, many challenges remain for local founders despite the record-breaking fundraising year African startups had in 2019. This is especially the case when it comes to women-led companies.

The energy sector will be critical for Africa’s post-COVID economic recovery and will be one of the most attractive investment sectors in 2021. Stakeholders ranging from the African Development Bank to large-scale private funds recognize the need cost-efficient industrial energy access as well as universal household electricity. To expand the impact of their investments in the energy sector, development finance institutions (DFIs) and private investors should pay more attention to empowering African-led energy firms by adjusting their risk analyses and to closing gaps for off-grid solar project financing.

Representation of local African founders, and female founders, remains a challenge in the African startup funding space. While it is a positive sign that African companies are attracting international investors’ attention, only 20 percent of private investment into African startups and companies came from Africa-based investors during the last five years. Further, eight of the top 10 African startups that attracted the most capital in 2019 were led by foreigners. Read more…

LEAVE A REPLY

Please enter your comment!
Please enter your name here