Business
How African tech startups are powering the continent’s rapidly growing economies
Business leaders and investors said the sector in Africa is held back by lower Internet penetration as well as scarcity of early stage capital and a lack of management expertise.
Many startups in the region are caught in a Catch 22 situation, said Churchill Mambe Nanje, who launched an online job search engine in Cameroon called Njorku.
“To hire the best talent to develop a startup, you need capital. Finding capital is hard because you need to have a track record and a viable product but to get those, you need capital,” said Nanje, whose company has been profiled by Forbes Magazine as one of Africa’s best startups.
Low Internet Usage
Part of the problem for African tech startups is that Internet use, despite mushrooming in the past decade, is low. Only 16 percent of Africa’s 1 billion people use the Internet, half the rate in Asia Pacific and below a global average of 36 percent, according to the International Telecommunication Union (ITU).
The information and community technology sector contributed just 7 percent to the continent’s gross domestic product (GDP) last year, according to an African Development Bank report.
Economic gains from rising Internet usage are likely to be strong. For every 10-percentage point rise in broadband internet penetration, economic growth increases by 1.4 percentage points, according to the World Bank.
