Business
How African tech startups are powering the continent’s rapidly growing economies
Development Finance
The scarcity and costliness of finance also impedes success. Banks in Ghana can charge up to 28 percent interest for a business loan.
Venture capital firms like Intel Capital, JPMorgan, Summit Partners and Rocket Internet have occasionally financed African ICT firms but business leaders said the sector needs much broader sources of finance.
In the Silicon Valley, startups can receive up to US$2 million from a range of funders including venture capital firms, ‘angel’ investors and private equity houses, according to Marcin Hejka, a regional managing director for Intel Capital. Such a financial ecosystem does not yet exist in Africa, he says.
Ghana’s Rancard, which distributes Gmail SMS services on 55 mobile networks in Africa and beyond, received funding from Adlevo Capital and Intel Capital but its CEO recognizes it was one of the lucky few.
“There are not enough early-stage tech venture capital funds available for Africa,” Kofi Dadzie said.
One reason for the lack of funding is the risks investors face, said Maurizio Caio, founder of UK venture capital firm TLcom Capital.
