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In the last decade, Africa's startup ecosystem has grown significantly. In most countries in Africa, at least 60% of the population is employed by startups and SMEs, highlighting the vital role of startups in economic development and job creation.
The rapid growth in the number of accelerators across Africa has been a direct response to this expansion of startups. These accelerators focus on tech startups and provide technical assistance services to scale and accelerate the growth of these startups. Due to these benefits, many ambitious founders seek out these programs, eager to acquire tech expertise and improve their products and services. Moreover, accelerators offer networking opportunities, mentoring, and connections to strategic and financial partners, all essential resources for startup founders.
Unsurprisingly, most of these accelerators are concentrated in Egypt, Kenya, Nigeria and South Africa, serving the vibrant tech startup communities in these countries and benefiting from the relatively robust infrastructure, high mobile penetration and internet connectivity. Noteworthy examples include Antler, Baobab, Catalyst Fund, CC Hub, EFG Fintech, Falak Startups, Founders Factory, Grindstone, and MEST, among many others.
However, tech-centric startups represent only a fraction of the diverse types of startups in Sub-Saharan Africa. Accelerators’ predominant focus on tech startups has unintentionally overlooked many critical sectors and business models which are essential for economic growth. In addition, a focus on tech startups has resulted in an under-representation of female founders in accelerators in sub Saharan Africa, as less than 20% of tech startup founders are women.
Non tech-focused startups play a crucial role in stabilizing local economies, facilitating access to essential services, and improving livelihoods. These startups span key sectors such as agriculture, manufacturing, construction, and hospitality, yet they do not necessarily rely on advanced technological applications or services.
Unfortunately, founders in these sectors often do not meet the criteria for many accelerators. This is unfortunate, as these industries are vital for job creation and support millions of livelihoods across the continent.
The World Bank estimates that the agriculture sector employs roughly 60% of Africa's workforce and accounts for about 32% of the continent's GDP, underscoring the necessity of supporting this sector through accelerators.The agricultural sector could significantly benefit from accelerator support aimed at enhancing crop production, agro-processing, and adding value to agricultural products.
Additionally, the manufacturing sector could see improvements in consumer goods and retail products, particularly in response to the growing demand fueled by urbanization and an expanding middle class.
Furthermore, sectors such as infrastructure, logistics, and construction predominantly consist of ‘brick and mortar’ businesses that require refined business models, operational efficiencies, and marketing strategies, all areas in which accelerators can provide invaluable guidance.
Moreover, non tech-focused startups can greatly benefit from the equity and debt capital often provided by accelerators, which typically collaborate closely with funding partners such as impact investors and venture capitalists. Non-tech startups face a challenging financing landscape, with access to credit frequently cited as one of the most significant barriers to their growth. Bank loans often prove unfeasible for many, with interest rates soaring to 20%-25% in certain markets like Nigeria. Consequently, startups often lack adequate options for accessing the working capital necessary to support innovation, product expansion, and other crucial areas essential for achieving substantial growth.
A few non tech-focused accelerators exist, including Villgro Africa, which supports emerging healthcare businesses, Acelera Agro for agricultural initiatives in Angola, and the AUDA-NEPAD Home-Grown Solutions Agribusiness Accelerator, a COMESA-led initiative that supports African-owned, growth-stage agribusinesses. More initiatives are needed to sustainably and effectively foster economic development across the continent.
Despite these structures, startups continue to require critical support services beyond access to tools and resources. Demand for these services significantly outpaces supply, particularly for non-technology-focused ventures. These essential services include:
Packaging: Effective packaging design is critical for startups, particularly those in the agricultural sector. It directly affects brand perception, marketing, and sales. Accelerators can assist businesses in optimizing their packaging, boosting product appeal while considering eco-friendliness, enhancing shelf life, and driving sales.
Shared Kitchens and Incubator Facilities: Shared kitchen spaces can be a vital asset for startups in the food and health sectors. Accelerators can provide access to fully-equipped kitchens, enabling entrepreneurs to develop and test their products without high overhead costs. Wakanda Food accelerator and Jarat kitchens are two great examples from South Africa.
Shared Event Spaces: Accelerators can help alleviate the financial burden on startups by providing affordable shared event spaces, which are invaluable for networking, workshops, and product launches.
Talent Databases: Accelerators can connect entrepreneurs with specialized talent such as fractional Chief Financial Officers (CFOs) and Human Resource experts. For example, Delta 40 Studio in Kenya maintains a robust database of fractional talent that can be shared with other accelerators and founders.
Marketplace for product sales : Accelerators possess extensive and diverse networks that can serve as clients and customers for the founders they support. They could establish physical or e-commerce marketplaces promoting local goods, driving sales for startups while encouraging community support for locally-produced items
While technology-focused startups often receive the spotlight, established industries act as the quiet engines powering economic stability and development across many African nations. By investing in and supporting non tech-focused startups, we can unlock substantial growth and ensure a more balanced and inclusive economic landscape across the continent.
Encouraging the growth of non tech-focused startups would not only address critical sectors that underpin local economies but also cultivate an innovative and more representative entrepreneurial ecosystem.
By Micheline Ntiru, Board Member, EHA Impact Ventures.