Small Business

The Challenges and Rewards of Creating a Startup in East Africa

Despite the difficulties startups may face when attempting a launch in Africa, the opportunities are just as great, particularly for those focusing their businesses in the mobile or virtual sectors.

Advances and opportunities are on the rise for startups in East Africa

The growth potential for business in East Africa is huge right now, as evidenced by the number of startups that have been emerging from the region. While there are some unique challenges that come along with the launch of a business in this part of the continent, there are as many potential rewards and possibilities as well.

The Challenges

The number one obstacle new businesses face in East Africa is difficulty with infrastructure. Although things are catching up and progressing rapidly, the region still suffers from large pockets of poor physical infrastructure, including deficiencies in power capacity, problems with transportation and issues with the ability to maintain adequate connectivity to online networks.

Africa as a whole also suffers from continent-wide business issues. Corruption, skills shortages, and regulation and labor issues plague the business landscape, resulting in greater difficulties for new companies trying to navigate this landscape.

The Potential

Despite the difficulties startups may face when attempting a launch in Africa, the opportunities are just as great, particularly for those focusing their businesses in the mobile or virtual sectors. The mobile rise in Africa has been well documented, and both online sales and mobile banking platforms – such as M-Pesa – are transforming the way business is done in East Africa.

East Africa stands on the precipice of an emerging young and newly urbanized market. Africa is now one of the most populated areas of the world, and city dwelling is on the rise. An estimated 40 percent of the population now lives in cities, and this emerging middle class of millennials is eager to spend some of their disposable income. This new spending power is a huge boon for startups, and an incentive for those who wish to launch a business in East Africa.

An additional side effect of this new middle class is that some of the challenges entrepreneurs have historically faced in East Africa are on the mend. Infrastructure issues are being addressed at faster rates than ever before, as both the demand and the solutions for these improvements grow with the population. As the nations become more prosperous and technology improves, the possibility of launching a new business in East Africa becomes a much better bet.

Finally, East Africa has a great number of incubators and accelerators poised to help the entrepreneur get their business off of paper and into reality. Spaces like iHub act as open spaces that actively allow innovators the technology, skills, and tools necessary to grow their ideas. Finally, angel investment efforts have sprung up as well, helping startups turn their dreams into reality by giving them access to funding never before available.

Future possibilities

As East Africa continues to modernize and begins to attract more businesses, startup potential is expected to continue to grow as well. Launching a company, particularly in the tech or virtual sectors, is becoming easier and more lucrative across East African nations, and the potential for such to take root and flourish is becoming more of a possibility. The opportunities are real and waiting for those with the drive and vision to see their new businesses take off and succeed.

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