Aigboje Aig-Imoukhuede CFR, Chairman, Access Holdings & Coronation Group
Gazelles. Camels. Elephants. In the language of venture capital, we have a full menagerie to describe a startup’s growth progression. However, in the past decade, the ultimate aspiration remains the unicorn: privately held companies valued at over $1 billion. Globally, there are approximately 1,200 unicorns across various industries, and while Africa’s list is smaller, it is growing. As of February 2023, the seven identified African unicorns predominantly operate in the fintech and digital sectors, addressing payment challenges across the continent.
For many startups in Africa, achieving unicorn status remains a distant dream due to structural challenges. To bridge this gap, governments and the private sector must foster ecosystems that nurture innovation and entrepreneurial growth at all levels.
Under ideal circumstances, gazelles—fast-growing companies essential for economic growth and employment—can mature into unicorns. These unicorns, in turn, can evolve into elephants: mega-companies that dominate markets. However, the key lies in cultivating gazelles first. Across Africa, there is a clear need to focus on five imperatives that can drive this transformation:
- Talent Catalysation
Talent is Africa’s greatest asset, yet its potential is being hindered by ongoing skills migration. Educational systems must promote a culture of innovation while ensuring local talent remains competitive. Without nurturing our intellectual capital, startups cannot thrive. - Infrastructure Development
Startups struggle to scale without reliable infrastructure. Basic access to internet and energy, which is taken for granted elsewhere, remains a challenge in many regions. The fintech sector has flourished precisely because pioneers tackled Africa’s underdeveloped payment systems head-on. Addressing similar gaps in logistics, transportation, and energy will unlock opportunities across other industries. - Startup Support Systems
Government-sponsored accelerators and incubator programs have proven effective in nurturing small and medium enterprises. Egypt provides an excellent example, where 40% of its startups have leveraged such initiatives, fueling rapid growth in its tech sector. Replicating this success across more African nations will bolster innovation. - Access to Venture Capital
Venture capital funding is vital to an innovation economy. It complements traditional bank loans by providing startups with resources to scale and innovate. However, a legislative environment that mitigates investment risk is necessary to attract investors. - Policy as a Catalyst
The right policies can deliberately stimulate demand, develop successful businesses, and strengthen economies. From tax incentives to startup-friendly regulations, policy frameworks must be tailored to nurture gazelles and unicorns alike.
The private sector also has a crucial role to play. Africa’s world-class banking sector has already proven its ability to facilitate growth, whether through funding, strategic partnerships, or economic advisory. Collaboration with governments can provide the support startups need to achieve scale and sustainability.
Yet, achieving unicorn status comes with its own challenges: lofty revenue expectations, intensified scrutiny from regulators and competitors, and demanding boardroom dynamics. Recent economic events, including the pandemic and the “great market reset” of 2021/2022, further underscore the volatility. African startups must adopt disruptive approaches to not only achieve but maintain unicorn status on a global scale.
Successful startups demonstrate three critical attributes: a clear value proposition, a scalable business model, and an unmatched understanding of their target market. Combined with visionary leadership capable of executing plans at scale, these factors allow African companies to compete globally.
To vastly increase the number of gazelles—and by extension, the likelihood of unicorns—stakeholders must work together to overcome existing barriers. Governments, private sector players, and policymakers each have a role in redefining industries, creating jobs, and building Africa’s economic resilience. The path to success is challenging, but with deliberate efforts, Africa’s unicorns and elephants will reshape the future.
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