One of the major reasons that limits African entrepreneurs is lack of creativity. Majority of entrepreneurs specialize in reinventing European and American business ideas without considering local factors that might hinder implementation. Consider what happens in Africa whenever there is a successful venture or IPO in the US. When Facebook went public, we saw Zimbabwean social media ventures like Wangu, Shaa and others. In 2019, Lyft and Uber went public and we are witnessing new startups like Hwindi, Vaya and Toda Driver apps serving a tiny market in Harare. Only a few survive in African markets because they have an American or European approach to African problems.
Creativity is an important skill in business. It ensures sustainability of any business and guarantees a huge competitive advantage over competitors. Many business students and entrepreneurs believe in a philosophy that, to be successful, one has to solve existing human problems and needs. However startups like Facebook, Apple and Amazon created a market by making their services a need.
Creativity breeds innovation. Without innovation old businesses are facing natural death. Think of Kodak, Nokia and Xerox, how they dominated the world markets for nearly a century but pushed out of the game by innovations from new companies like Danger (who introduced Android software), cannon (Digital cameras) and Apple Inc. (Personal Computers, Smartphones, Wearables). They underestimated the new innovations of the market and assumed them to be fads the market will never become loyal to.
One might argue that globalization standardizes markets but there is need to tailor-make products and services to suit the target market. For instance, WeChat is a Chinese version of WhatsApp but they went further to include local language, games, market and Alipay making it the darling of the local market. We can also refer to Baidu and Alibaba, the conclusion is the same. Copy, localize and include great improvements to the product to make it appealing and unique to the market. Lyft, a major competitor to Uber, is a borrowed idea from Zimbabwe (the original name of the company was Zimride). They improved the idea to make it work in the first world.
Coming up with original ideas might also lead to African Unicorns (startups with $Billion valuation) as the idea can be easily adopted in other countries. A good example is EcoLedger in Zimbabwe, an app which prepares financial data from mobile wallet transaction messages. With 100 000 Google play downloads (android can also allow external apk installation, it’s actually more than that) and an estimated conversion rate of 5 to 10% of customers paying $3/month, they can easily scale this idea to other countries and add more services considering local market factors.
However, African entrepreneurs need incubators and accelerators, mentors , venture capitalists and angel investors to be successful.
Golix, a Zimbabwean cryptocurrency exchange, missed an opportunity to expand to other regional countries before there were affected by RBZ ban. At one point, a continental blog estimated their value to $23m and enlisted it on the most promising African ventures. They also had the opportunity to introduce cryptocurrency credit cards like Bitpay or crypterium, and take over the remittance market from mukuru, Ecocash or bitkesh. I believe that was the turning point for many entrepreneurs since financing is a major problem in Africa. Entrepreneurs could crowdfund on a blockchain through ICOs (using the exchange to list local tokens) and bypass venture capitalists or local IPOs. Given the fragility of our economy, it could make sense than raising RTGS capital.
African entrepreneurs need to come up with innovative ways to raise capital, grow investors wealth, expand to regional markets, business and play long games. At times, lack of patience and quick-profits kill many promising businesses. How many African entrepreneurs build a business for more than 10 years? How many African business are using freemium models? How many are willing to own 30% of their ventures and allow investors to fund the business?
In the next posts, I will write about Business Models, Ways of raising capital, and local business case studies. If you have any suggestions or comments, contact through an email adchakara@gmail.com.
