How do you scale a business in Francophone Africa?
Every year at the same time, when the sacred startup funding statistics are revealed, the same questions arise. One of these questions is the unequal access to funding between ecosystems in Francophone and Anglophone Africa.
The data shows that 75% of funding goes to 4 very different countries located at Africa’s cardinal points (Nigeria, Egypt, Kenya, and South Africa), with a common denominator being their relationship with English (and past colonies of the United Kingdom). But is proficiency in English really that important?
While US-based funding played an outsized role in funding African start-ups in 2022, some research suggests that ties to elite American universities are a critical factor in accessing venture capital in Africa. These ties are more likely to happen in English-speaking countries. But the science stops here. Given the levels of funding across Africa’s 50 other countries ($1.3Bn), and the impact of a US founder deciding to settle in Dakar instead of Kigali (Wave), we must adopt a new set of metrics to assess the difference between them.
Once we do, the spoken language does not appear that relevant anymore.
First things first, what is Francophone Africa?
According to Campus France, there are 11 African countries that are officially Francophone and roughly located between the Democratic Republic of the Congo (DRC) in the East, Senegal in the West, Mali in the North and Gabon in the South. With approximately 60% of its population speaking French, Tunisia is not on the list. The same goes for Algeria, home to 11 million French speakers, the 3rd largest French-speaking population on Earth. The set of countries that one includes in “Francophone Africa” depends on one’s perspective and agenda. We will consider a wide definition that includes all countries where part of the population speaks French as a 1st or 2nd language.
In this consideration and to apprehend these countries’ startup ecosystems, it is important to take a step back and look at each country’s past and recent history to realise how they all experienced a different type of colonisation and took a separate political and economic trajectory after their independence.
While Algeria and Morocco might be close geographically and culturally, their recent history has shaped very different regulatory frameworks (liberal vs interventionist), corporate landscapes (public vs private) and degrees of openness to world trade and international institutions. This same comparison could be made between Benin and Côte d’Ivoire, Gabon and DRC or Burkina and Guinea…
Another less tangible but critical marker of foundational differences between countries and the shape of their ecosystems is rooted in deep cultural beliefs and behaviours. These are reflected in people’s relationship to the concept of work, time, money, science, and authority (correlated with the role of the state in society). They affect the definition of success from one country to another, but also the incentives for recruitment, promotion, and engagement of one’s communities. Vaudou’s deep embedment, evolution, and history in Benin, for example, has aided the body politic to better cope with modernity and trade, whereas, in some areas in North Africa or in Mali, quick personal enrichment may be considered less honourable than getting a PhD.
Ecosystems around the world are fundamentally shaped by these different aspects. To consider Africa as a whole, or to imagine subsets based on the spoken language or the geographies they are in, does not make much empiric sense from an ecosystem analysis point of view, whether you are a founder, incubator, investor or large corporation. Adopting a single perspective to encompass a set of African countries will definitely lead to mistakes.
At the same time, apart from “large enough” markets such as Nigeria or Egypt, it quickly becomes a necessity for any business in the continent to look outside the borders of its host country to expand. This leads us back to the question of how is it possible to scale across (Francophone) African countries.
Cote d’Ivoire is home to 30 million people and more than 60 spoken languages. Across the African continent, 36 countries out of 54 have less than 20 million people, with some of these countries among the lowest population densities in the world and more than 1,500 spoken languages. That makes small markets even more fragmented from within, while the lack of connecting infrastructure and complications in enforcing regional free trade agreements increases the distance between them. As a result, it’s sometimes easier to expand 2,000 miles away than in your neighbouring country.
The nature of demand is different from one ecosystem to another
One overlooked metric of interest when thinking of expanding in a new African market is the level of sophistication of the demand: the readiness of the market to accept a specific tech-enabled product or service. And it varies a lot between two neighbouring markets, such as Senegal and Côte d’Ivoire. Data from the Global Innovation Index (GII) suggests that Côte d’Ivoire has a sophisticated B2B market, with a heavy landscape of international corporations constituting a consistent demand for tech-enabled B2B services. Senegal, on the other hand, enjoys a greater openness to the world, while its B2C market and demand are more sophisticated than B2B, making it more suitable for B2C innovative products and services in a wide range of industries. Yet, both countries are often considered priorities on the same scale for expansion into West Africa by most founders, B2B and B2C alike.
Lastly, in a globalised labour market, the scarcity of talent makes it difficult for Africa-based businesses to find adequate resources, in sufficient quantity and in time, to grow in new markets. At this current juncture, I’m convinced that trying to reproduce the successful scaling models of international software companies based on the replicability of a playbook is doomed to fail. While it is still too soon to draw a conclusion, it appears that companies like Yassir, Opay or Wave are very much soaked in this software-inspired culture, inhibiting their ability to successfully scale in more than two countries despite the hundreds of millions they raised and have burned.
On the other hand, GoMyCode, a Tunisian EdTech that has raised $8m since 2017, is now actively operating in 7 African markets. LaPaire, an innovative eye retailer from Kenya, has “only” raised $2m since 2017 and is actively operating in 7 countries and 50 locations. What they have in common in their approach is the degree of liberty provided to local teams to manage their operations: marketing, recruitment, PR… while ensuring continuous support and guidance from HQ. They are multi-local.
If one lesson is to be remembered, it comes from AfricInvest, a leader in PE and VC, which now operates to different degrees in more than 35 countries and with a mission to build the investment infrastructure for Africa. AfricInvest’s secret sauce in investing successfully in so many markets lies in its ability since its inception in 1991 to build its market understanding and knowledge on key partnerships with local entities or independent teams of experts.
It is finally towards old African-sourced wisdom that we should turn to recognise how the “faster alone, but further together” proverb becomes a reality when talking about market expansion across (Francophone) Africa.
Abderrahmane Chaoui is an African ecosystem researcher, consultant, and writer. He speaks Arabic, French, and English.
