A review by the World Economic Forum has identified three major trends expected to prompt Africa’s economic growth in the upcoming decades. First, the continent comprises a young population, along with a growing labor force. Second, communities are becoming increasingly urbanized. The third, and perhaps most important trend, is the opportunity for African economies to benefit from rapid tech advancements. Tech is the key to unlocking growth, which enables entrepreneurs to leapfrog existing limitations and negate physical infrastructure costs.
Based on 2017 data, Ivory Coast has one of the most buoyant African economies (with a growth rate of more than seven percent , according to the World Bank), however conditions have not been sufficient to beget Ivorian techstars. There are several barriers that prevent Ivory Coast from a dynamic kickoff in the tech and entrepreneurial domain. For one, Ivory Coast lacks the proper infrastructure to foster entrepreneurs and innovators. Another key barrier is language, as French is not ‘the tongue of tech.’ Language has also been a hurdle for aspiring Francophone entrepreneurs when it comes to securing funding.
Despite these challenges, three key characteristics suggest the Ivorian market has terrific potential for future growth: An open ecosystem, international expertise brought home by successful Ivorian startups, and recent interest among international funds exploring the Ivorian ecosystem.
A burgeoning ecosystem, however structural issues remain
According to the Seedstars Index, Ivory Coast ranks sixth in Sub-Saharan Africa, with respect to the strength of its entrepreneurial ecosystem. In an interview with Wamda, Claudia Makadristo, Regional Manager for Africa at Seedstars, has stated that despite its growth, the Ivorian ecosystem is still very young and has yet to produce a significant number of ventures at scale. She attributes this shortfall to the Ivorian culture and mindset, the lack of appropriate entrepreneurship training, and the inability to tap into funding.
Although there has been a significant increase in the number of Ivorian stakeholders, such as incubators and accelerators (13 initiatives currently exist), there is a distinct lack of collaboration, which has slowed development and prevented the Ivorian ecosystem from evolving. The Francophone-African block, with its single currency, represents a huge opportunity for collaboration whereby Ivory Coast can serve as its main hub, Makadristo said. “However, there are still some structural issues to be solved locally,” she added.
For many Ivorian stakeholders, whose focus is to address local challenges, the potential for new and scalable business models and disruptive innovations is becoming increasingly clear, Makadristo explained. Contributors — such as the Seedstars Academy — hope to scale up effective educational resources, infrastructure, and solutions by delivering disruptive innovation via low-cost access and technology through its venture builder. “Spending wiser is where we believe that private actors can have an impact. Within the tech space, there is a need for better integration and cooperation with the corporate world. Programs such as the Seedstars Academy intend to bridge that gap.”
Wamda spoke with Idriss Marcial Monthe, a computer science engineer and CEO of CinetPay, an Ivorian fintech startup. CinetPay brings together all mobile payment methods in Africa and allows merchants to accept both online and offline payments. The platform also enables those without a credit card to use mobile money accounts to make online transactions. According to Monthe, “All stakeholders, governments, entrepreneurs, users, and partners must work together to create an environment capable of adopting the products and services set up by startups.”
An example of much-needed private-sector involvement, mobile operator MTN has taken action. Last November, MTN launched the first edition of its startup incubation program “Y’ello Startup,” which helps young entrepreneurs design and deploy innovative digital solutions whose aim is to create a strong impact on the Ivorian socio-economic environment.
In addition to increased collaboration, both quantity and quality within the ecosystem must be addressed. National investment is required to encourage budding entrepreneurs to get involved, while simultaneously addressing the deficit of entrepreneurial skills. Additionally, the ability to absorb further funding must also be tackled. Despite existing challenges, Makadristo affirms that the government has been increasingly engaged, working to equip youth with the skills needed to launch new businesses.
Language: A barrier for Francophone startups
According to Makadristo, African tech startups raised $195 million in 2017—a 51 percent increase from 2016 and an all-time high for African startups. The majority of this investment, however, is directed toward countries such as Kenya, Ghana, Nigeria, and South Africa, Makadristo explained. “If we look at the overall trends between 2010 and 2017, Ivory Coast absorbed 10 percent of volume in PE deals and 2 percent of value in PE deals in West Africa, compared to Nigeria’s 42 percent and 73 percent, and Ghana’s 27 percent and 20 percent.” Makadristo stressed that Francophone Africa faces difficulties in attracting startup investment due to linguistic biases—a hot topic of debate and growing frustration among regional entrepreneurs. “On the one hand, investors do not seem to pay much attention to Francophone Africa due to not having the linguistic knowledge to communicate. On the other hand, it is said that Francophone African entrepreneurs need to rethink the way they communicate with investors and learn how to give quick answers about the potential impact to assess an opportunity,” she said.
Francis Yapobi, founder of Ivorian startup Airshop, spoke with Wamda about his entrepreneurial experiences. Airshop aims to digitize duty frees by facilitating pre-ordering of duty-free goods. “The main problem is not the scarcity of money, it’s just that this money doesn’t exist for us,” he said. So far, Airshop has bootstrapped $100,000 in capital, and is betting on its current partnership with Air France (and additional future partnerships) to deploy its service. He added: “The financial sector has not yet moved away from the traditional funding models. We have PEs, but they fund buildings and infrastructure, and not startups.”
Yapobi went on to explain that in the past few years, a number of English-speaking African startups—especially Nigerian and Kenyan startups—have had exposure to Silicon Valley. These entrepreneurs came away better equipped to understand entrepreneurship and how the ecosystem functions. Perhaps most importantly, the experience has enabled them to ‘speak the language’ of fund managers, which eventually translates into an ability to attract more cash.
According to Monthe, Seed Capital is difficult to find in the market. Although plenty of investors are eyeing the African region, Ivory Coast is not mature enough yet to attract this investment. Despite this sentiment, change seems to be on the horizon for Ivorian entrepreneurs seeking funding, as investment firms begin to consider Africa. Two such firms are Silicon Valley-based VC firms Partech Ventures and Amethis Finance. Partech Ventures has recently launched an Africa-focused fund that will look to provide Early-Stage Funding. To date, the fund has raised $70 million of its $100 million target, making it one of the largest Africa-focused funds.
Despite challenges, Ivorian entrepreneurs pave the way
Monthe explained that the challenges they faced when launching CinetPay were similar to those any startup would encounter anywhere. Challenges include initial development, prototyping, validation, and launching in the market, as well as finding the right talent to further refine the product. “Finally, it is necessary to educate and raise awareness about this innovation and this is very difficult and takes a lot of time,” he said, referring to the market’s familiarity with tech.
Similarly, Yapobi stressed a general lack of awareness when it comes to entrepreneurial culture and startups. “The biggest problem in Ivory Coast is a problem of culture. There is a regulatory problem and bureaucracy where big companies are not willing to help startups,’’ said Yapobi, who believes the country is witnessing the rise of the first generation of startups.
These circumstances combined have driven startups to pave their own way to success, addressing existing challenges in the market. Monthe explained that their fintech solution came about because they had faced problems with online payment in Africa during their entrepreneurial journey. The startup has not secured a round of funding to date, but received a $5,000 grant from The Tony Elumelu Entrepreneurship program. Despite challenges within the ecosystem, CinetPay has defied the odds and managed to build a brand of its own. In 2017, the fintech startup was named winner of the Ivory Coast chapter of Seedstars World, representing Ivory Coast in the competition’s finals. CinetPay is currently present in Senegal, Cameroon, and Mali. Building on their ongoing successes, the company plans to expand into 14 countries across West and Central Africa in 2020.
What does the future hold for Ivorian entrepreneurs?
The ecosystem in Ivory Coast is still in its early days. As Ivorian startups are increasingly exposed to international markets, they are more likely to gain attention and much-needed capital from investors—especially when increased interest from global funds is considered.
Optimistic about the future, Monthe is certain that Ivory Coast’s entrepreneurial ecosystem will mature over the next five years. Given both the challenges and opportunities, it seems much will happen — and fast. Makadristo believes, “... Ivory Coast is in a unique position where it can truly be the driving force of collaboration of Francophone Africa as a whole.”