AU Partners Google to Formulate Policy Framework for Startups

By Aduragbemi Omiyale

The African Union (AU) has collaborated with Google and Africa Practice to design a policy framework for member states to address challenges hindering startups on the continent.

The new initiative, known as the AU Startup Policy Framework and Model Law, will provide specific sample clauses to guide nations in developing or updating their national startup legislative and regulatory governance arrangements.

“We are excited about the new prospects for our continent unlocked by the adoption of the Startup Policy Framework and Model Law which is set to leapfrog the startup ecosystem in Africa,” the African Union Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Mr Albert Muchanga, said at the launch of the framework.

This scheme was unveiled at the AU 6th Mid-Year Coordination Meeting in Accra, Ghana. The event brings together the AU, the Regional Economic Communities, the Regional Mechanisms and the AU member states.

“As you know, small and medium-sized enterprises, including startups, represent most businesses in all sectors and are the primary source of job creation.

“Specifically, startups spur development by creating jobs in the digital economy, employing 34,000 people across the continent. Unfortunately, out of 1000 unicorns globally, only seven are in Africa.

“This is primarily due to complex regulations, limited funding, a scarcity of skilled labour, and fragmented markets in Africa.

“Therefore, the framework is expected to unlock some of these hurdles and set a strong foundation for the growth of Africa’s startup landscape, projected to expand to $10 billion by 2056,” Mr Muchanga further said.

“Africa is a young continent, by 2050, the continent will account for 25% of the global population. Governments need to make provisions to enable capital flow for the burgeoning ideas coming out of Africa.

“We need to create an environment that enables these innovative minds to catapult the continent to economic prosperity, and this framework is what enables this,” he added.

Also speaking, the Regional Director for Sub-Saharan Africa, Government Affairs and Public Policy at Google, Mr Charles Murito, noted, “Africa receives a disproportionately small share of global venture funding.

“In 2023, the continent raised a total of $4.5 billion from 545 disclosed venture capital deals, reflecting a 30 per cent decrease in value and a 31% decline in the number of deals compared to 2022.

“Notably, 16 per cent of the funding recipients were female-led ventures, only marginally up from 11 per cent in 2020.

“Funding flows also skew towards the same sectors, exacerbating the financing challenge; with fintech continuing to lead deal volumes.

“The same destinations also receive disproportionately more of the financing flows into the continent: startups in Nigeria, Kenya, South Africa, and Egypt received 62 per cent of the total deal volume.”