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Why African Tech Startups Fail and How to Mitigate Risk

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Tech Startups

By Otori Emmanuel

Technological start-ups in Africa are innovative about providing solutions to challenges that exist in Africa. However, with these solutions come several bottlenecks which eventually create a barrier to the survival and sustainability of the business.

There are several factors that contribute to the failure of start-ups in Africa and the ability to learn from these failures would support a new way of thinking to help mitigate these risks.

In this publication, I would be sharing risk factors from working with not less than 100 companies in the technological, FMCG, retail, agro, fashion, events, confectionary and manufacturing in providing consultancy services and some of the patterns I found led to the business failure.

  1. Huge Injection of Capital Without Traction

Generating and implementing an idea has to go through several stages of design thinking to ascertain the viability of such a product before it is released into the marketplace based on the feedback from prospective end users.

Due to the fact that some early-stage entrepreneurs have already built a name in the ecosystem can easily make them access funding even when an idea is still just an idea that has not been properly researched but because entrepreneurs sometimes are also very emotionally attached to an idea sometimes, they can make several assumptions without considering the facts and then begin to seek capital inflow to kick-start this idea.

Traction is important because it signifies growth and growth could be seen in the form of demand which eventually leads to cash flow. Investing in an idea is too risky and even riskier for an early-stage entrepreneur with limited experience and exposure.

In order to ensure an idea would scale, it is important to employ design thinking to limit assumptions.

  1. Not Working With the Right Team

Not Working with the right team has huge consequences in itself. A start-up should have one core, and it is in the ability to execute with the team. Because most start-ups bootstrap at their early stage, they tend to work with whoever is available and not necessarily the skilled and competent professionals who would hit the ground running and deliver the required expectations.

I remember working in a pharmaceutical start-up where mislabeling of medications occurred because the professional involved was not aware of the procedures as a pharmacist would. This could have been a huge mistake if it was unnoticed until it reached the retailer who did checks and found out.

The right time would limit the time a task is expected to be done. Start-ups should never play down on experience, proficiency and competence. In fact, it is necessary to develop specific in-house procedures for hiring that suits the company’s culture.

  1. Lack of Product-Market Fit

A product could be a fantastic one, but if the market is not ready, then its sustainability is questionable. A very innovative start-up that came with the idea of solving the challenges of travel is GoMyWay, this Start-up was launched in Nigeria but did not thrive.

Was the product fit for the market in terms of providing the needed solution to the already existing challenges, I would say yes, however, factors such as kidnapping, assault, killings have created trust in the mind of travellers and so this travelling application that was supposed to connect a traveller with a car with another traveller going in the same direction could not survive because the safety of travellers was in question.

  1. Government Regulations

Several administrations of government have worked tirelessly to make the business environment conducive, however, there are still gaps to ensure that the start-ups do not get gagged as their benefits are very key to economic development.

The recent move to create a start-up bill to ensure that the interest of start-ups can be protected is one to secure sustainability and increase interactions with regulators in such a way that regulations understand the peculiarities of these businesses and work around policies that would not see capital investments go down the ground with just a regulation.

I believe the start-up bill would create stakeholders in the overall value-chain and then ease how business is done.

There are other factors that contribute to business failure and the listed are some common ones that affect businesses based in Africa.

I however believe that as there is an ongoing conversation to create a roundtable for stakeholder’s interaction, there would soon exist synergy in the ecosystem.

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Nigeria to Launch NIGCOMSAT Satellites in 2028, 2029

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NIGCOMSAT Satellites

By Adedapo Adesanya

Nigeria has set 2028 and 2029 as the timeline for the deployment of its new satellites, NIGCOMSAT-2A and 2B, respectively.

The Managing Director of NIGCOMSAT, which is Nigerian Communications Satellite Limited and the premier satellite operator in Nigeria, Mrs Jane Nkechi Egerton-Idehen, disclosed this at the second Nigerian Satellite Week in Abuja on Monday. She noted that the development is expected to boost military intelligence, surveillance, and regional connectivity.

“For 2A and 2B, we have started the process. We have closed the tender and are now back into the financing and implementation stage. 2A is built to come up in 2028, and 2B for 2029.

“When they are up and running, they are expected to provide security within the borders and neighbouring countries. They will support the security agencies because data collection and intelligence in real time is important. Satellites like communication satellites allow that, irrespective of where they are,” she said.

In his remarks, the Minister of Communications and Digital Economy, Mr Bosun Tijani, said the satellites form part of the nation’s strategy to strengthen digital infrastructure.

Mr Tijani explained that the satellites will complement ongoing investments in 90,000 kilometres of fibre-optic cable and nearly 4,000 telecom towers, which are being rolled out nationwide and extended to neighbouring countries, including Cameroon, Niger, Chad, Burkina Faso, and the Republic of Benin.

He stressed that satellite technology is critical for national development, affecting education, agriculture, business, and emergency response.

“The president’s approval of NIGCOMSAT-2A and 2B demonstrates a clear commitment to building the future. These satellites will enhance security, connect remote communities, and extend our fibre-optic network into neighbouring countries,” he said.

“Some of these neighbouring countries pay up to ten times more for internet capacity than Lagos. Extending our fibre network will not only improve connectivity but also enhance border security and regional collaboration.

“Satellite technology affects everything, from how a child in a rural community accesses the internet to how farmers make critical decisions and how businesses operate across distance,” the Minister said.

Also speaking, the Chief of Army Staff (COAS), Lieutenant General Waidi Shaibu, welcomed the development, saying the military will leverage the satellites for operational efficiency.

“The Nigerian Army will continue to use space assets to improve intelligence gathering, surveillance, and operational coordination across all theatres of operation,” he said at the event, represented by Major General Kennedy Osemwegie, Commander of the Nigerian Army Cyber Warfare Command (NACWC).

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Interswitch, KCB Group to Deliver Innovative Financial Solutions in East Africa

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Interswitch KCB group

By Modupe Gbadeyanka

A partnership to advance digital payments and financial inclusion across East Africa has been strengthened between Interswitch and KCB Group.

Both parties have agreed to expand digital payment infrastructure and deliver innovative financial solutions that meet the evolving needs of individuals, businesses, and institutions across the region.

The aim is to accelerate seamless, secure, and inclusive digital payments in East Africa, where the leading Africa-focused integrated payments and digital commerce enabler, Interswitch, recently announced an expansion of Verve card acceptance footprint, leveraging its consolidated partnership with KCB Group, Kenya’s largest financial services group by assets, following a similar move in Uganda through the local KCB Franchise in February 2022.

During a recent executive engagement at KCB Group headquarters in Nairobi, the chief executive of Interswitch, Mr Mitchell Elegbe, held high-level discussions with KCB leadership, including its chief executive, Paul Russo.

At the core of the strengthened collaboration is the integration of Interswitch’s robust payment rails, card scheme, and emerging digital token solutions with KCB Group’s expansive regional footprint and trusted banking franchise.

This integration enables the acceptance of Verve cards and tokenised payment solutions across KCB’s extensive merchant point-of-sale network in Kenya and Uganda, significantly enhancing everyday usability for customers while strengthening KCB’s digitally driven retail payments offering.

The consolidated partnership is expected to drive increased merchant acquisition, improve interoperability across payment ecosystems, and expand access to secure, cashless transactions. It also reinforces both organisations’ shared objective of deepening financial inclusion and accelerating digital commerce across East Africa.

“Our collaboration with KCB Group represents a powerful alignment of vision and capability. By combining our technology-driven payment solutions with KCB’s strong regional presence, we are unlocking new opportunities to scale access, drive innovation, and deliver greater value to customers across East Africa,” Mr Elegbe stated.

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Telcos to Compensate Customers for Service Disruptions—NCC

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NCC

By Adedapo Adesanya

The Nigerian Communications Commission (NCC) has directed Mobile Network Operators (MNOs) to provide compensation to subscribers whose network quality of service experience is below specified targets within specific locations.

In a Sunday statement, the commission noted that its position is that customers should not be made to bear the full burden of service disruptions where operators fail to meet prescribed standards of service delivery.

Under this directive, NCC said erring operators would compensate affected users directly for breaches of Quality of Service (QoS) Key Performance Indicators (KPIs).

Mobile Network Operators (MNOs) will be required to pay these compensations for instances of poor quality of service recorded within specified time frames.

“The compensation will be provided in the form of airtime credits, calculated based on subscribers’ average spending patterns and their presence within Local Government Areas where service failures occur”, according to the statement.

The directive is rooted in the agency’s broader regulatory philosophy that places the consumer at the centre of Nigeria’s telecommunications ecosystem.

“Telecommunications services today underpin economic activity, social interaction, and access to digital opportunities. When service quality is poor, the consequences affect productivity, commercial activities, and even public confidence in our communications system.

“While regulatory fines have traditionally served as a deterrent against poor service delivery, the Commission is adopting a more consumer-focused approach that strengthens accountability within the industry”.

The commission explained that it has designed this measure to complement existing and ongoing efforts to strengthen service quality monitoring and enforce performance standards.

Further to this directive by the commission to MNOs on compensation to consumers, the regulator has mandated Tower Companies that own the critical infrastructure, such as masts, for Quality of Service delivery, to invest in infrastructure with measurable outcomes using sums that it has fined these companies, in addition to other financial fines the Commission will deem appropriate.

“The commission will continue to reinforce the obligation of operators to invest consistently in network resilience, capacity expansion, and infrastructure upgrades to meet the growing demand for telecommunications services.

“At the same time, it will deploy regulatory tools that promote fairness, transparency, and accountability across the sector, ensuring that every subscriber receives the quality of service they deserve while sustaining a telecommunications industry capable of powering Nigeria’s digital future”, the statement added.

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