African Startups Receive $5 Billion in Investments in 2022, but Face Regulatory Challenges
According to the "Startup Model Law Framework" report published by the African Union, African startups received $5 billion in investments in 2022, with 5,200 startups benefiting from this funding. However, across the continent, favorable legislation is rare, compliance costs are high, and regulatory uncertainty often hinders the ability of these businesses to grow.
The digital economy could contribute up to $180 billion to Africa's GDP by 2025, but African countries must also become creators of technology, not just consumers.
Tunisia: A Success Story
The report highlights Tunisia's success story, where before the adoption of the "Startup Act" in 2018 (Tunisia was the first African country to adopt it), women represented 61% of graduates from higher-level technology programs, but made up only 31% of the "neither employed nor in education or training" section of the country.
This situation made financing and survival difficult for startups and SMEs. The adoption of the law offered Tunisia a unique opportunity to address the potential challenges faced by startups and SMEs, including:
- Unfavorable legal and regulatory frameworks
- Limited access to financing and business development support
- Underdeveloped infrastructure
As a result, investments in Tunisian startups increased by 31% between 2017 and 2021. Additionally, the World Bank launched a €66.90 million ($75 million) fund for innovative startups and SMEs.
Emerging and Cultivated Ecosystems
Tunisia falls into the "emerging" category, along with Algeria and Côte d'Ivoire. These countries are laying the foundations for their growth in the technology and startup sectors. While they are experiencing improvements, their ecosystems are still nascent and are building the necessary fundamental elements for future development.
Morocco, on the other hand, is in the "cultivated" category, indicating that the country is in a development phase with moderate progress in its technological and startup ecosystem. Morocco benefits from a relatively stable socioeconomic environment and continues to strengthen its infrastructure to support further growth.