The Business of a Start-up in Africa

Business Start-up Africa

Suzana Moreira is the founder of moWoza, a social enterprise adopting mobile phone technologies to aid food distribution in Africa.  Suzana has travelled extensively across Africa, and has developed significant insights into sustainability at the Bottom of the Pyramid.  It is from conversations with grass-root communities across Africa that moWoza was born.  Food security, nutrition, literacy, female empowerment and climate change are issues that Suzana is addressing through her work in social enterprise and community development.  Suzana regularly contributes research and articles to academia, NGOs and business institutions on the topics of innovations leapfrogging in emerging markets, social enterprise and sustainability.  Prior to setting up moWoza, Suzana worked on several large infrastructure development programmes in Europe and in the manufacturing industry in South Africa.  Suzana holds a MBA from the Imperial College London Business School.


On March 14th, the NY Times reported that the Washington Post was not using Twitter, YouTube or Foursquare to map road blockages and resource availability during the disruptive snow storm, but rather Ushahidi, an IT platform built in Kenya.  Because Ushahidi originated in crisis from a bedroom, no one tried to patent and monopolize it.  Because Kenya is poor, with computer systems out of the reach for many, Ushahidi made its system work on cellphones.  Because Ushahidi had no venture-capital backing, it used open-source software and was thus free to let others remix its tool for new projects.”  Ushahidi today is used all around the world in crisis and crowd situations.

Ushahidi, is an African start-up that has attracted the world’s attention, likewise, M-Pesa, African inspired Kiva and Integr8 are world renowned business models that were conceived in Africa and have overcome the usual African challenges of poverty, corruption and inadequate policies.  Each of these challenges should be viewed as creative catalysts in the knowledge that the resulting model will be at least innovative and at most disruptive.  It is the processes and systems that are adopted to overcome these challenges that turn the African start-up into the success stories we hear about in the developed world.

Africa is becoming a business destination and many start-ups are positioning themselves to become part of this growing business trend.  As Vijay Mahajan points out in ‘Africa Rising’, 300 million of the 900 million consumers are tirelessly working their way out of extreme poverty to become lower middle class citizens. The World Bank says the percentage of Africans living on $1.25 a day or less dropped from 59{abb65e2b6815f549a727af2ea9f3a377a727ddc064972a198a74f88a6b766686} to 51{abb65e2b6815f549a727af2ea9f3a377a727ddc064972a198a74f88a6b766686} from 1996 to 2005 and has decreased further since.  The Development Policy Forum (DPF) estimates that by mid-century, the greatest population concentration will be in neither China nor India but in sub-Saharan Africa. The region is expected to gain a billion inhabitants – from 900 million today to 1.8 billion in 2050. The urban population alone will triple from 300 million to over a billion in 2050.  Africa offers huge business potential in the upcoming years.

The principles of doing business in Africa are the same as doing business in any developed country in the world.  Emphasis however lies on conducting extensive due diligence, understanding that decisions take time and that access to capital is best sought internationally.  Depending on the scale and nature of the business, corruption can be an issue to be offset but as most Africans will attest to – there are options and an entrepreneur can proceed without being involved in these somewhat complicated and thwarting business practices.

Although Africa is not as connected offering the hi-tech wizardry of the developed world, Africans are overcoming electricity shortages and lack of internet connections by applying unique mobile phone technologies that deliver services which range from connecting farmers to agricultural cooperatives to mobile phone education aimed at youth, and, interestingly corporate companies are rolling out mobile phone training programmes for their staff.  As with any start-up, on the ground market research will expose countless opportunities.

Success in many African countries is in engaging and developing relationships with village elders or with church and health leaders in particular communities.  These are the people who can endorse the offering that you are taking to market.  This is familiar to the business ways of the developed world, where business success is associated with brand leaders and strong sponsors.  Village and community leaders are also useful in negotiating premises, recommending resources and providing the bridge between a start-up and the local authorities.

Perhaps most challenging in Africa, depending on the industry, is infrastructure capacity.  Whereby e-commerce and sophisticated distribution models are taken for granted in the developed world, logistics and distribution can turn the viability of a great start-up concept into a failure.  Start-ups need to carefully analyse supply chain complexities and the constraints of accessing marketplaces.

Many innovative start-ups are piloting there innovative technologies in Africa.  moWoza is a social endeavour that is emblematic of a new generation of African start-ups that have recognised the pressing need for transformation and empowerment amongst the people of Africa.   Initially operating between South Africa and Mozambique, moWoza, is servicing the low income economic migrant who regularly remits goods back to their dependants in the home country.

Most African migrant workers are extremely price sensitive and prefer to shop in South Africa where there exists a larger competitively priced product selection than in their home countries.  However, sending these goods across borders is costly and by relying on informal distributors to transport the goods across the South African borders to their home countries they are risking confiscation at the border crossing, extremely late deliveries and the dependant receiving damaged goods.

moWoza provides a unique mobile phone powered cash-to-goods, end –to-end service that guarantees the migrant worker that the dependant will receive the goods in the dispatched condition on a confirmed date. By committing the time and resources to conduct extensive market research across various African countries, forming focus groups and understanding what situations migrant workers faced, moWoza was able to develop a value proposition that delivers a superior offering to its target market.

Illiteracy and malnutrition are high on moWoza’s agenda.  The World Bank has set targets to reduce illiteracy and relapse into illiteracy – this has spurred moWoza, whose low-income migrant target market are predominantly illiterate, to design and deliver literacy programmes through its agent network.   In addition, most Mozambican migrants in South Africa originate from rural areas where malnutrition amongst children is acute.  By offering food packages that conform to the World Health Organisation basic food basket standards, moWoza is ensuring that its economic migrant workers’ dependants are consuming nutritional food.

There are many possibilities and with a good service offering, it is only a matter time before moWoza will pursue secondary revenue streams. Community leaders are opening doors and suggesting other services that can be commercialised.  This is Africa.  A new era has begun, and for start-ups that are willing to commit themselves to the development of Africa there are endless opportunities.

Criticisms of Academic Entrepreneurship

Academia is great, and understanding basic as well as advanced business concepts will undoubtedly help any entrepreneur in their journey towards launching the next top startup. However, there has been a recent trend among MBA programmes to focus a more of their coursework on entrepreneruship.

This coursework predominantly focuses on business plan writing, scalability and a lot of the things that we talk about here at f3fundit which in concept is not a bad thing, learning from others best practices and others mistakes gives us a leg up on the competition, however, what it does not do, and never will do, is substitute the real life experience that one gets from actually “doing it”.

Moving from Teaching to Doing

After all, reading every book in the lexicon on football, does not make you a good footballer, you have to go out there and practice, practice, practice. The same goes for entrepreneurs.

In the current academic spectrum, schools and professors are too preoccupied with teaching students theory, rather than having them do. The focus needs to shift to a more hands on approach. The question is how?

As start uppers will tell you, they are always underfunded, don’t have enough time, and are understaffed. The last of these is where the academic and real life – entrepreneurial words need to bride.  Here we don’t mean summer MBA internships at startups, we mean active participation throughout the course year for credit.

Managing Expectations for Startup Internships

Students interested in entrepreneurship need that hands on experience, and truth be told, three months is simply not enough to learn what a student needs to. This bridge also needs to act as a tool to manage expectations of MBA’s and startup jobs.

You’ll find that a majority of top 10 MBA students will have egos, however, the start up process is decisively different than working for even an established SME. While the student may have expectations that he or she will work on strategy formulation, the reality may be that for two weeks the team may spend long hours doing nothing more than making cold calls, or even data entry. Being bootstrapped means that every penny counts and hiring three people at €8/hr to do data entry for three days is sometimes just not an option.

This is something that unfortunately the academic approach lacks, instead of a reality that oftentimes sees longer work hours than investment banking or consulting, the picture is painted that the start upper is an engine of innovation, and that securing financing is something relative to being in California in 1998 and starting a dotcom, whereas the real picture is more attune to a Mad Max style post apocalyptic grind. Which truth be told makes it fun.

Implementing Change

Implementing change is never an easy task especially within institutions that have over time developed bureaucracies and have long embedded traditions and employees with a certain mindsets. One method, that does however prove effective in stimulating change among learning institutions are alumni and current students.

As schools rely on alumni donations on expanding, and as many of the alumni from business schools are or were entrepreneurs their voice should hold mettle among the administration. On the other side of the spectrum, business school students need to actively inform administration of their desire to participate in more hands-on initiatives instead of solely focusing on academic learning whether it be case, or technical, as neither is a satisfactory substitute for “just doing it”.

Video Series: Top 10 Mistakes Entrepreneurs Make

This video comes from the Stanford GSB, in which  a panel of seasoned entrepreneurs, venture capitalists, board members and other professionals discuss the common pitfalls most new entrepreneurs encounter when building their business.

This video is a bit different than others, when discussing learning and failure, in that this video focuses on learning from success other than failure, while having one foot in the grave and the other on a banana peel may be great, so is taking the best practices and learning from them. We can after all learn not only from the mistakes of others, but also their successes.

Do I need a MBA?


Do you need a MBA? If you’re a startup entrepreneur the most important thing is knowing the ins and outs of your industry. If you’re starting something new in publishing, know publishing, if you’re starting something new in biotechnology, know biotechnology, if you’re starting a new service that offers someone something, know that something and those someone-ones. Get it?

But what if you just happen to have a damn spiffy idea but don’t know the industry? You could of course try and get a job, lear everything you can, and then take the plunge – or you could simply just go get a good business education.

Why? Well the skills you pick up at a MBA are invaluable and will give you the necessary skill set to effectively tackle any problem, but only that, a MBA changes the way you approach problem solving and business in general. In all it’s a wonderful tool for anyone to have. This isn’t saying that a MBA is the end all answer to all business problems, but it sure is the next best thing.

However, even if you are a specialist in your industry, it doesn’t mean you have good business acumen. Let’s take an example of a group of engineers that developed an iris scan for a mobile phone platform. The initially decided to market the product through an app store directly to the population.

But the question begs, what on earth will the average Joe need an iris scan on his mobile for. In all likelihood nothing, but who may – the military, enterprises, biotech, etc…

Thing is, this group of engineers were excellent at what they did, but when it came to business, they didn’t know a business model from a hole in the wall.

So did these guys need a MBA? As individuals maybe not, you could clearly see that they had a passion for technology more than business, but one thing is certain, a MBA in the team would have been able to align them, point them in the right direction, save them what we can only assume were hours trying to formulate a distribution strategy that was faulty from the onset.

So to answer the question we started off, do I need an MBA. No, you don’t, but it would be a pretty good idea to get one, and if you’re not passionate enough to get it yourself, get someone on the team with one. Remember, the team that founds any project should complement itself.

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