When e-commerce company Jumia wanted to go public in 2019, Africa’s most famous startup did not list in Lagos, Nairobi, Kigali or Johannesburg. I went to New York instead. This says it all about Africa’s startup problem. It’s not about money. It’s an exit issue.
African entrepreneurs can build world-class businesses, but investors are hesitant because they don’t know when or how they will get their money back. Initial public offerings (IPOs) remain extremely rare, and most exits occur in the form of trade sales, which are often unpredictable and slow to liquidate. Our stock exchanges also offer little reassurance, as liquidity is still limited outside of the big players.
Startups here can remain “startups” for decades without a clear path to maturity.
In contrast, in Silicon Valley, everyone knows the strategy and follows that strategy. Build quickly, scale, and be listed on an exchange or acquired within 5-7 years. Investors know they won’t be stuck forever. Not just money, but certainty drives the flow of billions.
If Africa wants its technology ecosystem to thrive, it will need to work in tandem with new funding. Yes, let’s mobilize government assets, pensions, banks and guarantees. But similarly, let’s change the rules of the game. Build an exit clarity framework that gives investors confidence.
This means you can reduce costs, simplify disclosure, and move quickly through the “growth IPO lane” on our exchanges. This means standardized merger templates that ensure regulatory review within clear deadlines.
This means a regulated secondary market where early investors and employees can sell shares before the IPO.
That means modernizing employee stock ownership rules so talent can build wealth.
And that means creating an anchor exit facility where major domestic companies, such as South Africa’s Public Investment Corporation and IDC, share the risk with development partners and invest in IPOs.
Evidence shows why these are important. More than 80% of Africa’s startup funding comes from overseas. The majority of African unicorns are funded by foreign venture capital, some have foreign co-founders, and some are incorporated outside the continent. This means that exit and wealth creation primarily flows overseas. When global shocks occur, whether it’s interest rate hikes in Washington or political turmoil in Europe, our businesses are shaken.
On the Johannesburg Stock Exchange, the small-cap board accounts for a small portion of daily trading activity, highlighting how limited liquidity is outside of blue-chip stocks.
In Kenya, the Growth Enterprise Market Segment, created to serve fast-growing companies, has struggled to gain traction, with only five companies listed as of 2024, more than a decade after its launch in 2013.
Indeed, some may argue that the exit already exists. Trade sales are happening, holding periods in Africa are shorter than in many markets, and capital is trickling in regardless.
That’s true, but only partially. Trade-in sales are an option, but they are often unpredictable. Regulatory approvals take time, and transaction terms are not always transparent enough for investors to incorporate into their models with confidence.
This is not a system that inspires confidence in our own pension funds or sovereign wealth managers.
The response, then, is not to simply wait for more money to arrive, but to fix the structures governing that movement. If we could walk into an investor room and say, “Here’s the company’s pipeline, here’s the capital vehicle, and here’s a clear five-year exit path,” we could completely change the conversation.
We can make African innovation not only attractive to foreign investors, but also bankable to African investors. South Africa is uniquely placed to lead this change. We have deep capital markets, competent regulators, and a pool of institutional investors looking for new growth opportunities.
The need is not just to invest in startups, but to invest in a new rulebook that makes exit a reality. If we are successful, we will have built more than any other fund. We will build a system that recycles African savings into African innovation and creates African wealth.
For too long, the debate has been framed around the lack of money. But the truth is not scarcity, but certainty. Investors don’t just pursue profits. They pursue predictable exits. If there is no exit, funds will be hesitant. When you exit, your funds will be doubled.
Yes, let’s mobilize capital and launch a new fund. But let’s do something even more difficult and courageous: change not just the money, but the rules. By doing so, we ensure that our unicorns are not built solely on foreign capital. In doing so, we give our own savers and pensioners a stake in Africa’s growth.
So we end up writing a new strategy where African innovation, African capital and African ownership all move on the same page. Because the real lesson of Jumia, after all, is not that Africa can’t create multi-billion dollar startups. That means that until we change the exit rules, we risk exporting wealth that should be owned and grown at home.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.
