Infrastructure improvement and capacity building is necessary in order to encourage foreign investment into startups and entrepreneurs in Africa, according to panelists speaking at the Entrepreneurs Incubator Hub at AfricaCom 2013.
Considering the barriers to investment in digital startups in Africa, the panelists highlighted that while the continent boasts a number of budding entrepreneurs with innovative ideas for the digital space, a lack of stable infrastructures and a perceived lack of entrepreneurial capacity are the main obstacles to attracting funding.
“The challenges to investments, the barriers, in Botswana is from a capacity side,” said Tshepo Tsheko, manager of First Steps Venture Centre at the Botswana Innovation Hub.
“Most foreign investors don’t feel that there are enough capable entrepreneurs,” said Tsheko. “We have a lot of great startups but they can’t access funding. So the barriers are still in place.”
According to Rostan Schwab, senior investment officer at the International Finance Corporation (IFC), continued investment into basic infrastructures such as power and internet is necessary to combat the “weak opening environment” that startups in Africa are faced with.
The lack of these basic necessary tools deters external investors significantly, Schwab said.
Schwab pointed to the fact that contrary to popular belief, only one third of growth on the African continent is attributable to natural resources and mining; while the majority of growth comes from consumer facing sectors such as technology.
With this in mind, Schwab said more support and more investment is necessary to break down the infrastructural, but also the regulatory barriers to funding coming into Africa.