South Africa is supposedly Africa’s tech frontier of the future
South Africa is supposedly Africa’s tech frontier of the future
South Africa has been ranked first in the fDi's African Tech Ecosystem of the Future ranking for 2021/2022. It took the top spot in several critical categories, including startup status, business friendliness, and economic potential.
fDi Intelligence released the report in collaboration with research firm Briter Bridges. It is fDi Intelligence's inaugural African Tech Ecosystems of the Future ranking.
According to fDi intelligence, the ranking examines Africa's technology ecosystem and its future potential.
The survey collected data through the use of "specialized online tools, fDi Markets and fDi Benchmark, as well as supporting data from Briter Bridges."
Seventeen African countries were examined in total. The criteria for selection included countries with more than 50 startups, investments totaling more than $500,000 in 2019 and 2020, and more than nine technology clusters.
Economy Stats
Economic potential, business friendliness, human capital and lifestyle, cost-effectiveness, and connectivity all played a role in the ranking.
Additionally, a total of 86 data points were used, with each country earning a maximum of 25 points. Several data points of note included GDP per capita, population, the ability to attract and retain talent, and the cost of electrical connections.
Kenya finished second overall, behind South Africa. Additionally, it outperformed all 17 countries in the category of human capital and lifestyle. Egypt came in third overall, but had the best strategy for Foreign Direct Investment (FDI).
Tunisia was named the most cost-effective country despite finishing fifth overall, while Ghana took fourth place.
While Nigeria was ranked first in terms of startup activity, it was ranked sixth in terms of overall rankings.
Although Lagos has a renowned tech startup ecosystem in Africa, the report acknowledges that the city's ecosystem cannot progress beyond its current state due to the country's poor infrastructure. According to the report, "this difficult environment precludes Nigeria from excelling in any category of the fDi Tech Ecosystems of the Future ranking."
While these submissions are accurate, a 2019 report by StartupBlink ranked Lagos as Africa's best startup ecosystem. This casts doubt on the metrics used to define a favorable startup ecosystem.
Conclusion
Africa, in general, has a lot of catching up to do in terms of technology startup investment. While impressive, the tech startup landscape pales in comparison to other emerging tech ecosystems, with South America serving as a good example.
Latin America raised $4.6 billion in startup funding in 2019, according to crunchbase news. African startups raised $1.3 billion during the same period, according to Quartz Africa.
Citing a report by Disrupt Africa that shows a meteoric increase in startup funding — from 125 to 397 between 2015 and 2020 — fDi Intelligence maintains that Africa's progress is astounding, despite the large gap.
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