Inflation and funding have been identified as some of the major problems facing start-up companies in Africa, especially in Nigeria and Egypt. In a new report by research firm Flourish, 66% of founders in Nigeria listed inflation as a top stressor while it is 57% in Egypt.
The new report titled: ‘Passion and Perseverance: Voices from the African Founder Journey’, noted that Africa is home to a rising number of startup community with early-stage founders, investors, accelerators, and other stakeholders from across the venture capital ecosystem. However, exchange rate volatility, inflation and lack of funding continue to hamper the potential of these companies.
In compiling the report, Flourish said it conducted a survey, with responses from more than 160 startup founders across 13 African countries. It noted that start-ups in Nigeria and Egypt are confronted by some macroeconomic challenges as 59% of founders pointed towards the challenge of raising funds as a major issue, 44 per cent said inflation and currency devaluation while 40 per cent pointed our other external factors like global economic volatility.
The report acknowledges that the potential for the success of these start-ups is immense given the drive and motivation exhibited by their founders, however navigating the current macroeconomic conditions presents a major obstacle.
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It is perhaps in a bid to make things easier for these companies that the Nigerian government proposed a tax incentive for small scale businesses in the country.
