Zambia, a landlocked country in Southern Africa, is known for its rich natural resources, vibrant culture, and diverse wildlife. In recent years, the country has also been making significant strides in building a thriving startup ecosystem. With a population of over 17 million and a growing middle class, Zambia presents a promising market for entrepreneurs and startups looking to innovate and make an impact.
Despite facing some challenges such as limited access to funding and infrastructure, Zambia's startup scene is marked by creativity, resilience, and a strong community of entrepreneurs who are driving change and contributing to the country's economic growth. In this article, we will take a closer look at Zambia's startup ecosystem, explore some of the key players and initiatives, and examine the opportunities and challenges for startups in the country.
Government Support for Startups
The Zambian government has been taking steps to encourage entrepreneurship and innovation. In 2018, it launched the National Technology Business Centre (NTBC) to provide incubation services and support for startups. The NTBC offers a range of services, including business training, access to finance, and mentorship. The government has also created tax incentives for startups, including reduced corporate tax rates and exemptions for companies that invest in research and development.
Access to Finance
Access to finance is a significant challenge for startups in Zambia. The country's financial sector is still developing, and most banks require collateral, making it difficult for startups to access loans. However, there are a few initiatives to address this issue. For example, the African Development Bank has launched the Zambia Entrepreneurship Fund, which provides funding and technical support to startups. The fund has a focus on startups in the agribusiness, renewable energy, and tourism sectors, which are seen as key areas for economic growth in Zambia.
Infrastructure, including internet connectivity, is still developing in Zambia. This can be a barrier to startups that need reliable and fast internet access to run their businesses. According to a report by the World Bank, only 15% of Zambia's population had access to the internet in 2020. However, this is expected to improve in the coming years as the government invests in improving infrastructure and more internet service providers enter the market.
Zambia has a small but growing pool of young, skilled, and educated people who are interested in entrepreneurship. According to the World Bank, the literacy rate in Zambia was 72.3% in 2018, up from 68.5% in 2010. However, there is still a significant skills gap, particularly in areas such as software development and digital marketing. This can make it difficult for startups to find the talent they need to grow their businesses. To address this issue, the government has launched a number of initiatives to improve education and training, including the introduction of a new curriculum for primary and secondary schools that focuses on science, technology, engineering, and mathematics (STEM).
Incubators and Accelerators
There are a few incubators and accelerators in Zambia, such as BongoHive and Innovation Village, which provide support and resources for startups. BongoHive, founded in 2011, is one of the leading startup incubators in Zambia. It provides co-working space, mentorship, and training to startups. BongoHive has incubated over 120 startups, including Zoona, a mobile money transfer service that has expanded to other African countries. Innovation Village, founded in 2019, is another startup incubator in Zambia. It provides office space, training, and mentorship to startups, with a focus on women-led businesses.
Startup Events and Communities
Zambia has a growing startup community, and various events, such as hackathons, workshops, and networking events, take place regularly. These events provide opportunities for startups to meet and learn from one another. For example, Lusaka Startup Week, an annual event, brings together entrepreneurs, investors, and industry experts to share ideas and learn from one another.
Despite the challenges, there are also significant opportunities for startups in Zambia. The country's economy is diversifying, and there are emerging sectors that offer growth potential. For example, the government has identified agribusiness, renewable energy, and tourism as key sectors for economic growth. Startups that focus on these sectors can benefit from government support and incentives.
Zambia's strategic location in southern Africa also provides opportunities for startups. The country is a member of the Southern African Development Community (SADC), a regional economic community that aims to promote economic growth and development. This provides access to a market of over 300 million people in 16 countries, which can be attractive to startups that want to expand beyond Zambia.
In addition, Zambia has a young and growing population that is increasingly interested in entrepreneurship. This provides a large pool of potential customers and employees for startups. Moreover, the government has launched a number of initiatives to improve education and training, including the introduction of a new curriculum for primary and secondary schools that focuses on science, technology, engineering, and mathematics (STEM). This can help to address the skills gap and provide a better-educated workforce for startups.
Despite the challenges, there are already some success stories in Zambia's startup ecosystem. One of the most successful startups is Zoona, a mobile money transfer service that was founded in 2009. Zoona has expanded to other African countries, including Malawi and Mozambique, and has received several awards for its innovative business model.
Another successful startup is Zazu, a digital bank that provides financial services to individuals and small businesses. Zazu has received funding from local and international investors and has won several awards for its innovative approach to banking.
Another successful startup out of Zambia is Union54 which is an API platform that issues USD virtual and physical debit cards founded by a couple, Perseus Mlambo and Alessandra Martini. Union54’s API allows African software companies to issue and manage their debit cards without needing a bank or third-party processor. It was the first Zambian startup to be accepted to Y Combinator and has raised about $15m in total including a seed round of $3 million led by Tiger Global.
Another aspect that can be explored is the role of partnerships and collaborations in fostering the growth of Zambia's startup ecosystem. Startups in Zambia can benefit from partnerships with established companies, universities, research institutions, and other startups. Such partnerships can provide startups with access to resources, networks, and expertise that can help them to grow and scale their businesses.
One example of a successful partnership in Zambia's startup ecosystem is the partnership between BongoHive, a technology and innovation hub, and Barclays Bank Zambia. The partnership has provided startups with access to funding, mentorship, and other resources that have helped them to grow and succeed.
Moreover, collaborations between startups can also be beneficial. Startups can collaborate on projects, share resources, and exchange knowledge and ideas. Such collaborations can help to address the skills gap and promote innovation and entrepreneurship.
Overall, partnerships and collaborations can play a crucial role in building a thriving startup ecosystem in Zambia. By working together, startups, established companies, universities, and research institutions can create an environment that supports and nurtures innovation and entrepreneurship.
Despite the growth potential of Zambia's startup ecosystem, there are still a number of challenges that need to be addressed. One of the main challenges is access to funding. While there are a few initiatives to support startups, such as the Zambia Entrepreneurship Fund, the amount of available funding is still limited. Most banks in Zambia require collateral, which can make it difficult for startups to access loans. Moreover, investors, both local and foreign, are still hesitant to invest in startups due to perceived risks and uncertainties.
Another challenge is the lack of infrastructure, particularly in terms of internet connectivity. As mentioned earlier, only 15% of Zambia's population had access to the internet in 2020. This can make it difficult for startups that need reliable and fast internet access to run their businesses. Moreover, power outages are common in Zambia, which can further disrupt business operations.
The skills gap is also a major challenge. While Zambia has a growing pool of young, skilled, and educated people, there is still a significant skills gap, particularly in areas such as software development, digital marketing, and business management. This can make it difficult for startups to find the talent they need to grow their businesses.
Compare the Zambian startup ecosystem to other African ecosystems.
When it comes to the African startup ecosystem, there are several countries that have emerged as leaders in the region. Some of the most prominent startup ecosystems in Africa include Nigeria, South Africa, Kenya, and Egypt, which are often referred to as the "Big Four". However, other countries such as Uganda, Ghana, Senegal, and Morocco are also making significant strides in developing their startup ecosystems.
In terms of investment, startups in Zambia have received significantly less funding compared to those in the "Big Four" countries. According to funding data from Africa: The Big Deal, Nigerian startups raised over $1.2 billion in funding in 2022, followed by Kenya with over $1.1 billion, Egypt with over $800 million and South Africa with $555 million. In contrast, startups in Zambia raised only $14m in 2022 which is a fraction of what their counterparts in the "Big Four" received. Similarly, other African countries like Uganda ($70 million), Tanzania($80 million), Namibia ($15 million) and Cote d’Ivoire ($34 million) have also received more investment in their startup ecosystems compared to Zambia.
However, despite the low levels of investment, Zambia's startup ecosystem has some similarities to other African startup ecosystems in terms of the challenges and opportunities it faces. Like many African countries, Zambia has a young and rapidly growing population, which provides a significant market for innovative products and services. The country is also experiencing growth in the technology sector, with startups in fintech, e-commerce, and mobile apps gaining momentum.
In terms of the development of the ecosystem, Zambia is still behind the "Big Four" and some of the other African startup ecosystems like Uganda, Ghana, Senegal, and Morocco. However, the Zambian government has recognized the importance of entrepreneurship and innovation in driving economic growth and has taken steps to support the development of the startup ecosystem. For example, the government has established initiatives such as the National Technology Business Centre (NTBC) and the Innovation and Technology Development Fund (ITDF) to support innovation and entrepreneurship in the country.
In conclusion, the startup ecosystem in Zambia has shown potential for growth and development, despite facing significant challenges such as limited access to funding, infrastructure, and skilled talent. The country has a young and growing population, which provides a significant market for innovative products and services, and the government has taken steps to support entrepreneurship and innovation. While Zambia is still behind the "Big Four" and other emerging African startup ecosystems in terms of investment and development, the country has similarities with other African startup ecosystems in terms of the opportunities presented by a young and growing population and the growth of the technology sector.
Moreover, partnerships and collaborations have the potential to play a critical role in fostering the growth of Zambia's startup ecosystem, by providing startups with access to resources, networks, and expertise that can help them to grow and scale their businesses. With continued support from the government, private sector, and other stakeholders, the startup ecosystem in Zambia has the potential to become a hub for innovation and entrepreneurship in the region and contribute significantly to the country's economic growth and development.