By Badri Zolfaghari*, Mikael Samuelsson*, & Susanne Nilsson*
When people talk about entrepreneurship in Africa, the conversation usually starts with everything that’s missing. Limited funding. Weak infrastructure. Poor internet connectivity. Unreliable electricity. Bureaucracy. Corruption.
The implicit message is that African entrepreneurs succeed despite these disadvantages.
These challenges are real. But they are only one part of the story.
We study entrepreneurship, innovation and team building in Africa. In a recent paper we followed ten technology startups in South Africa that were developing digital solutions in under-resourced communities. They were involved in a range of activities, including:
- improving financial services for people excluded from the banking system
- using virtual reality to improve science and technology education
- developed digital addressing systems for informal settlements
- creating platforms connecting waste collectors to the formal recycling economy.
We spent over two years interviewing their founders, observing how their businesses evolved and examining how they responded to changing conditions.
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One pattern emerged consistently. These ventures were developing a distinctive way of innovating that depended on five interconnected practices:
- embedding themselves in local communities to build trust and understand people’s needs
- designing solutions around local realities
- adapting quickly when circumstances changed
- creating digital technologies to connect people and opportunities in new ways
- moving comfortably between informal community networks and formal institutions. These included banks, schools, corporations and government agencies.
These practices enabled entrepreneurs to build businesses that were deeply rooted in their communities while also connecting them to wider markets and institutions.
Our findings suggest that policymakers should ask what makes African entrepreneurs uniquely effective rather how African entrepreneurs can become more like entrepreneurs elsewhere.
Beyond the ‘deficit’ story
Technology entrepreneurship is often discussed through the lens of places like Silicon Valley. There, startups typically emerge within relatively mature innovation ecosystems. They are supported by dense networks of investors, research universities, specialist talent and established technology firms. Entrepreneurs rely heavily on networks and relationships. But the networks tend to be concentrated within formal innovation institutions.
When this ecosystem is treated as the benchmark, entrepreneurship elsewhere is often understood in terms of what is missing.
By contrast, across Africa, entrepreneurs are building businesses that combine community relationships, informal economic practices, digital technologies and formal institutions to create opportunities that none of these systems could provide on their own.
The result is a different model of entrepreneurship.
Innovation starts with trust, not technology
One of the strongest patterns we observed was that successful startups rarely began by trying to disrupt communities. Instead, they embedded themselves within them.
Education startups worked alongside teachers before introducing new technologies into classrooms. Financial technology companies spent months building trust with informal traders. Legal technology firms partnered with community advice centres before digitising legal services.
Rather than assuming they knew the answers, founders invested time understanding how people already solved problems. Only then did they introduce technology. This contrasts with a common image of startups as fast-moving disruptor. In these examples entrepreneurs arrive with ready-made solutions.
We also found that entrepreneurs constantly moved between local knowledge and external opportunities. This included partnering with banks, universities or multinational companies to access expertise and investment.
They also showed adaptability. Some had to redesign their businesses after robberies and COVID-19 lockdowns. In some cases regulatory barriers made existing approaches impossible.
Digital technology as a bridge
Technology wasn’t simply the product these ventures were selling. It became the bridge connecting different worlds. Examples included:
- a fintech company. It used digital identities to help informal workers access financial services that had previously excluded them.
- an addressing platform. This allowed residents of informal settlements to receive deliveries and emergency services in places invisible on digital maps.
- educational ventures. These combined community spaces with online learning so children without access to equipment could experience technologies.
Building bridges instead of choosing sides
Entrepreneurship is often presented as a choice between the informal economy and the formal economy.
Our research found something quite different.
The most successful ventures operated comfortably across both. They worked with local community leaders while collaborating with multinational firms. They built trust through face-to-face relationships while scaling through digital platforms.
They understood township realities while connecting customers to national and global markets. Rather than choosing one world over another, they built bridges between them.
Why this matters
Africa has one of the world’s youngest populations and one of the fastest-growing digital economies. Governments and investors are increasingly looking to entrepreneurship as a driver of economic growth and job creation. But policies are still mainly being built around the assumption that entrepreneurs simply need better versions of institutions developed elsewhere.
But we argue that support should strengthen the ability of entrepreneurs to connect:
- communities with larger markets
- formal institutions with informal networks
- local knowledge with global opportunities.
That means investing in infrastructure, finance, partnerships, community organisations and digital ecosystems.
Lessons for the rest of the world
The conditions facing entrepreneurs everywhere are becoming more uncertain. Supply chains are fragmenting. Artificial intelligence is reshaping industries. Climate change is creating new disruptions. Markets are increasingly unpredictable.
In many ways, businesses across the world are beginning to face the kind of complexity that entrepreneurs in African townships have navigated for years. In our view African entrepreneurs can offer lessons in how to innovate in complexity (hyperdynamic context, as we call it).
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* Senior Lecturer in Organisational Behaviour, University of Cape Town
* Professor Entrepreneurship and Innovation, University of Cape Town
* Researcher
