South Africa’s first-place ranking reflected its relatively advanced start-up scene; it led the way in the categories of startup status and business friendliness.

“South Africa is home to one of most developed VC networks and the oldest start-up incubator on the continent, the Cape Innovation and Technology Initiative,” the report states. “The incubator is credited with supporting more than 3,000 entrepreneurs in its two-decade history. With ready access to VC funds, government grants, incubators and tech talent, South Africa is a vision of what other tech ecosystems could become.”

Kenya’s second-place reflected its immense growth in recent years. The East African country boasts the highest numbers of coding schools and is a forerunner in the African fintech space.

Nigeria had the highest volume of start-ups—over 750. South Africa came second, but its startups raised $241 million raised in 2020, compared to Nigeria’s $64.1 million.

The country was missing altogether in the top 10 rankings for categories that are critical to helping a startup thrive beyond its founding, including cost effectiveness and the level of country-wide tech talent. It also only ranked sixth for business friendliness. This highlights the frustrating state of conducting business in Nigeria, where entrepreneurs must contend with stifling government policies, infrastructural issues such as poor internet speed, access and connection, and a host of other systemic challenges.

“Although Lagos is renowned for its start-up ecosystem, there is a significant disconnect between the city’s tech ecosystem, its surroundings and the wider country, which suffers from chronically poor infrastructure and education, and recurring political instability and security issues,” the report highlighted.

Countries such as Morocco and Tunisia were praised for enacting reforms that have supported startup growth. Morocco won out in connectivity for its plans to improve the country’s digital infrastructure. Tunisia’s 2018 startup act, which positioned science and technology at the heart of its goals for economic transformation, was praised for inspiring similar acts in other Africa countries.

In Nigeria, by comparison, promising start-ups who have the potential to contribute significantly to the economy have had to stop operations due to the rapidly shifting position of the government. Bike-hailing apps, popular alternatives to Lagos’s traffic jams and poorly maintained road network, were banned last year for safety and security reasons by the Lagos state government; while the Central Bank of Nigeria has cracked down on crypto startups. These moves have prompted business leaders to approach the government for a more consistent regulatory approach.

“This challenging environment prevents Nigeria from excelling,” the report’s authors state.

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