BUNTU MAJAJA: Africa’s start-up paradox — playing small in a trillion-dollar game

Africa’s economic growth is too slow for its population boom. With GDP growing at just 3.5% annually while the population expands by 2.5% a year, the continent is barely inching forward at 1% per capita growth annually. At this rate it would take 140 years to reach India’s projected 2025 GDP per capita of $11,000 (R200,000), 200 years to match China, and 300 years to reach Germany’s standard of living. Something isn’t working.

This is not about talent — we have plenty. It’s not about ambition — Africa is home to some of the world’s most innovative entrepreneurs. The real issue? We keep making the same trillion-dollar mistake: we treat start-ups like traditional businesses and by doing so are holding back the very companies that could transform Africa’s economy. And while we hesitate, the rest of the world is moving ahead fast.

The global economy is being reshaped right now

Artificial intelligence (AI) isn’t the future, it is already here, and it is changing how industries operate, creating new global giants overnight. Agile companies that adapt quickly, such as Amazon, OpenAI and Alibaba, are keeping up and rewriting the rules of the global economy.

Apple, Google and Samsung became dominant because they moved fast while companies that hesitated became irrelevant. Africa cannot afford to hesitate again. If we keep treating start-ups like small “traditional” businesses, applying the wrong policies and expectations, we will miss our biggest opportunity for exponential economic growth.

One of Africa’s biggest economic missteps is confusing start-ups with small and medium-sized enterprises (SMMEs). The two are fundamentally different. SMMEs grow steadily, meeting local demand. A restaurant, a logistics firm, a retail shop: those are examples of this. Start-ups are designed to scale exponentially, disrupt industries and create new markets. Think Uber, Paystack, Temu and Shein.

We keep applying SME-style policies to start-ups, measuring their success by short-term job creation and profitability instead of their potential to scale and reshape entire economies. This is like expecting a rocket to climb a skyscraper floor by floor instead of launching into orbit.

Measuring start-up success all wrong

The standard measures such as direct job creation and earnings before interest, tax, depreciation and amortisation, while effective for overall business performance, miss the point regarding start-ups. Start-ups don’t exist to hire thousands of employees. They exist to remove inefficiencies, unlock access and solve problems at scale. And when they do, they create entire ecosystems in which millions of jobs follow.

Alibaba built an e-commerce ecosystem that empowered millions of merchants. Shein created a global supply chain that enabled small retailers worldwide. Temu reshaped logistics for global e-commerce. They didn’t create millions of jobs within their own companies. They created the infrastructure that made millions of jobs possible.

We have proof that African start-ups can create huge economic impact. M-Pesa unlocked financial inclusion, allowing millions to transact digitally, while Flutterwave enabled thousands of African businesses to sell online and scale globally. Andela didn’t focus on local employment but built a pipeline of African tech talent for the world.

Start-ups indirectly create jobs at scale, and exponentially. And yet we continue underinvesting in the very companies that have the power to transform Africa’s economy.

Start-ups don’t wait, they build

A common argument against investing in start-ups is that Africa “lacks the necessary infrastructure”. History has proven that start-ups don’t wait for infrastructure, they create it. Over a decade ago sceptics said e-commerce couldn’t work in Africa due to weak logistics. Start-ups built their own solutions that included local delivery networks, digital payment systems and pay-on-delivery models. Today e-commerce is thriving on the continent for the very reason that there are no legacy infrastructure systems.

Governments struggled for decades to expand national grids. Start-ups introduced mini-grid solar solutions and pay-as-you-go energy models. Now, millions have electricity because they built what was needed. Africa does not need to “wait for better conditions”. It needs to empower start-ups to build those conditions through access to funding and enabling policies.

Africa has the talent, ideas and market size to lead the next wave of global innovation, but unlocking this potential requires a fundamental shift in how we support start-ups. We must stop treating them like SMEs and recognise their power to scale industries, not just create local jobs.

Success should be measured by impact and scalability rather than traditional job metrics. Regulations must be reformed to enable, not restrict, rapid growth. Policymakers, investors and corporates need to align in driving this transformation. If we act now we can unlock trillions in economic growth. If we don’t, we risk falling behind as other regions take the lead.

Africa stands at a crossroads, facing a simple but critical choice — seize this moment to redefine its economy or risk letting another decade slip away. By empowering start-ups to scale and transform industries, the continent can drive exponential growth, but failing to do so means remaining on the sidelines while the rest of the world advances. The future isn’t waiting — it’s time to act. 

Majaja is CEO of the SA Innovation Summit.