Unlocking Africa’s trillion-dollar potential: why startups need more than just SME policies

AFRICA’S economic growth is too slow for its population boom. With GDP growing at just 2.5% annually, while the population expands by 3%, the continent is barely inching forward at 1% per capita growth each year.

- BUNTU MAJAJA

At this rate, it would take 140 years to reach India's projected 2025 GDP per capita of $11 000 (R200 765.29), 260 years to match China's, and 350 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 for Africa is home to some of the most innovative entrepreneurs in the world, says the writer. I Supplied

The issue is that we keep making the same trillion-dollar mistake.

We treat startups like traditional businesses and by doing so, we 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 isn't the future, it is already here and is changing how institutions operate, creating new global giants overnight. Agile companies that adapt quickly, like Amazon, OpenAI, and Alibaba, are ramping 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 is at a critical moment. If we keep treating startups 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 mistakes is confusing startups with small and medium-sized enterprises (SMMEs). The two are fundamentally different. SMMEs grow steadily, meeting local demand. A restaurant, a logistics firm, and a retail store are examples of this. Startups are designed to scale exponentially, disrupt industries, and create new markets. Think Uber, Paystack, Temu, and Shein.