Venture capital funding globally is contracting, but experts express hope regarding a new $1 billion investment fund established by the United Nations Development Program (UNDP) for Africa’s tech landscape, potentially shielding startups there from dwindling investments.
Richmond Ogigai, founder of WallX Africa, a Nigerian payment solution for African businesses, hailed the UN’s $1 billion Timbuktoo fund as a remarkable initiative, possibly the largest startup fund in Africa. He anticipates it will draw other investors, both local and international, and revitalize a funding ecosystem that has been sluggish.
Named after the fabled city of Timbuktu in Mali, the fund aims to invest in 10,000 startups over the next decade, according to Eleni Gabre-Madhin, UNDP Africa’s chief innovation officer. Gabre-Madhin, spearheading the initiative launched at the recent World Economic Forum in Davos, Switzerland, revealed plans for the initial $350 million to be housed in the Kigali International Financial Center, Rwanda. She aims for 1,000 of the 10,000 startups to become scale-ups, projecting their collective impact to reach a hundred million livelihoods and generate $10 billion in value for the continent.
Africa contributes a mere 0.2 percent to the global startup value despite its substantial young population of 1.3 billion, expected to double by 2050. Only seven unicorns—private startups with a combined valuation of $1 billion—operate in Africa, with six in fintech and one in e-commerce (Jumia), four of which are Nigerian.
During his recent visit to Nigeria, United States Secretary of State Antony Blinken met entrepreneurs in Lagos, acknowledging their endeavors in tackling significant challenges.
Although Africa boasts the world’s youngest population, with an average age of 25, it remains the poorest region, with approximately 431 million people living below the poverty line. President Paul Kagame of Rwanda pledged a $3 million contributory fund toward the Timbuktoo initiative, aiming to empower African youth.
In light of shrinking global venture capital funding, Timbuktoo aims to safeguard Africa’s startups, with Benjamin Dada, a tech-news platform leader in Lagos, highlighting high interest rates and an uncertain economic climate as challenges. Timbuktoo seeks to attract local investors as an alternative to foreign direct investment, targeting sectors within Africa’s tech ecosystem.
Africa, the most foreign capital-dependent region globally, receives investments primarily in Nigeria, Kenya, South Africa, and Egypt. Timbuktoo will focus on burgeoning sectors in selected hubs across Africa, facilitating collaboration with local venture capital firms familiar with the market.
Ogigai noted the success of this approach in shaping Nigeria’s tech ecosystem, emphasizing the importance of local investor participation to instill confidence in international investors.
Source: PassBlue