ERITE Publications
The startup ecosystem in Zambia
- June 14, 2024
- Posted by: ERITE Editor
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The startup ecosystem in Zambia is characterized by several key statistics and insights:
- Global Startup Ecosystem Index: In 2022, Zambia’s startup ecosystem was ranked 109th globally, with Lusaka rising significantly to 734th place, an improvement of 143 places from 2021.
- Innovation and Business Environment:
- Global Innovation Index: Zambia ranked 121st in 2021, aligning with its status as a lower-middle-income country.
- Internet Penetration: While mobile networks cover 92% of the population, internet penetration is low at 14.3%, and only 29.6% of adults own smartphones.
- Startup Challenges:
- Infrastructure and Funding: The lack of digital infrastructure, particularly in rural areas, and limited funding options pose significant challenges for startups. For instance, internet usage is constrained despite high mobile coverage.
- Cultural and Regulatory Barriers: There is a general lack of role models and success stories, which affects the startup pipeline. Additionally, compulsory registration of IT professionals by the ICT Association of Zambia (ICTAZ) is seen as a barrier to innovation.
- Prominent Startups:
- PremierCredit: An online microlending and investment platform that operates in Zambia and Zimbabwe, PremierCredit is exploring opportunities across Southern Africa and has raised significant venture capital funding.
- Lupiya: Provides financial services to individuals, small businesses, and female micro-entrepreneurs. Despite raising VC funding, the company highlights the need for more investment to facilitate rapid growth.
- Funding and Investment:
- Venture Capital: In 2021, only three companies received a total of US$3 million in funding, which increased to US$30 million in 2022, though this remains low compared to more established markets.
- Zambian Business Angel Network (ZBAN): Founded in 2020, ZBAN connects angel investors looking for startup opportunities, having funded six projects by 2023 with deal sizes ranging from US$1,000 to US$100,000.
- Government Initiatives:
- Regulatory Sandboxes: The government has shown openness to innovation through initiatives like regulatory sandboxes for digital finance services, enhancing the environment for startups.
- Startup Legislation: Efforts are underway to pass startup legislation, aiming to create a more structured and supportive ecosystem.
- Gender Representation: Women are underrepresented in the startup space, with most applicants for innovation events being male. Efforts to increase female participation have not yet yielded significant results.
Overall, while Zambia’s startup ecosystem is developing, it faces several challenges, including digital infrastructure, funding, and regulatory barriers. However, the government’s support through regulatory sandboxes and proposed startup legislation indicates a positive outlook for future growth and development.
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