‘Africa’s Startup Success Hinges on Strategic Mergers and Acquisitions’, Says Izin Akioya

Mary Nnah

Africa’s startup boom has transformed the continent’s business landscape, with hubs like Nigeria, Kenya, South Africa, and Egypt driving innovation in fintech, e-commerce, healthtech, and agritech. However, despite this growth, startups face significant challenges, including fragmented markets, limited funding, and logistical hurdles. To overcome these barriers, industry experts emphasize the critical role of mergers and acquisitions (M&A).
Recently, serial entrepreneur, marketing expert, and global logistics leader Izin Akioya stressed the importance of M&A in shaping startup success across Africa.

According to her, startup failure rates in Africa, as in other regions are high. “About 70-90% of startups fail within the first 3 to 5 years, which is consistent with global statistics. In South Africa, a study by the Small Enterprise Development Agency (SEDA) revealed that about 70% of small businesses fail within the first year. In Nigeria startups face high failure rates due to funding challenges, with some reports suggesting that only 20-30% survive beyond 3 years.”

Izin pointed out that limited access to funding is one of the key factors contributing to high rates of startup failures in the region. Difficulty in finding product-market fit due to diverse consumer needs, fragmented markets, and poor infrastructure, such as unreliable internet and electricity compound the issue.

Continuing, Izin said, “Complex and inconsistent regulatory environments in some African countries create barriers to scaling, while limited access to just-in-time skilled talent, especially in tech and management roles, pose challenges for startups. Fluctuating currencies and economic challenges in some regions impact business sustainability.” Furthermore, she said, “Despite the media buzz around a prevalence of incubators, programs and funds targetting the sector, access to valuable mentorship and accelerator programs remains unequally distributed and highly contested.”

Izin said that even with the emerging hubs like Kenya and Egypt seeing increase startup success, mergers and acquisition as a growth accelerator remains nascent.

“An M&A strategy can serve as a potential exit or growth opportunity when securing significant funding is challenging. By planning for M&A, founders can position their startups as attractive acquisition targets or partners for larger companies.
By consolidating, startups can build more robust operations and enhance customer experiences. Mergers or acquisitions can help startups enter new markets by leveraging the existing infrastructure and networks of local companies. Acquiring smaller competitors or complementary businesses can help startups gain market share, technology, or talent, enhancing their value proposition.

M&A activity in Africa is still in its early stages and requires a nuanced approach that balances financial incentives with respect for local visions and leadership. Local entrepreneurs may hesitate to sell their companies, fearing loss of autonomy or mission dilution, while early adopters will need competent representation, legal, financial, and valuation advisory.

So, as Africa’s entrepreneurial landscape continues to evolve, embracing mergers and acquisition as a strategic lever could be the key to unlocking the continent’s full innovation potential.

Albeit, the future of Africa’s startups lies not only in ingenuity but also in collaboration and M&A is a powerful enabler of that vision”, she said.