Experts warn African governments against interfering with startup ecosystem

Industry experts that spoke at VC4Africa’s Investor Summit at DEMO Africa 2014 in Lagos, Nigeria have warned Nigerian government and those of other African countries not to upset the nascent ecosystem that is being built for startups. They urged governments to limit their involvements in the industry to promulgating policies and protecting intellectual properties.

“Government has an enormous role to play to ensure that any digital innovation that is created in the country is protected and generates wealth for the innovators of that innovation,” said Fernando de Sousa, General Manager, Microsoft Africa Initiative.

According to him, investors can invest in companies and create new businesses, but if every innovation being created is not protected by the laws of the land, they can be stolen. Preventing this he said is the most critical role the government ought to play in enabling the investment climate in Africa.

de Sousa said another role African governments can play is enabling cross-border trades and creating opportunities for entrepreneurs in their country to extend their startup businesses across border.

“I think Africa is the worst case scenario where governments argue with each other over issues that are no longer relevant,” he said.

In his remark, Tomi Davies, a member of Lagos Angels Network said African governments can also be involved in promoting angel literacy and education.

“This refers to ability to understand the different things involved in the angel investment and startup ecosystem. Government can also be involved in promoting collaborations,” he said. “The ability to see pan-African players is going to be a critical component of the ecosystem because what we are finding with the mobile and social platforms being increasingly available is the need to promote collaborations.”

He however expressed pessimism about the concept of joint investments involving African governments.

“This is simply because the level of education people have about angel investment is at an early stage and precludes geographic disparity. You have to be there when the poor guy (entrepreneur) just had the door slammed in his face,” said Davies.

Ben White, VC4Africa, moderator of the sage panel on “Moving forward – the roadmap for the future” added angel investors in smaller African markets can network with counterparts in larger African markets to facilitate cross-border investments.

“For example if there are angel investors in smaller markets like Cameroon where the market is not big enough, and they are looking to Nigeria, they can interact with investors in Nigeria for various forms of support and partnerships. This is an area angel investors from across Africa can gain a lot from each other and we cab begin to see increasing number of Nigerian startups in Kenya and vice versa,” he said.

He added that there are also opportunities to showcase best practices.

“iDEA’s collaboration with the Nigerian government is a potentially interesting model for other African governments that are thinking about how they can approach and support the startup ecosystem in their countries,” said White.

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