In a breaking study led by Caylee Talpert - in collaboration with Nura Lab, SID Israel, the Israeli Forum for Impact Economy (IFIE), and the Israel-Africa Institute - social scientists discover what so often holds Israeli tech companies from succeeding in Africa.
The first of its kind, this study reveals that the key to succeeding at the $1 trillion opportunity in Africa isn’t high-end technology but adaptability and community.
The study spans over 100 reports, policy papers, and academic studies, creating a comprehensive picture of the African market over the past decade. They integrated hands-on experience and interviews with the leaders of seven Israeli tech companies that work in Africa.
Spanning fintech, renewable energy, agriculture, and digital health, the study deep dives into the Israeli failures and successes in Africa and the reasons behind them.
“This study is the first of its kind to provide Israelis who want to work in Africa with practical tools and frameworks to build strong foundations in these complex yet vital markets,” said Hagit Freud, CEO of Nura. “It will allow future tech ventures in Africa to properly understand the market they are entering and prevent further unexpected losses for companies.”
According to the study, success in Africa is not dependent exclusively on the technology but rather on local partnerships and investing in building a full ecosystem around a product. Companies must adapt to the differing operations, tailoring their service to the continent rather than expecting the continent to adapt to their technology.
The study gives examples of different successes and struggles that Israeli companies experienced on entering the African market, demonstrating clearly the conclusion of the study.
Success Stories
Companies such as Fido, Hazera, and Lumos Global have managed to break into the market through the methods suggested in the study, such as by creating local partnerships, adapting to African cultures and realities, and designing innovative business models.
For example, Fido has successfully provided over half a billion dollars in digital loans within Ghana and Uganda, empowering millions across Africa to take control of their finances and clear complex debt. They have adapted their algorithms to local credit conditions and help people to understand the local credit bureaus.
Hazera built a large market for African-adapted seeds that are sold through a variety of local distributors. Lumos Global has brought solar electricity to over one million people in Nigeria and Côte d’Ivoire by working with local mobile operators.
The common thread? All these companies have adapted to the African market. They are partnering with local businesses and workers, understanding the local markets, and changing their technology to work with it.
Ayelet Levin-Karp, CEO of SID Israel says success in Africa “depends on a deep understanding of local needs, strategic partnerships, and investment in supportive ecosystems.”
Israeli tech companies must adapt to survive and even thrive in these markets.
Challenges
This same need for adaptability has also posed a challenge to many Israeli tech companies. The study highlights the adversities faced by many other companies who were forced to close operations, such as MobileODT and PrePex.
MobileODT developed a groundbreaking tool to detect cervical cancer but struggled to create a sustainable business model in Africa that would satisfy their investors, eventually leading to them shifting focus to a US market - where they are used in 31 hospital systems across the country.
PrePax has a similar story of challenges, whilst their medical product had been adopted by governments and health agencies internationally, they failed to scale appropriately to the African markets and were eventually forced to close in 2019 despite the significant positive impacts they had on healthcare.
Neither MobileODT or PrePax were lacking a useful purpose and both have had incredible impacts on healthcare. Their failure came not from bad technology but a misunderstanding of the market.
Why is this important?
Entering the African markets is a $1 trillion opportunity. China, Russia, and Turkey are also competing for influence in Africa, and by winning this influence Israel could gain a positive partner. Right now only 1.5% of Israel’s exports are to Africa.
By increasing this Israel can gain a valuable asset - as Shiri Fein Grossman, CEO of the Israel-Africa Institute said, “strengthening Israel’s presence in Africa is a top strategic priority.” This study is a major step towards this partnership.