Often, entrepreneurs have indicated that a business location plays an active role in determining whether or not it will succeed. That is, choosing the right country/city can mean the difference between success and failure, as ecosystems have been described as a major opportunity for businesses today.
Startup ecosystems are emerging all over the world, as ambitious founders and creative startups want to find unique ways to find a great product market that can solve a large percentage of the world’s problems.
However, innovative ideas can only succeed within an ecosystem designed to support and nurture them, which implies that entrepreneurs need enabling environments with the most developed ecosystems to launch their startups.
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Map of the global startup ecosystem and research hub, Startupblink has released its 2022 global ranking of the world’s most startup-friendly cities. During its research, the center gathers data from over 60,000 startups and measures ecosystems based on the number of startups (quantity), quality, and their business environment.
According to the ranking, only one city in Africa, namely Lagos, entered the global top 100, making it the only African city to ever achieve this ranking.
Here is a list of the Top 5 African cities with the most developed startup ecosystem
- Lagos, Nigeria: The city of Lagos has been described as the heart of Nigeria’s growing startup ecosystem, with its startup ecosystem valued at $9 billion. The city rose from 41 places to 81st in the world and is the first African city to enter the top 100 of the ranking. Lagos is also ranked 24th globally in the food tech industry and 43rd in e-commerce and retail. The city has made a name for itself as a technology hub, rapidly advancing towards a 24-hour economy, which generates 10% of Nigeria’s total GDP of $432.3 billion. For startups, Lagos appears as a land of promise and a vibrant tech ecosystem brimming with energy and dynamism. It is no surprise that the city remains a top destination for investors and businesses as it gives them the opportunity to succeed.
- Cape Town, South Africa: Home to nearly two-thirds of all startups in South Africa, the city is not only a beautiful tourist destination, but also has a thriving startup ecosystem. Most of the startups located in Cape Town are technology driven and solve the myriad of problems unique to the African continent. The availability of capital, talent, and supporting organizations in the city makes it easy for startups to thrive. The city also has a strong network of venture capital and investment, and is also one of the most important IT centers on the African continent. In 2011, the city completed a 500 km fiber optic network project, which provides broadband services at lower cost.
- Johannesburg, South Africa: The city of Johannesburg, affectionately known as “Joburg”, which ranks number 2 in South Africa, has been described as an ideal location for Fintech, Software and Data and Transportation startups. The city, home to some of Africa’s leading banks and financial institutions, has its ecosystem valued at $572 million in 2021, with an estimated 450 startups in the city, of which around 30% are in Fintech. It has a population of around five million people with over 220 programs providing support for startups. Over 70% of South African businesses are located in the city as it generates 15% of South Africa’s wealth.
- Cairo, Egypt: In Egypt, the startup ecosystem is largely limited to Cairo, with the rest of the country’s cities offering very few opportunities. Cairo has a population of around 26 million, which has been attributed as the main strength of the city’s ecosystem, speaking of startups, allowing them to easily test products and grow rapidly. The city has been described as welcoming to young entrepreneurs, allowing them to start businesses with very little financial resources, while offering a wide range of incubators, accelerators and coworking spaces for start-ups. Cairo ranked as the top ecosystem in the Middle East and North Africa region in 2021. The city marked an overall 60% increase in venture capital funding rounds over the past five years and in 2021.
- Nairobi, Kenya: The city of Nairobi was named 3 years ago as the second best city for startup ecosystem in Africa, earning it the name “Silicon Savannah”. The startup market in the city is booming as entrepreneurs are starting to see Nairobi as a viable option where they should set up their business. Interestingly, global tech giants like Google, Microsoft and Samsung all have offices in Nairobi. In recent years, Nairobi has developed a thriving startup scene and made a name for itself as a technology hub. The city has been described as the “mother of mobile money” and a “mecca” of innovation and diversity. With a population of around 4.5 million, Nairobi has been ranked as the sixth wealthiest African city and a startup-friendly place.