In a groundbreaking study led by Caylee Talpert, in collaboration with Nura Lab, SID Israel, and the Israel-Africa Institute, social scientists uncover what often prevents Israeli tech companies from succeeding in Africa. This first-of-its-kind study reveals that the key to tapping into the $1 trillion African market lies not in advanced technology but in adaptability and community engagement.
The study, which spans over 100 reports, policy papers, and academic studies, provides a comprehensive overview of the African market over the past decade. It incorporates hands-on experience and interviews with leaders from seven Israeli tech companies operating in Africa, covering sectors like fintech, renewable energy, agriculture, and digital health. The findings highlight both successes and failures, offering practical tools and frameworks for building strong foundations in these complex markets.
Hagit Freud, CEO of Nura, emphasized that the study equips future tech ventures with the knowledge to understand the African market and avoid unexpected losses. Success, according to the study, hinges on local partnerships and creating ecosystems around products, tailoring services to the continent’s unique needs rather than expecting the market to adapt to the technology.
Success Stories
Companies like Fido, Hazera, and Lumos Global have thrived by adopting these strategies. Fido has provided over half a billion dollars in digital loans in Ghana and Uganda, adapting algorithms to local credit conditions. Hazera has built a market for African-adapted seeds through local distributors, while Lumos Global has brought solar electricity to over one million people in Nigeria and Côte d’Ivoire by partnering with local mobile operators. These companies succeeded by understanding local markets, forming partnerships, and adapting their technologies accordingly.
Ayelet Levin-Karp, CEO of SID Israel, noted that success in Africa depends on a deep understanding of local needs, strategic partnerships, and investment in supportive ecosystems.
Challenges:
The study also highlights challenges faced by companies like MobileODT and PrePex, which struggled due to a lack of adaptability. MobileODT’s cervical cancer detection tool failed to establish a sustainable business model in Africa, leading the company to pivot to the U.S. market. Similarly, PrePex, despite its positive healthcare impact, couldn’t scale appropriately in African markets and closed in 2019. Their failures stemmed not from poor technology but from a misunderstanding of the market.
Why is this important?
The African market represents a $1 trillion opportunity, with only 1.5% of Israel’s exports currently directed there. As competitors like China, Russia, and Turkey vie for influence, increasing Israel’s presence in Africa is a strategic priority, according to Shiri Fein Grossman, CEO of the Israel-Africa Institute. This study provides a critical step toward fostering stronger partnerships and unlocking this potential.
