Buntu Majaja
Africa’s economic growth is too slow for its population boom. With GDP growing at just 3.5% annually while the population expands by 2.5%, the continent is barely inching forward at 1% per capita growth each year. At this rate, it would take 140 years to reach India’s projected 2025 GDP per capita of $11 000 (R200 765.29), 200 years to match China, and 300 years to reach Germany’s standard of living. Something isn’t working.
This is not about talent - we have plenty. It’s not about ambition for Africa is home to some of the most innovative entrepreneurs in the world. The real issue is that we keep making the same trillion-dollar mistake. We treat startups like traditional businesses and by doing so, we are holding back the very companies that could transform Africa’s economy. And while we hesitate, the rest of the world is moving ahead fast.
The Global Economy Is Being Reshaped Right Now
Artificial intelligence isn’t the future, it is already here, and it is changing how industries operate, creating new global giants overnight. Agile companies that adapt quickly, like Amazon, OpenAI, and Alibaba, are keeping up and rewriting the rules of the global economy.
Apple, Google, and Samsung became dominant because they moved fast, while companies that hesitated became irrelevant. Africa is at a critical moment. If we keep treating startups like small ‘traditional’ businesses, applying the wrong policies and expectations, we will miss our biggest opportunity for exponential economic growth.
One of Africa’s biggest economic missteps is confusing startups with small and medium-sized enterprises (SMMEs). The two are fundamentally different. SMMEs grow steadily, meeting local demand. A restaurant, a logistics firm, and a retail shop are examples of this. Startups are designed to scale exponentially, disrupt industries, and create new markets. Think Uber, Paystack, Temu, and Shein.
We keep applying SME-style policies to startups, measuring their success by short-term job creation and profitability instead of their potential to scale and reshape entire economies. This is like expecting a rocket to climb a skyscraper floor by floor instead of launching into orbit.
Bridging the Gap: Budget Speech, Investment & Startup Growth
We also see the failure to distinguish between startups and SMMEs play out in our national economic policy. The 2025 South African National Budget highlighted this gap in a stark way. While Finance Minister Enoch Godongwana's speech addressed economic constraints, SMMEs received only passing attention. Worse still, the Department of Small Business Development was allocated a mere 2% of the total budget which is a fraction of what is needed to drive real entrepreneurial growth.
While efforts to expand the tax base are understandable, small businesses are now potentially facing added burdens, such as the proposed VAT increase. The additional 0.5% VAT hike in 2025/26 and another 0.5% in 2026/27 will place further financial strain on already struggling enterprises. Finding ways to balance revenue generation with pro-growth incentives for scaling businesses could strengthen long-term intended outcomes.
While public sector wages see increases, SMMEs are left in a precarious position, with many forced to cut jobs to stay afloat.
The reality is that the National Development Plan predicts that 90% of new jobs by 2030 will come from SMMEs. However, without substantial policy reform, targeted funding, and a framework that distinguishes scalable startups from traditional businesses, the potential for these companies to drive Africa’s economic transformation will remain unrealised.
Startup Scale Equation Thinks Beyond Jobs
Standard measures such as direct job creation and Ebitda, while effective for traditional businesses, miss the point when it comes to startups. Startups don’t exist to hire thousands of employees. They exist to remove inefficiencies, unlock access, and solve problems at scale. And when they do, they create entire ecosystems where millions of jobs follow.
Alibaba built an e-commerce ecosystem that empowered millions of merchants. Shein created a global supply chain that enabled small retailers worldwide. Temu reshaped logistics for global e-commerce. They didn’t create millions of jobs within their own companies. They created the infrastructure that made millions of jobs possible.
We have proof that African startups can create massive economic impact. M-Pesa unlocked financial inclusion, allowing millions to transact digitally. Flutterwave enabled thousands of African businesses to sell online and scale globally. Andela didn’t focus on local employment but built a pipeline of African tech talent for the world.
Startups indirectly create jobs at scale, and exponentially. And yet, we continue underinvesting in the very companies that have the power to transform Africa’s economy.
The Infrastructure Myth: Startups Don’t Wait - They Build
A common argument against investing in startups is that Africa “lacks the necessary infrastructure.” History has proven that startups don’t wait for infrastructure—they create it. Over a decade ago, sceptics said e-commerce couldn’t work in Africa due to weak logistics. Startups built their own solutions that included local delivery networks, digital payment systems, and pay-on-delivery models.
Today, e-commerce is thriving on the continent for the very reason that there are no legacy infrastructure systems.
Governments struggled for decades to expand national grids. Startups introduced mini-grid solar solutions and pay-as-you-go energy models. Now, millions have electricity because they built. Africa does not need to ‘wait for better conditions.’ It needs to empower startups to build those conditions through access to funding and enabling policies.
A Call to Action: Policies That Power Africa’s Next Leap
The 2025 Budget signals an ongoing effort to support entrepreneurship and address economic constraints. However, as Africa’s startup landscape evolves, policies can be enhanced to better accommodate the unique scaling needs of high-growth startups.
While traditional SME development remains a core driver of job creation, startups operate differently, serving as economic accelerators that create entire ecosystems. The conversation needs to shift toward measuring startups' success through impact, scalability, and industry transformation rather than direct employment figures alone.
By refining regulatory frameworks to enable rapid growth and aligning policymakers, investors, and corporates, Africa can unlock the full potential of its energetic youth-minds and demographics dividend.
The question is not whether Africa will grow, but how fast it can scale. With intentional collaboration, bold decision-making, and even ecosystem reforms the continent can drive exponential economic transformation. Now is the moment to align vision with action because the trajectory of the next decade is being shaped today.
Buntu Majaja is the CEO of the SA Innovation Summit.
*** The views expressed here do not necessarily represent those of Independent Media or IOL.
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