One of the definitions of “moribund”, a word I stumbled upon while attempting to piece together an alliterative headline for this article, is “lacking vitality or vigour”, which would perfectly describe the subject of the article – Mozambique’s tech startup scene.
I’ve probably spent more time in Mozambique – and Maputo in particular – than most observers of the African tech space, living there for a period of months, and on the face of it there is plenty to recommend it. Maputo has more the vibe of a European city than an African one, with its streetside cafes and bars. It is more affordable than most, too, with extraordinarily cheap internet, and within easy reach of excellent beaches and other various activities.
Yet whereas these kind of characteristics, the appeal of a good, affordable lifestyle, have helped turn cities like Cape Town into major tech hubs, Maputo remains a backwater – used by the likes of Angel Fair Africa and Seedstars for events. Admittedly, it suffers for being a Lusophone African nation, as we have discussed here, but whereas in countries like Angola there are plenty of green shoots to suggest a brighter future for startups, in Mozambique there is little reason for optimism.
Ecosystem? What ecosystem?
One of the country’s few tech success stories, relatively speaking, is e-commerce startup Izyshop. Founded in 2015, Izyshop allows Maputo’s residents and businesses to shop for groceries online. The startup launched self-funding its own inventory, and was turning a profit within its first year of operation. Last year, it raised funding, no mean for a Mozambique-based startup.
Chief executive officer (CEO) Titos Munhequete is very negative about the state of play within the country’s startup ecosystem – if you can call it that at all. Firstly, funding is incredibly tough to get.
“This is mainly because the market is quite small and a bit volatile. Also, aside from the language barrier, the legal system is different from those of the main pull of capital, which is mostly Anglophone,” he said.
Startups also lack of access to enough incubators and accelerators, Munhequete said, while the government does not really understand the startup space.
“Unfortunately there are quite a few tax and legal barriers to overcome. The focus is around the large oil and gas projects, which leaves startups without proper attention. But the community is pushing towards having more reforms done soon,” he said.
All of this means there is little reason why investors and corporates should look at Mozambique as an attractive market from a tech perspective. Even if they suddenly started to, it would not necessarily be a good thing for the local scene at this point.
“External investment brings different types of demands that most of the startups are not able to deal with. Unless it is a startup operating in multiple markets. I think at this stage the emphasis should be on developing a local angel investor community, and once a business is ready to expand across countries then have an external investor coming in,” he said.
A scene still in its infancy
Perhaps the only other local success story is UX Information Technologies, which among other things is the company behind Biscate, an app that connects workers in the informal sector to customers through USSD and web technologies.
Co-founder Frederico Silva is an evangelist for the Mozambican startup scene, with UX having acted as an ambassador for Seedstars World in the country, and slightly more positive than Munhequete. For him, it is all a question of stages. The local startup scene is, he says, only around five years old, and so is still very much in its infancy.
“Most of the local startups are driven by college students with a strong drive to innovate and ability to develop, but who lack the business savviness to grow the company to a sustainable position,” Silva said.
Expat-led startups, he said, have shown greater potential, given they have a more mature approach and are able to access more funding. Slowly but surely, however, there are signs of a support ecosystem developing in the country. The government hosted an ICT business idea competition, the American Embassy has hosted hackathons, and incubators and co-working spaces have started to open, most notably Orange Corners.
Silva said more still needs to be done, however.
“The legal framework is not enabling for startups, especially from a fiscal and tax perspective. Mozambique’s business environment and cultural barriers tend to isolate the country from other markets and investment opportunities. The country’s private sector has a conservative business approach and lack of an investment culture,” he said.
There are several players that are required to play their part if these hurdles are to be overcome.
“The private sector will need to become more dynamic, with special focus on MNOs and the banking industry, in order to spur innovation and foster a forward thinking culture,” said Silva.
“The government will need to align policies and adapt the tax structure and legal framework to make it a startup-friendly environment. Entrepreneurs will need to acquire basic business skills and think and build products that can be relevant beyond Mozambique.”
This is asking a lot, but it is vital the Mozambican startup sector does start to grow.
“Mozambique’s economy has been hurt recently and businesses took a hit as a consequence of it. The country has a mere 700,000 formal jobs for a 12 million labour force, and if scalable, startups can play a relevant role in absorbing a percentage of these people,” said Silva.
The road ahead will be long, but there may yet be hope for Mozambican entrepreneurs. Silva believes there will be benefits to hanging in there down the line.
“I believe the potential is in matching the country’s vast talent in tech with business savvy individuals that can link skill to opportunity and pilot solutions in a soil that’s off the radar,” he said. “It should take the country an additional five years to see its economy bouncing back and paving the way for the startups that set foothold in the market to succeed.”