Sankalp Summit 2025

In the current global landscape, several challenges have emerged that significantly impact economic cooperation and development. Africa stands at a pivotal juncture, with unique challenges and opportunities shaping its entrepreneurial landscape.

Global Challenges

1. Rise of Nationalism: Countries are increasingly adopting inward-focused policies, prioritizing national interests over collective global action. This shift towards nationalism can undermine international cooperation, as seen in recent global events.
2. Wealth Concentration: The global economy is witnessing a trend where a small number of startups achieve valuations exceeding $1 trillion. While this reflects innovation and growth, it also raises concerns about wealth being concentrated among a select few, potentially exacerbating economic inequalities.
3. Emphasis on Perception Over Substance: There's a growing tendency for businesses to focus on cultivating a positive image rather than delivering genuine value. This approach can lead to superficial corporate practices that prioritize branding over substantive contributions to society and the economy.

"The tumultuous times present an opportunity for Africa to reset its perception on the global stage—it's not a dark cloud, but a silver lining."-Vineet Rai, Founder, Aavishkaar Group.

Africa's Opportunities

1. Democratized and Accessible Solutions: Technological advancements offer Africa the chance to develop solutions that are both democratized and accessible, addressing widespread challenges. For instance, the proliferation of mobile banking has extended financial services to millions previously unbanked, showcasing how innovation can drive inclusion.
2. Sustainable Business Models: Emphasizing sustainability, African startups are increasingly focusing on climate-resilient and environmentally friendly business practices. Initiatives like the Google for Startups Accelerator have highlighted African startups dedicated to combating climate change through innovative solutions.
3. Long-Term Strategic Planning: Transitioning from short-term "sprint" gains to long-term, marathon-like strategies is essential for enduring success. This approach encourages resilience and adaptability, enabling businesses to thrive amidst evolving global dynamics.

So how can we foster a more entrepreneur-friendly environment, so that the potential of African startups can be fully realized?

Here are some insights I gathered from the SANKALP Summit 2025:

Short-term: Simplifying the Fundraising Journey

African entrepreneurs, particularly those in the impact investing sector, encounter significant challenges in their fundraising endeavors. These obstacles include:

Challenges in the Fundraising Process

1. Demand for Impact Metrics: Investors often require detailed impact assessments, which can be resource-intensive for startups. These stringent impact reporting requirements sometimes make entrepreneurs deviate from their core businesses.
2. Lengthy Application Procedures: The complexity and duration of application processes can deter entrepreneurs, consuming valuable time and resources. A panel discussion by entrepreneurs revealed that it took them an average of 50 Hours to complete a single application!
3. Delayed Fund Disbursement: Extended periods between application approval and fund release can hinder business operations and growth. Several entrepreneurs shared stories of how they waited so long that by the time funds came through they had shut down their businesses. A waiting period of 18 months from approval to disbursement is unacceptable!

Mid-term: Bridging the Gender Investment Gap for Women Entrepreneurs

In Africa, women entrepreneurs represent a significant portion of the business landscape, with over a quarter of the continent's 44 million micro, small, and medium enterprises (MSMEs) being female-led.

Despite their substantial presence, African women entrepreneurs face considerable challenges in accessing finance. The estimated financing gap for African women across business value chains is $42 billion, including $15.6 billion in agriculture alone.

Two main systemic issues contribute to the financial disparities experienced by women entrepreneurs in Africa:

• Cultural Norms and Biases: Societal expectations often relegate women to traditional roles, limiting their opportunities to acquire assets or pursue entrepreneurial ventures. These cultural biases can deter women from seeking financing or being perceived as credible borrowers.
• Asset Ownership: Women frequently lack collateral due to unequal property rights, hindering their ability to secure loans. This lack of assets is a significant barrier, as traditional lending practices heavily rely on collateral.

Long-term: Enabling a Climate Finance Facility in Africa

Recent analyses indicate that climate finance flows to Africa have increased. Between 2019 and 2020, an annual average of $29.5 billion was committed, rising to $43.7 billion in 2021/2022—a 48% increase. Despite this progress, these figures represent only about 23% of the estimated $160 billion needed annually to fulfill Africa's Nationally Determined Contributions (NDCs) by 2030. This substantial financing gap underscores the urgency for enhanced efforts in mobilizing resources.

Mitigation projects, such as renewable energy ventures, often present clear revenue streams and shorter payback periods, making them attractive to investors. In contrast, adaptation projects, which aim to bolster resilience against climate change impacts, are critically underfunded. In 2019/2020, only $11.4 billion (39%) of the total climate finance was allocated for adaptation. Moreover, while global climate finance doubled to $1.3 trillion annually in 2021–2022, the share for adaptation decreased from 7% to 5% of total climate finance. This decline is concerning, especially given Africa's heightened vulnerability to climate change.

Some Strategies to Enhance Adaptation Financing that can unlock opportunities include:

1. Blended Finance Models: Combining public and private funds can mitigate investment risks associated with adaptation projects. Development partners can employ blended financing structures, incorporating private insurance and partial guarantees, to attract private capital.
2. Innovative Financial Instruments: Exploring instruments like green bonds, resilience bonds, and debt-for-climate swaps can provide alternative financing avenues for adaptation projects.

What can you do next as an entrepreneur?

Share your journey.

1. How has fundraising been for you?
2. Have you faced biases as a female founder while fundraising?
3. To what extent have you been able to access climate financing?

Want to know the best places to raise impact funds?

Check out Sunlight Reviews.

To assist entrepreneurs in identifying suitable funding sources, the platform offers a comprehensive database of funders across Africa. This resource provides unbiased reviews and insights from entrepreneurs, enabling entrepreneurs to make informed decisions about potential investors.