The African Union (AU) has launched the AU Startup Policy Framework and Model Law in a move to drive innovation across Africa.
This initiative is supported by Google and Africa Practice, and aims to tackle challenges faced by startups in Africa. It provides principles, recommendations, and sample clauses for AU Member States to update their national startup laws and regulations.
The Policy Framework and Model Law was created in partnership with Google and aligns with the AU’s goal to harmonize startup and innovation approaches.
Speaking at the African Union 6th Mid-Year Coordination Meeting, H.E. Albert M. Muchanga, AU Commissioner for Economic Development, stated.
“This framework will leapfrog the startup ecosystem in Africa.” He noted that small and medium-sized enterprises, including startups, are key to job creation.
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Subheading: Addressing Startup Challenges
Muchanga also highlighted startups’ significant role in the digital economy, employing 34,000 people across Africa. However, only seven out of 1,000 global unicorns are in Africa.
This is due to complex regulations, limited funding, a lack of skilled labor, and fragmented markets. The framework aims to address these issues and set a strong foundation for Africa’s startup landscape, expected to reach USD 10 billion by 2056.
Muchanga further emphasized the need for governments to support innovative ideas from Africa. He noted that by 2050, Africa will have 25% of the global population. “We need to create an environment that enables innovative minds to drive economic prosperity,” he said.
Charles Murito, Google’s Regional Director for Sub-Saharan Africa, highlighted global venture funding disparities. “Africa receives a small share of global venture funding.”
In 2023, Africa raised USD 4.5 billion from 545 venture capital deals, a 30% decrease from 2022. Female-led ventures received only 16% of the funding in 2023, up from 11% in 2020.
Murito stressed the need for diverse funding and support for startups led by women and youth. “The framework calls for action to better support these startups,” he said.
Marie Wilke, Chief Innovation Officer at Africa Practice, called the framework’s adoption a transformative phase. “We must keep momentum with regional and national legal updates.” She emphasized the importance of supporting small and new businesses for “The Africa We Want.”
The AU Startup Policy Framework and Model Law is a significant step toward creating a supportive environment for startups in Africa.
It aims to address regulatory and funding challenges and promote sustainable development, technological growth, and research across the continent.