The African entrepreneurial landscape is maturing, with ecosystems across the continent showing remarkable growth in funding, innovation, and operational capacity. However, creating unicorn startups valued at $1 billion or more remains a herculean task, largely due to fragmented markets, constrained resources, and scalability challenges. I’ve often reflected on what it will take to build the next generation of African unicorns. While many emphasize the importance of scaling through traditional routes (organic growth, new market entries, or fundraising), I believe there is a growing case for mergers and acquisitions as a game-changing strategy. This has got me thinking: Could mergers and acquisitions be the new strategy to overcome these hurdles and build Africa’s next wave of unicorns?
For me, the real question isn’t just whether M&A can create unicorns, but whether Africa’s unique context makes it an essential path for growth and scalability.
Looking at Africa’s fragmentation, our continent is defined by immense opportunities and structural complexities. With 54 countries, each with its regulatory frameworks, currencies, and socio-economic dynamics, scaling across Africa is unlike any other region. This fragmentation can be seen as both the challenge and the opportunity. I believe M&A could be a powerful tool for startups to address this fragmentation. By strategically acquiring complementary businesses, startups can accelerate their regional footprint, build cross-border infrastructure, and integrate expertise tailored to local markets. Consider how much faster an African fintech could scale if it acquired a local startup with regulatory approvals and operational capabilities in new markets rather than starting from scratch.
In appraising this strategy appropriately, it will be good to draw lessons from the global ecosystem because Africa is not the first emerging market to grapple with these questions. Taking cues from regions like India and LATAM, where M&A has been a driving force behind unicorn creation. For Example, Flipkart’s acquisition of Myntra strengthened its leadership in Indian e-commerce and Nubank’s strategic acquisitions solidified its dominance in LATAM’s digital banking.
Africa has already started to see these dynamics emerge. Stripe’s acquisition of Paystack, Network International’s acquisition of DPO Group and recently Moniepoint’s strategic move to acquire KopoKopo, a Kenyan fintech. These scenarios exemplifies how strategic M&A can help expand market reach and consolidate regional influence. However, to build more African-led unicorns, I believe we need more intra-African M&A deals that merge operational synergies and local expertise.
However, it’s crucial to recognize that M&A is not a one-size-fits-all solution. Globally, over 70% of M&A deals fail to deliver value, often due to challenges such as cultural misalignment, conflicting goals, and poor execution. These challenges are even more pronounced in Africa, where regulatory complexities, limited funding options, and an underdeveloped M&A advisory ecosystem create additional barriers to success.
A common concern is the perception of M&A primarily as an exit strategy among African startups and their investors. This narrow view risks overlooking the transformative potential of mergers and acquisitions as growth enablers. Moreover, many founders are reluctant to relinquish control, fearing that an acquisition could dilute their vision or stifle the innovative spirit they nurtured from the start of their journey. For M&A to truly thrive as a path to unicorn status in Africa, it must be approached with a mindset that prioritizes collaboration, integration, and long-term value creation
With all of the above in context, certain changes need to happen If we are to embrace M&A as a viable path to unicorn creation, here’s what I believe needs to happen:
- Mindset Shift Among Founders – Founders need to view M&A as a strategic growth tool rather than a sign of weakness or loss of independence.
- Investor Support – VCs and private equity players must step up to provide capital and guidance on structuring and executing deals that create long-term value. I can confirm that this has started happening with early and growth-stage Fund Managers in Africa, but we need to do more.
- Regulatory Harmonization – Policymakers must streamline cross-border regulations to facilitate smoother M&A processes across African markets. This requires deliberate action by our regulators to come together to harmonize ease of business continent-wide, starting with regulatory harmonization and currency re-alignment.
- Ecosystem Maturity – We need experienced advisors, legal experts, and integration specialists who can help startups navigate the complexities of M&A.
I firmly believe that Africa’s unicorns will not emerge by simply replicating Silicon Valley models. Because our path must reflect the continent’s unique strengths and challenges. M&A offers a practical way to consolidate fragmented markets, unlock synergies, and compete globally.
However, it’s not a decision to be taken lightly as stakeholders in this ecosystem, founders, investors, regulators, and advisors must work collectively to build the frameworks, trust, and expertise that make M&A a powerful growth strategy rather than a speculative gamble.
The question isn’t just whether M&A is the right path. It’s whether we are ready to embrace its potential and address its challenges head-on.
With Africa’s startup ecosystem’s continuous maturity, M&A has the potential to be more than just a strategy, it could be the cornerstone of creating sustainable, scalable unicorns that truly represent the continent’s diverse innovation potential. Will African founders and investors seize this opportunity, or will the market favour alternative paths to scaling? The answer may well define the next decade of entrepreneurship on the continent.
What do you think? can M&A redefine the trajectory of African startups, or are other strategies better suited to the region’s unique challenges? Share your thoughts!