Operating procedures also remain burdensome. According to the TMF Group, an Amsterdam-based consultancy, getting electricity is a huge concern for businesses in South Africa and can take upwards of 200 days, which includes a string of lengthy procedures.

Similar instances are commonplace across Africa, with public utility companies notorious for their delays and poor service. Auxiliary services, meanwhile, including power, water, transport and supplies, are often inexplicably absent, making doing business impossible in some areas.

Complex Regulatory Procedures

Government regulations and tax laws also make investing in Africa difficult. The continent has made sweeping regulatory reforms in recent years in a bid to ease the burden on investors, but challenges remain. Unlike the US and UK, there are no tax incentives for angel investors, while local investors face insecurities about legal and tax frameworks.

Foreign investors, meanwhile, often need a local contact, or “sponsor”, in order to legally invest in many Africa countries. In addition, investors remain unsure about whether they can withdraw money from a country after making certain capital transactions.

Such trends have had a negative effect on investor sentiment in Africa. As Vinny Lingham, an angel investor says, ‘In South Africa, investor confidence in the government and the exchange rate is waning… Government policies are preventing foreign investors from actively backing South African startups in a meaningful way.’

Access to capital

Given these issues, it is not surprising investors often shy away from startups in Africa. Yet this often meanas startups face the addition problem of being unable to access and obtain capital, with many finding it impossible to gain enough funding, even with western support.

While many new companies are successful in raising tens or even hundreds of thousands of dollars initially, the challenge for entrepreneurs and investors is to grow their companies to a size where they become viable prospects for larger capital funds to snap up. So far, that isn’t happening, and investors and venture capitalists, if they are investing in Africa, are continuing to pursue the well-trodden roads that promise smaller but more stable returns.