A group of entrepreneurs are actively working with Zambia’s government to transform the southern African country into a regional start-up hub modelled on other small nations with thriving tech industries.

The Zambia Technology Sector Working Group has already met with government ministers at least seven times to discuss the business-friendly regulations needed to attract more tech firms, talent and capital, according to start-up founders involved in the plans.

“[Policy-makers] want Zambia to be the Estonia or Singapore of Africa,” says Mwiya Musokotwane, a founding member of the working group and CEO of Thebe Investment Management, which is building a $1.5bn mixed-use development called Nkwashi in the country’s capital, Lusaka.

The group’s aim is to work with various government departments to ensure tech entrepreneurs are “welcomed, valued and supported”. It is working to address common issues such as immigration policy and business licences, and hopes to make Zambia a testbed for new technologies. 

“There is no reason why technology shouldn’t be treated the same way as agriculture, because its potential to create jobs is very significant,” says Mr Musokotwane. 

Details of the policies are not expected until a conference being organised in May 2022. But there is significant political will: the government, led by president Hakainde Hichilema, who took office in August 2021, has been vocal about its intention to bolster entrepreneurship and the digital economy.

It has created the Ministry of Technology and Science as part of efforts to support the tech industry and reduce Zambia’s reliance on copper, which accounted for about 75% of the country’s export earnings in 2020.

While the start-up scene in the country of 19 million people is fledgling compared to larger African economies, entrepreneurs believe efforts to implement business-friendly regulation in Zambia could make it an attractive base for pan-African tech companies and talent.

Event momentum

The idea for the working group emerged from the June 2020 virtual African Renaissance Conference, which featured about 1500 African and global tech industry participants. Among the crowd were big names like payments giant Stripe’s CEO Patrick Collison and Balaji Srinivasan, a serial entrepreneur and angel investor.

“The conference was genuinely exciting,” recalls Perseus Mlambo, a CEO of Zambian-based digital bank Zazu Africa, who is also part of the working group. “It was the first time there wasn’t any bullshit about ‘Africa rising’. We actually discussed the challenges and what we are doing as an ecosystem [to tackle them].”

In the months following, discussions continued in the ecosystem aimed to build on momentum from the event. Then, in 2021, members of Mr Hichilema’s administration reached out to ask entrepreneurs about challenges they face and their recommendations for policies that would help address them.

“For me, as someone who is not from Zambia, that was incredibly encouraging,” says Mr Mlambo, who is originally from neighbouring Zimbabwe. “It allowed us to say we have an opportunity here because the government is listening.”

Building on the experience gained at Zazu Bank, Mr Mlambo co-founded another fintech company called Union54, which became the first Zambian start-up to graduate from renowned Silicon Valley-based accelerator Y-Combinator. In October 2021, it raised $3m in a round led by Tiger Global, the deep-pocketed US hedge fund, in what Mr Mlambo hails as a sign the ecosystem is gaining international recognition.

Vitalik Buterin, the 28-year old co-founder and inventor of Ethereum, the world’s second largest cryptocurrency, has also expressed his support for Zambia’s tech scene. This followed a 2019 visit to the country and a more recent virtual meeting with Mr Hichilema in 2022.

“Looking forward to seeing more blockchain and crypto projects make an impact in Zambia and in Africa more generally,” the crypto pioneer tweeted on March 29, 2022.

Dire straits 

Despite international support and intentions to implement start-up friendly regulation, Zambia-based entrepreneurs still face significant hurdles in building their start-ups.

Mr Mlambo, who was an early mover in Zambia’s ecosystem,
says that when he arrived in 2015, there was virtually no entrepreneurial activity.

“When we came here it was incredibly dire,” he says. “Other Zambian entrepreneurs can attest to how difficult the landscape was. For a while, the only funders in town were non-governmental organisations [NGOs] offering grant programmes. All the VC's who claimed to be investing in Africa were just really investing in Kenya, Nigeria, South Africa and maybe Egypt." 

This sentiment is echoed by other members of the ecosystem. Simunza Muyangana, the co-founder and director of entrepreneurship at BongoHive, Zambia’s first innovation hub in Lusaka, says that founders often have to travel outside the country to raise early stage capital. 

“Widening and deepening the talent pool is something that also needs to be worked on,” he adds.

In 2021, Zambian start-ups raised around $3m of funding, according to a report by VC firm Partech Partners, placing 20th out of the 29 African countries covered.

“Zambia has historically been very supportive of entrepreneurship  and backing female entrepreneurs,” says Lelemba Phiri, a principal and founder at Africa Trust Group, a Cape Town-based investment organisation, who has experience investing in Zambian start-ups.

Ms Phiri says that while the ecosystem is still young, with a small pool of investable businesses, compared to larger African ecosystems, the number of start-ups is growing as is ecosystem support. 

Maturing ecosystem

Despite Zambia’s insufficiencies in structured funding programmes from the public sector, Ms Phiri highlights the growing number of start-ups raising more than $1m such as microfinance company Lupiya and agritech Good Nature Agro as a sign the ecosystem is maturing.

Mr Muyangana, who supports a host of early-stage entrepreneurs at BongoHive, says that in recent years the tech community has certainly become more fertile and supportive.

When BongoHive started back in May 2011, most of its support came from organisations located outside Zambia, such as Google, Facebook, British charity Comic Relief and other institutions.

“Today, we look at partnerships that include local banks, local organisations, law firms, accounting firms and mentors that are local business people,” says Mr Muyangana. 

He adds that a local angel network established in October 2021 is giving start-ups even more access to funding. 

Zambia’s push to implement tech-friendly regulation comes amid recent regulatory action in other African countries. These include new taxes on digital businesses in Ghana and Cameroon, as well as Nigeria’s clampdown on fintech and cryptocurrency companies.

In April 2021, Zambia’s Securities and Exchange Commission and central bank brought in a regulatory sandbox, enabling innovative products, services and other emerging financial technologies to be tested in the country. This was done independently of the working group.

“Zambia’s policy infrastructure that exists, like no capital controls, makes it fairly easy for founders, particularly in fintech,” adds Mr Musokotwane. Building on this, the working group hopes incentivising software businesses to move
to Zambia will have positive downstream effects on the local population.

“Over time, the signalling effect to Zambians will be to train themselves to become software developers and be able to find work in these ecosystems,” says Mr Musokotwane.

This article first appeared in the April/May 2022 print edition of fDi Intelligence.