‘Why African startups must rethink Silicon Valley models’

African startups must rethink the business models they borrow from Silicon Valley and other global technology hubs, adapting their strategies to local infrastructure, purchasing power, access to capital and consumer behaviour, Mitchell Elegbe, founder and group chief executive officer of Interswitch, has said.

Elegbe argued that while global business ecosystems offer valuable lessons in technology, management and scaling, their underlying assumptions may not reflect the economic and operational realities of African markets.

He used his “Tropical Savannah” framework to explain why entrepreneurs must understand the environments in which they operate rather than reproduce successful foreign models without adapting them.

“The Tropical Savannah is not Silicon Valley. African entrepreneurs should learn from successful business ecosystems around the world, but the strategies and assumptions behind those models must be adapted to local market conditions,” Elegbe said.

Read also: African women founders won less than 1% of startup funding as Her Startup opens applications

His argument highlights a central challenge for Africa’s startup ecosystem: translating global business practices into commercially sustainable models in markets where infrastructure gaps, affordability constraints and differences in consumer behaviour can influence how companies acquire customers, generate revenue and expand.

For technology companies in particular, a business model that works in a mature market may require significant adjustments in Nigeria and other African countries. Differences in logistics, access to reliable infrastructure, customer spending power and financing conditions can affect operating costs, pricing strategies and the pace at which businesses can achieve scale.

The challenge is not necessarily a shortage of global knowledge or technology. Rather, it is determining which elements of established business models can work locally, which require modification and which may be unsuitable for the markets entrepreneurs intend to serve.

Elegbe’s position comes as African technology businesses seek to attract investment, expand their customer bases and build sustainable operations amid changing funding conditions. While international capital and technology have opened opportunities for local founders, the ability to translate those resources into businesses that reflect local demand remains critical.

Interswitch’s own development illustrates the approach advocated by its founder. The company began by addressing a specific problem in Nigeria’s payments ecosystem, developing an online, real-time payment system suited to the local market before building the people, technology, systems and partnerships needed to support its growth.

The experience points to the importance of starting with a clearly defined market problem rather than adopting a business model simply because it has succeeded elsewhere.

For African entrepreneurs, this could mean adapting pricing and distribution strategies to customers’ spending capacity, designing products around local payment habits and building operations that account for infrastructure limitations. It also requires understanding the market deeply enough to identify opportunities that global competitors may overlook.

However, local adaptation does not mean abandoning international standards or limiting businesses to domestic markets. Elegbe’s argument is that entrepreneurs should combine lessons from established business ecosystems with an understanding of the customers, economics and operating conditions that determine success in their own markets.

This distinction is particularly important as African startups pursue regional expansion. A model developed for Nigeria, for instance, may also require further adjustments before it can succeed in other African countries, given differences in regulation, purchasing power, infrastructure and consumer preferences.

Read also: After eight years advising startups, Irtus Consolidated now wants to fund them

Ultimately, the “Tropical Savannah” framework calls for a shift in how entrepreneurs approach growth: from replicating foreign success stories to building businesses around the specific problems and opportunities within their markets.

For Africa’s startup ecosystem, the implication is that global ambition alone may not be enough. Sustainable growth will also depend on founders’ ability to adapt proven business principles to local realities and build solutions that customers can afford, use and sustain.

Royal Ibeh is a senior journalist with years of experience reporting on Nigeria’s technology and health sectors. She currently covers the Technology and Health beats for BusinessDay newspaper, where she writes in-depth stories on digital innovation, telecom infrastructure, healthcare systems, and public health policies.