Innovating Against the Odds: Zimbabwe’s Startup Scene in 2024

Prices aren't real without inflation.

Image source: Tatenda Mapigoti

Good morning entrepreneurs and tech enthusiasts.

Kendrick Lamar—ever heard of him? He is a hip-hop artist who does what is known as ‘conscious rap’. In 2012, he released an urban classic called Money Trees. In this song, he talks about how, if a dollar turned into a million, we would all be rich. Well, Zimbabwe is evidence that he lied because overnight, a dollar turned into a million and Zimbabweans woke up poor. Maybe just maybe he was talking about a different ‘dollar.’

To start anything, there has to be something to start with. From a distance, it's convincing that there is nothing to start with for a startup in Zimbabwe, but let's start this newsletter by applauding Zimbabwean startups that continue to try to keep the startup culture alive. I’m talking about companies like Cashlinq, Panamax, and Mugonat Systems, and many unknown champions doing everything in an unfavorable system sick from hyperinflation and heartbreaking sanctions.

Since 2003, Zimbabwe has grappled with economic sanctions from the US, EU, and other Western nations, compounded by hyperinflation in 2008. In a country where it is technically impossible to fit bread money in your wallet, it becomes extremely difficult to access funding as a startup because foreign investors are hesitant to inject capital into a notorious economy famous for absorbing all the money without a visible impact on its gross domestic product per capita. This creates unlimited hurdles for startup founders who have nothing to do with compromised fiscal and monetary policies that are tainting the country’s image on a global scale.

Currently, Zimbabwe uses a multi-currency financial system that includes both US and Zimbabwean dollars. However, statistics indicate that around 80% of local transactions are conducted in US dollars due to the declining value of the Zimbabwean currency.

Don’t be fooled by the economic status of Zimbabwe. Zimbabwean startups are not just sitting, crying, and waiting for a savior; rather, many have found success in niche markets at home and expanded into neighboring countries. Despite raising just $2 million collectively in 2022, according to Africa: The Big Deal, these startups continue to explore alternative avenues for growth.

According to Tinodashe Dubayi, head of digital transformation at fintech firm ClickNPay, "People look at offerings by fintechs and think, surely these can't be any worse when they look back to the early days of hyperinflation when savings would evaporate."

Among these products are Innbucks, which enables patrons to obtain spare change from eateries; Ecocash, a virtual wallet; and O'Mari, a super app that combines investech, insurtech, and mobile money.

However, due to hyperinflation, consumers' disapproval of digital wallets and other non-cash transactions is one of the factors hurting B2C startups in Zimbabwe's ecosystem. During an interview, Njabulo Sandawana, a digital entrepreneur from Zimbabwe, stated, "People here believe more in cash because, in the past, they have seen their savings in more stable currencies converted to Zim dollars by the government."

Signs of a light at the end of the tunnel.

Zimbabwe's macroeconomic situation has brought up many obstacles but has also created certain opportunities. In an interview, the creator of an ERP software startup stated, "We have seen an increase in demand for our products because of the difficulty in accessing and paying for enterprise software made in foreign countries."

Due to Zimbabwe's small addressable market, numerous B2C firms have been pushed to consider markets outside of the nation. A growing number of companies use Zimbabwe as a testing ground for their hypotheses and product market fit rather than producing goods exclusively for the local market.

Among them are Cashlinq and Tano Digital, which have grown to Botswana and Zambia, respectively. Other suggested locations for expansion are Mozambique, Malawi, and South Africa.

Zimbabweans have been ‘burned’ in the past, and they are also progressively becoming more drawn to alternative financial technology than to traditional banking institutions. Fintech digital wallets and blockchain technology are becoming more and more popular as people search for other options. Maybe just maybe international competitive advantage will always be a myth for Zim tech startups.