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TACKLING THE MISSING MIDDLE OF THE TECH INVESTMENT LANDSCAPE IN BENIN
- Benin aims to become a digital hub in West Africa, with tech innovation driving economic diversification post-transition to a lower-middle-income country in 2020.
- In 2024, Spiro, an electric motorcycle startup, secured $50 million, boosting Benin's startup ecosystem and positioning it as a key player in Francophone Africa.
- Despite commendable GDP growth and digital investments, Benin struggles with a 'missing middle' financing gap, hindering tech startups' scalability and sectoral growth.
- Challenges include limited venture capital interest, regional scalability needs, regulatory barriers, and a small domestic market impacting startup growth and access to capital.
- World Bank reports highlight Benin's digital infrastructure strides but point out deficiencies in digital skills, access to venture capital, and regulatory adaptations needed for fintech sector growth.
- To address these challenges, suggestions include adopting a Startup Act, enhancing local investor capacity, establishing public co-investment funds, and developing digital skills and workforce.
- Benin's regulatory framework allows for investment entities like venture capital companies, but challenges such as double taxation policies and infrastructure disparities inhibit startup growth and foreign investments.
- Initiatives like the Fonds d’Appui Catalytique de Solidarité (FACS) face hurdles, indicating the importance of structured fund management for effective support of startups and SMEs.
- Other Francophone African countries like Morocco, Tunisia, Rwanda, and Senegal offer insights on successful VC ecosystems, suggesting regulatory adaptations and funding strategies for Benin's ecosystem.
- Benin's strategic position for regional expansion and growing support infrastructure make it an attractive target for venture capital investments, emphasizing a need for policy reforms and local stakeholder collaboration.
- Through tailored policies, regulatory innovations, enhanced investor capacity, and infrastructure improvements, Benin can unlock its digital innovation potential and establish itself as a vibrant hub for tech startups in West Africa.
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