Easier Said Than Done

Insights from the past decade on how Israeli technology companies can build scalable, sustainable and financially successful businesses in Africa.

Research Team: Caylee Talpert (Research Lead), Dr. Aya Navon Wurgaft, Yonatan Bukhdruker, Reuven Sebty, Hagit Freud

Partners: Israel Africa Relations Institute, SID-Israel, Israeli Forum for Impact Economy (IFIE) , and Nura Global Innovation Lab

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Executive Summary 

Africa’s rapid development and market potential have drawn increasing interest from Israeli technology companies seeking new arenas for growth and impact. In recent years, there has been a growing focus on the role of the private sector and the opportunities Africa presents for Israeli companies operating in sectors such as IT, water and sanitation, agriculture, energy, and healthcare.

This study moves beyond why these markets offer an opportunity to ask how Israeli technology companies can succeed in these markets. i.e. build scalable, sustainable, and financially viable businesses in Low- and Middle-Income Countries (LMICs) in general and Africa in particular, while delivering meaningful impact in important sectors relating to international development (Development Impact). Through an extensive literature review and interviews with executives from seven Israeli companies successfully managing to operate and scale in Africa, the research identifies five key strategic themes essential to business success in these complex environments:

1. Strategic Partnerships

In markets characterized by institutional voids and trust gaps, partnerships, especially with NGOs, governments, and development actors, can provide critical market access, legitimacy, operational capacity, finance and more. Companies emphasized the importance of presence on the ground, and long-term, trust-based relationships, noting that alignment of incentives and timelines between business and non-profit partners is essential but not easy.

2. Ecosystem Creation

Israeli technology companies often find themselves operating in underdeveloped ecosystems with gaps in infrastructure, financing, awareness, and regulation. Many have responded by investing in broader sector-building activities such as training customers and employees, creating awareness, and shaping policy environments. While these investments can support long-term growth, they require careful balance and clear prioritization to stay focused on their core business goals and vision.

3. Localization

Companies that succeed in Africa are those that embed themselves in local contexts, spending time on the ground, hiring local staff, listening, and adapting. The most effective approaches combine local knowledge with global best practices, allowing firms to co-create and deliver products that are both relevant and scalable.

4. Business Model Innovation

Access and affordability are major barriers for low-income consumers. Successful companies were able to leverage technology together with innovative business models to overcome these barriers. They employed lean operating models, flexible revenue streams, and creative financing mechanisms to reach underserved markets. However,  some  struggled with premature scaling and lacked structured experimentation to validate their models, suggesting a need for more disciplined iteration and learning.

5. The Right Financing

Investor alignment plays a critical role in long-term success. Companies noted the importance of strategic investors with prior experience in Arica and that were prepared for longer investment horizons required for patient growth strategies. Other firms relied on  internal financing that enabled more flexibility that enabled them to handle the complexities of these markets.

Key Take-Aways

1. ‘Unexpected’, external factors are to be expected: Expect the unexpected: Build lean and adaptable business models and find investors with long-term horizons that will withstand external challenges.

2. Innovative technology is necessary but not sufficient: Tech entrepreneurs entering Africa should spend as much time thinking about the non-technical aspects of their business model as the technology itself.

3. Success requires moving beyond best practices: Know the best-practices in the field, but also exercise discretion to adapt when economic considerations or practical realities require other solutions.

4. Achieving impact should be aligned with financial objectives: Impact is important but cannot be at the expense of financial sustainability. Focusing on both financial performance and development impact, while not easy, is often necessary for building sustainable businesses in Africa.

5. Africa is a long-run play, look elsewhere for “quick wins”: Endurance and perseverance are key but so is finding patient investors or developing innovative approaches that can finance the business over a long-time horizon.

6. There is no substitute for “feet on the ground”: Invest time and resources on “being on the ground.” This is key in understanding the local culture, building trust and maintaining relationships.

7. Africa has its challenges, but also advantages: Africa has advantages, particularly for companies with innovative and relevant technologies who succeed in establishing strong relationships with key stakeholders.

8. Israeli entrepreneurs are well positioned to contribute to Africa’s development through innovation: This research shows that meaningful, scalable impact depends on innovative business models, patient strategies, local engagement, and business discipline, not just technological ingenuity.