Entrepreneurship in Africa: What Holds Startups Back?

Abstract

Entrepreneurship is key to economic transformation across Africa, but startup performance is erratic and fragile. New ventures are expected to create jobs and foster innovation; however, many fail to survive the early stages because of structural barriers that limit their growth. In Africa, this is common, as entrepreneurship is often driven by necessity rather than opportunity. This paper aims to identify major constraints experienced by startups in Africa and synthesise evidence on how these constraints are linked within entrepreneurial ecosystems. These findings are based on a systematic review of peer-reviewed empirical studies published from 2020-2026. The review shows that startup constraints are cumulative and institutionally embedded. Finance was the most common barrier among the 30 studies examined and was discussed in 20 studies (66.7%), followed by regulatory and policy challenges in 18 studies (60.0%) and institutional governance issues in 17 studies (56.7%). The data reveal that poor infrastructure, complicated regulations, inconsistent policies, low trust in institutions and lack of entrepreneurial education all contribute to reduced access to affordable financial resources. Of particular concern is that women and young entrepreneurs face greater obstacles to accessing capital, business networks, technology, and formal support mechanisms. Digital innovation and incubators and entrepreneurial hubs provide some, though selective, opportunities for market access and business capacity development. This systematic review documents the prevalence and interactions among different barriers to startups in African entrepreneurial ecosystems. It demonstrates that breakthroughs in developing startups in Africa depend on wide-ranging reform of finance, infrastructure, skills training and the enhancement of institutional quality, which have to be carried out in a synchronised manner and not in isolated endeavours.