In recent years, African startups have heavily prioritized rapid user growth, often pursuing expansion aggressively to attract investor attention. Yet, the landscape is shifting. In 2024, funding for African tech ventures dropped sharply to $1.1 billion, marking a 50% decline from 2023. Meanwhile, the expense of acquiring customers is climbing, driven by infrastructural challenges and the need for tailored marketing strategies. With over 678 fintech companies currently operating across Africa (an increase from 576 in 2021, per Disrupt Africa), competition for users is fiercer than ever. So, how can emerging unicorns secure sustainable growth in this environment?
Drawing from my experience scaling fintech and SaaS platforms both within Africa and internationally, I’ve observed that startups boasting the largest user bases don’t always succeed. A closer look at Africa’s current unicorns reveals a common thread: those that endure focus on retaining their existing customers. Retention fuels long-term growth, enhances customer lifetime value, and builds resilience against tightening capital availability.
The rising expense of growth is unsustainable
Startups across Africa are now grappling with unprecedented customer acquisition costs. Data from Ingressive Capital indicates that many allocate between 20% and 40% of their operating budgets to marketing and user acquisition. At the same time, digital advertising costs in critical markets like Nigeria and Kenya have doubled over the last three years. Each additional user is more costly to acquire and less likely to convert.
When acquisition consumes such a large portion of resources, losing a customer equates not only to lost revenue but also to squandered investment. Conversely, improving retention by just 5% can increase profits by 25% to 95%, compounding growth without proportional spending. For African entrepreneurs, the path to growth now hinges more on nurturing existing users than on relentlessly pursuing new ones.
Retention: The true catalyst for growth
Retention amplifies growth without a corresponding rise in costs. From my perspective, startups with robust retention rates experience revenue growth two to three times faster than those primarily focused on acquisition. Given the rising costs of customer acquisition and shrinking funding pools, this growth velocity can be the difference between thriving and folding.
Moreover, retention provides founders with stable, investor-friendly metrics. Controlling churn elevates lifetime value, reduces cash burn, and accelerates the timeline to profitability-advantages that are crucial in capital-constrained markets. Loyal customers also generate referrals, reduce support expenses, and serve as a competitive moat. In Africa’s saturated tech ecosystem, this loyalty often represents the most sustainable advantage.
Why retention is even more vital in Africa’s unique market
The African business environment intensifies the consequences of customer churn. Fragmented payment systems, low consumer trust, and inconsistent internet connectivity make acquiring users challenging and retaining them even more so. For example, in Sub-Saharan Africa, the average cost of 1 GB of mobile data represents 15.3% of the monthly GDP per capita for the poorest 20%, making continuous engagement with digital services costly for many users.
Competition is intensifying as well. The number of fintech startups in Africa surged by 17.7% over two years, driving up acquisition expenses and underscoring the importance of retention to safeguard profit margins. Additionally, re-engaging lost customers often costs two to three times more than maintaining existing ones, especially when localized marketing and offline support are required.
Therefore, even a small improvement in retention rates can dramatically enhance unit economics. Founders who design products resilient to connectivity interruptions, incorporate offline engagement channels, and foster trust through transparent pricing will outperform those relying on unsustainable advertising budgets to chase scale.
Insights from Africa’s established unicorns
Successful African startups demonstrate that retention is key to reaching unicorn status. Take Flutterwave, valued at over $3 billion, which strengthens customer loyalty through APIs, recurring billing, and social commerce integrations, rather than merely onboarding merchants. Wave, with a valuation of $1.7 billion, retains users by offering ultra-low 1% fees, free deposits and withdrawals, and round-the-clock support to keep mobile money customers engaged.
Jumia, Africa’s leading e-commerce platform, employs subscription services like Jumia Prime to encourage repeat purchases and reduce churn, while expanding rural agent networks to secure customer loyalty. These examples highlight how retention strategies underpin company valuations, investor trust, and sustainable expansion.
Retention-first founders will dominate the next decade
For entrepreneurs and investors in Africa, the message is clear: acquiring new users is becoming more challenging and costly, while retaining existing customers is increasingly valuable. The next wave of unicorns will succeed not by outspending competitors on advertising, but by embedding their products deeply into users’ lives.
This requires integrating retention-focused strategies from the outset-crafting onboarding processes that resonate, designing seamless experiences that accommodate intermittent connectivity, maintaining transparent pricing, and fostering community-driven loyalty. Investors should prioritize retention metrics over superficial acquisition figures when assessing early-stage startups.
Ultimately, retention offers the strongest defense against rising acquisition costs, dwindling capital, and fierce competition, shaping the future leaders of Africa’s tech ecosystem.
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Stephen Akadiri is a specialist in organic growth with over six years of experience scaling fintech, media, and SaaS brands worldwide. Currently Senior SEO Growth Manager at Grey (YC W22), he champions sustainable expansion across diverse markets.
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