T.A.M. And Why We Need To Look Beyond…

Just population numbers no revenues included***

The Total Addressable Market (T.A.M.) for Kenyan startups has been a strong ongoing debate in the local startup ecosystem. As compared to some of the most vibrant tech ecosystems in the world, one pattern is clearly evident, TAM. Most of them have huge populations which in turn means more people to sell to, thus unicorn type growth.

Is this, therefore, a reality in Kenya and Africa at large? Taking that TAM is simply a numbers game, for this piece, I’ll just let the numbers talk.

Taking an example of some of the biggest startup ecosystems in the different continents worldwide as compared to Kenya, the representation is as below:

Graph Country
Representation of Different Country Market Sizes

So how do countries like Israel, Singapore, Germany, and the UK still manage to compete effectively despite having smaller populations? The answer is redefining their markets to include entire regions.

The UK and Germany are European nations with access to European markets with a population of over 500 million people and markets which tend to be quite similar.

In Asia, Singaporean startups have mastered the art of building for a wider market including neighboring Southeast Asian nations like Thailand, Cambodia, Malaysia, Philippines, Indonesia, Vietnam, and Myanmar with a target market of 600M+.

Israel exclusively designs products for sale in the American market. This is the mentality we ought to embrace. This has resulted in unicorns coming out of each of these regions and countries.

Graph Region
Representation of Different Regional Market Sizes

Thinking TAM in Africa
The challenge with Africa is having 54 countries which means 54 cultures, 54 governments, hundreds if not thousands of languages and multiple barriers to entry for new companies. It is obviously much easier to build one product for a population of 100M plus, makes life much easier! It’s very evident why Nigerian startups have more traction, a key factor is a huge market.

So how do you go about doing the same for Africa? It is paramount that you build with the end in mind, all while taking sociopolitical factors into account.
Taking a startup in Nairobi Kenya, there are two ways to go about it in my opinion:

1. Starting Out: Considering Geographically Close Markets that are also Culturally Similar
For a local startup, this is definitely a good starting point. East Africa has a population of 277 million taking these five countries: Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. The larger Eastern Africa has a population of 374 million which is also a market ripe for disruption inclusive of nations like Malawi, Zambia, and Ethiopia!
I believe that building for East Africa should be a priority taking that there is a reduced language barrier, reduced cultural barriers, and fewer logistical nightmares.

2. Going Further: Targeting Anglophone Countries + Friendlies
There are Anglophone countries and a few non-Anglophone in Africa that are personal favorites for expansion with a total population of 630+ Million (representing the Larger African Market). These are Tanzania, Uganda, Rwanda, Ethiopia, Zambia, Malawi, Ghana, Nigeria, Zimbabwe, Liberia, South Africa, and Mozambique.
Exceptions: Botswana, Mauritius, Gambia, Ivory Coast, and Senegal.

I went ahead an made a map representation of the same to give a clearer picture.

Africa 2
Representation of target markets for African startups in the Larger Africa.

With more and more people coming out of poverty every day in emerging markets, the market potential is ever increasing! There is even greater potential for African startups to grow above and beyond current expectations!


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