The African startup scene, once defined by ambitious visions and rapid growth, is now facing scrutiny over erratic leadership changes and frequent CEO transitions. These shifts, often involving high-profile hires and departures, pose crucial questions about the viability of external executives filling the shoes of African startup founders. This leadership volatility has especially impacted major startups like Nigeria’s Kobo360, where Ciku Mugambi recently stepped down as CEO after just one year in the role, leaving stakeholders pondering whether replacements can match the vision of founding leaders.

Kobo360, a logistics company that facilitates cargo transport for large corporations such as Dangote and Unilever, gained early momentum with substantial backing. Founded in 2017, the company attracted significant interest, raising $6 million in its 2018 seed round led by the International Finance Corporation (IFC) and an additional $30 million in 2019 from investors including TLCom and Y Combinator. However, the company’s growth has been anything but smooth, with funding challenges and leadership changes casting doubt on its long-term stability.

Resignations at Kobo360

Ciku Mugambi joined Kobo360 in 2021 as Chief Operating Officer, bringing experience from her tenure at the IFC. Her rapid promotion to CEO in 2023 followed the exit of co-founder and previous CEO, Obi Ozor, who left to take a government role in Nigeria’s Enugu State. Mugambi’s appointment was viewed as a strategic decision aimed at stabilizing the company, yet her tenure saw mixed results, with some insiders noting that while the company achieved break-even in Nigeria, it struggled to raise fresh funding.

Mugambi’s departure announcement on October 29 came as no surprise to some, as speculation about her resignation had circulated for weeks. While she cited challenges in securing new investment, the underlying causes remain speculative as neither Kobo360 nor Mugambi offered further comment. Investors and industry experts are now left questioning if corporate leaders like Mugambi, hired from traditional finance or corporate sectors, are truly able to steer the challenging waters of African startups.

A Broader Pattern in African Startups

Kobo360’s struggles mirror issues faced by other African tech firms where similar leadership changes raised concerns about succession planning and corporate governance. In 2022, Twiga Foods — a prominent Kenyan agritech firm — experienced a similar upheaval when Peter Njonjo, a former Coca-Cola executive, left the company unexpectedly. Njonjo’s appointment was initially celebrated as a strategic move to add corporate rigor to the startup, which had been rapidly scaling its food distribution business. However, his departure within a short tenure highlighted the difficulties of transitioning executives from large corporations into startups requiring high agility and flexibility.

Again, Ron Chiarello’s appointment as CEO of 54gene in March 2023, following the resignation of founder Abasi Ene-Obong, coincided with the company’s subsequent liquidation, further raising significant concerns about the efficacy of external leadership in African startups. While Chiarello brought a robust academic background and experience from institutions like Stanford University and Argonne National Laboratory, as well as his role as founder of Alveo Technologies, his tenure highlighted the potential pitfalls of replacing founding leaders with executives. 

African Co-founders Versus External Hires: A Difficult Balance

Many investors initially saw the hiring of experienced external CEOs as a necessary step to institutionalize African startups and bring in operational efficiencies. However, the repeated pattern of brief tenures and high turnover has led to debates about whether these hires, often from established corporate backgrounds, can truly adapt to the unique demands of the African market. Founders, with their grassroots insights and deep understanding of local challenges, often play a more integral role in navigating the complex African business environment than outsiders.

The African tech startup ecosystem, characterized by diverse market conditions, infrastructural challenges, and a dynamic regulatory environment, demands CEO leadership that can adapt quickly and make intuitive, culturally informed decisions. This flexibility and hands-on approach, some argue, are difficult for external hires to replicate. The case of iProcure, a Kenyan agritech startup, is another example where an external CEO, Niraj Varia, struggled to steer the company effectively. Varia’s tenure ended prior to the company’s eventual decline, raising questions about whether the transition from founder-led leadership to externally hired executives was a misstep.

Future Implications for African Startups

While African startups have increasingly looked towards international hires to bring maturity and structure, the trend is now under greater scrutiny. Investors and stakeholders are reconsidering the model of replacing founders with “professional CEOs,” who may lack the nuanced understanding and adaptability required in African markets. As African startups mature, it’s becoming evident that they need leaders who not only understand corporate governance but also possess a keen understanding of local challenges.

For the next generation of African startups, the solution may lie in fostering talent from within, focusing on leadership development that aligns with both the company’s culture and market needs. While external CEOs with global experience can bring valuable insights, they may need to work closely with founders or local leaders who deeply understand the terrain. This hybrid model, blending corporate expertise with localized insights, could offer a balanced approach to leadership that sustains growth while preserving the founding mission.

As the African startup ecosystem continues to evolve and the pressures of scale intensify, the ecosystem faces a critical juncture, especially with filling the CEO positions after founders have left. Stakeholders must now weigh the trade-offs between external expertise and local knowledge, and determine whether erratic leadership changes can be mitigated by rethinking the structure and support given to newly appointed CEOs. African startups themselves also seem ignorant of what succession plans are and how to effectively implement them.