The abrupt dismantling of the US Agency for International Development (USAID) by the Trump administration has claimed a prominent casualty: Prosper Africa. This six-year-old initiative, designed to bolster US-Africa trade and investment, played a crucial role in the African technology startup ecosystem, acting as both a significant backer and a vital deal maker. Its demise leaves a significant gap in funding and support for the affected African startups, raising questions about their future.
The Trump administration’s move, communicated to USAID workers via emails and online postings, signals a dramatic shift in US foreign policy, prioritizing cost-cutting over traditional aid and development strategies. The decision to pull nearly all USAID workers from the field effectively ends a decades-long mission focused on global security through initiatives addressing poverty, education, and disease. Prosper Africa, closely tied to USAID, has become a victim of this policy overhaul.
The initiative’s website currently displays a message stating it is “undergoing maintenance” in line with Presidential Executive Orders, a clear indication of its uncertain future. This shutdown comes at a critical time for the African startup scene, where Prosper Africa had become a key player.
Since its inception in 2019 as a U.S. government initiative that supports two-way trade and investment between the United States and Africa by connecting buyers, suppliers and investors across regions, Prosper Africa’s influence extended across various sectors, with notable successes. In essence, the initiative facilitated investments and partnerships between the US and Africa. For example in 2020, it supported Tomato Jos, a Nigerian tomato processing company, in raising $4.4 million to expand its operations, benefiting local farmers and creating jobs. In the healthcare sector, Prosper Africa facilitated multi-million dollar deals, connecting US companies with African healthcare providers and expanding access to essential services. These deals, such as those involving Alta Semper Capital ($44 million), Ilara Health ($3.9 million pre-Series A), LaPaire Glasses ($3.85 million) and the Africa Healthcare Network ($20 million), not only improved healthcare access in Africa but also boosted US exports and supported American jobs.
The organization’s support for the African tech ecosystem was particularly significant. It partnered with initiatives like Future Africa’s Accelerate Africa (A2) program, which prepares early-stage African founders for global scaling. Prosper Africa’s backing provided crucial resources and connections to global networks, including leading US accelerators like Y Combinator and Techstars. Future Africa’s Founding Partner, Iyinoluwa Aboyeji, noted that while current market conditions might deter other investors, they reinforce the organization’s commitment to building a support ecosystem for African founders. The scaling of A2 was directly enabled by Prosper Africa’s partnership, highlighting the initiative’s importance in nurturing the next generation of African tech entrepreneurs.
Prosper Africa also played a vital role in connecting African startups with investors. Through events and partnerships, it showcased investment opportunities to a global audience, facilitating the flow of capital into the continent. Its Catalytic Investment Facility, launched in 2022, aimed to mobilize over $200 million in private capital for African innovation and entrepreneurship, partnering with fund managers like Future Africa, Altree Capital, Endeavor South Africa, Okavango Capital, and ThirdWay Partners.
The failure of the US Congress to pass the Prosper Africa Act further contributed to its demise. The bill, intended to codify the initiative, would have provided crucial stability and long-term support. Its failure underscores the political challenges facing US engagement with Africa.
What Happens Next?
With Prosper Africa effectively shuttered, African startups and fund managers face an uncertain future in accessing U.S. capital and partnerships. While some funding mechanisms like the U.S. International Development Finance Corporation (DFC) and other private venture capital firms may continue to operate, the loss of Prosper Africa removes a key facilitator of deal-making between African entrepreneurs and American investors.
Other venture capital firms and accelerators will continue to fill the void left by Prosper Africa’s withdrawal, but the scale and credibility of U.S. government backing will be difficult to replace. Alternative funding sources, such as European and Asian investment firms, have also shown historical readiness to fill in the void. However, African governments may also need to reconsider policies to attract private investors without relying on U.S. support.
The closure of Prosper Africa leaves a void in the African startup ecosystem. While organizations like Future Africa have pledged to continue their work, the loss of a major player like Prosper Africa will undoubtedly impact funding and deal-making.
For now, concerned African startups must brace for a future without Prosper Africa. Whether a new U.S. administration revives a similar initiative in the future remains uncertain, but in the immediate term, African businesses will need to seek alternative avenues for capital and market access.
Again, the future of US engagement with African startups remains uncertain and unstable, raising concerns about the long-term prospects for the sector’s growth. Nevertheless, the big question remains: who will fill the gap left by Prosper Africa, and what will be the long-term consequences for African tech entrepreneurship?