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Africa has a Fintech is a global leaderbut education and edtech are still a struggle. Africa has the world’s worst education system – 90% of children in some markets leave primary school with no basic reading skills. Fintech captured 60% of all African venture funding last year, driven primarily by a clear value proposition – faster, cheaper and better services. Remittances will reach ahref=””https://www.semafor.com/article/01/27/2025/remittance-startups-ride-africas-migration-wave” “rel=””noreferrer noopener nofollow””target=””_blank” “>$56billion in 2024,FinTechs made it easier for Africans to send money.
Education receives less than 2 percent of venture capital, despite a market worth $160 billion annuallywhich is nearly three times bigger than remittances. Why? Too many African edtechs build flashy technology to find a customer. The artificial intelligence (AI), which is fueling the hype, threatens to magnify edtech’s failures.
Governments have already jumped on the AI hype train. Nigeria recently announced plans for 6,000 teachers to be trained in AI.
This play has been played before
Twenty years ago, One Laptop Per Child (OLPC), an initiative that promised $100 laptops to every child, was launched. Peru, Uruguay and Rwanda all joined the initiative. In Peru, an evaluation that lasted for several years found no impact on learning. Maintenance issues, lack power, and untrained educators meant that 50%+ of laptops failed within 2-3 years. Birmingham and Alabama- where the city scrapped their OLPC-based programs after three years – had the same story. The lesson is: great technology, bad implementation and worse business models.
AI has become the new $100 laptop. Initiatives are already promising personalised AI tutors at less than $50 per year and ultra-cheap LLM calls API calls for pennies each. A cost-effective product will be meaningless if nobody uses it or pays for it.
It is impossible to leapfrog a bad business model
Consider a Kenyan startup that offers AI-powered teacher assistance via WhatsApp, a smart delivery method given its 200M African usersBut flawed model: They plan to charge teachers between $10 and $20/year despite the fact that most teachers are underpaid or stretched thinA better strategy? Sell to governments Kenya employs over 330,000 teachers. Just $20 per teacher would yield $6.6 millions annually. Expanding across the continent could result in a $50M+ enterprise, which is more than four times the turnover for one of Africa’s biggest textbook publishers.
The government, not the household, accounts for 70% of Africa’s education spending. Some African edtechs are achieving notable scalebut many struggle to grow past a narrow base. These are usually elite private schools and middle-class families who have internet access. 82 percent of African learners do not have internet access at homeand 95% do not have smartphones. It’s not just about scaling cool technology. It’s not about scaling cool tech. It’s about designing real-world business models.
A 100M investment without a business model
From 2014 to 2022, USAID invested up to ahref=””https://www.bsg.ox.ac.uk/sites/default/files/inline-files/South-SouthProgramme-DiscursiveKenya.pdf” “rel=””noreferrer noopener nofollow””target=””_blank” “>$96.2 millions in TusomeKenya’s flagship early grade reading program. At its peak, only 18% of Grade 2 pupils met national English benchmarks. This was up from 12% in the baseline. Was a 6-point increase after eight years, and nearly $100M worth it?
If you look closer, it’s clear that Tusome was not built on a model based on demand. The Kenyan government contributed mainly in kind- teachers and infrastructure that it already funded. The real budgetary buy-in — for essentials like classroom visits and books — only came years later. Kenya’s hard-won gains in literacy may be at risk now that USAID funding is no longer available.
A co-financing claim is often made: that for each dollar USAID invested in Kenya, $0.70 was contributed by Kenya. Most of the money wasn’t new, but a reclassification. It had little to do with actual demand. As an edtech investment, this feels like accounting acrobatics rather than a sign that traction is being achieved. Ten years into Tusome, I found myself fielding queries from program staff who were just starting to explore “sustainability”–only after spending nearly $100 million.
Education, by its very nature, is a government-led industry. In developed markets, most of the revenue generated by the largest education businesses, which are worth billions of dollars, comes from clients in public sectors, whether federal, state or district. The role of the private sector is to create engaging, valuable products which governments will want to purchase. Development actors often misinterpret demand by focusing on ‘cost effectiveness’ projections. Engagement is often the most important variable, but it’s often overlooked. TikTok did not become the most popular app in the world by being cheap. It won by being deeply engaging, and culturally intuitive. If edtech does not do the same, then it will fail no matter how intelligent the AI is.
This is the lesson of AI in education: If no one uses it, then no one will pay for it. In Africa, too many edtech items are still being pushed on schools, teachers and parents. The real question is, where are these products being pulled from?
AI will not save edtech; business model innovation may
Africa’s education history is littered by $50M and $100M projects – flashy tech pilots, ambitious programs that failed because they lacked demand. Even the best-intentioned investments can be shelved without a business plan.
We must rethink the way edtech’s financed, deployed and scaled to unlock AI’s full potential. This model has worked before: Gavithe Vaccine Alliance, helped vaccinate more than a billion kids by enabling governments buy and deliver what they needed.
Could it be time for Africa’s education technology ecosystem to create its own Gavi model? The learning crisis is urgent. If we don’t tackle the funding question, we’ll fail not only today’s students but tomorrow’s economy. AI will not be able to overcome these challenges.
Karim Mohammed is an African investment expert with over 20 years’ experience as a finance expert, venture investor, and engineer. He has advised and led three African edtech fund totaling more than $200M, focused on improving education and expanding employment opportunities throughout the continent.
