Why AI alone won’t be enough

Africa is a global leader in fintech, but continues to struggle with education and edtech. Africa has the worst-performing education system globally – in some markets, 90% of children leave primary school without basic reading skills. Fintech captured 60% of all African venture capital last year, driven by a clear value proposition: faster, cheaper, better services. Remittances alone hit $56 billion in 2024. Africans were already sending money; FinTechs just made it easier.

Education, by contrast, receives less than 2% of venture capital despite being a $160+ billion annual market, nearly three times larger than remittances. Why? Because too many African edtechs are building flashy technology in search of a customer. The hype fueling artificial intelligence (AI) threatens to amplify edtech failures.

Governments are already climbing aboard the AI hype train. Nigeria recently announced plans to train 6,000 teachers in AI.

We’ve seen this play before

20 years ago, the One Laptop Per Child (OLPC) initiative promised $100 laptops for every child. Countries like Peru, Uruguay, and Rwanda joined in. In Peru, a multi-year evaluation found no learning impact. Maintenance issues, lack of power, and untrained teachers meant 50%+ of laptops stopped working within 2–3 years. The same story unfolded in developed markets like Birmingham and Alabama, where the city scrapped its OLPC-based program after three years. The lesson: great tech, bad implementation—and worse business models.

AI is fast becoming the new $100 laptop. Already, initiatives are promising personalised AI tutors for less than $50 a year or ultra-cheap LLM API calls at pennies per query. But a cost-effective product is meaningless if no one uses—or pays for—it.

Leapfrogging a poor business model is impossible

Take one Kenyan startup offering AI-powered teacher support via WhatsApp; a smart delivery channel given its 200M users in Africa. But flawed model: they plan to charge teachers $10–$20/year, despite most teachers being underpaid and stretched thin. A better strategy? Sell to governments. Kenya employs over 330,000 teachers. Just $20 per teacher could yield $6.6 million annually. Expand across the continent, and this could become a $50M+ business—more than 4x the turnover of one of Africa’s largest textbook publishers.

Governments, not households, account for 70% of education spending in Africa. While some African edtechs have achieved notable scale, many struggle to grow beyond a narrow base, typically elite private schools or middle-class families with internet access. Meanwhile, 82% of learners lack internet at home, and 95% don’t have consistent access to smartphones. It’s not about scaling cool tech. It’s about designing business models that work in the real world.

A $100M  investment with no business model

Between 2014 and 2022, USAID invested as much as $96.2 million in Tusome, Kenya’s flagship early-grade reading program . At its peak, just 18% of Grade 2 students met national English reading benchmarks—up from 12% at baseline . A 6-point gain after eight years and nearly $100M—was that good value for money?

Look closer, and it becomes clear: Tusome was never built on a demand-driven model. The Kenyan government’s contributions were mostly in-kind—teachers and infrastructure it was already funding. Real budgetary buy-in—for essentials like books and classroom visits—only came years later, and quickly stalled once donor money dried up. Now that USAID funding has ended, there are already signs that Kenya’s hard-won literacy gains may quickly unravel.

Much is made of a co-financing claim: that for every $1 USAID invested, Kenya contributed $0.70. But most of that wasn’t new capital—it was a reclassification of existing spending, with little relation to actual demand. As an edtech investor, this feels more like accounting acrobatics than a sign of traction. 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 is, by nature, a government-led sector. In developed markets, the largest billion-dollar education businesses earn most of their revenue from public sector clients—federal, state, or district. The private sector’s role is to build engaging, valuable products that governments want to buy. Too often, development actors misread demand, focusing on ‘cost-effectiveness’ projections. But the most critical variable is often overlooked: engagement. TikTok didn’t become the world’s most used app by being cheap—it won by being deeply engaging and culturally intuitive. If edtech doesn’t do the same, it will fail regardless of how smart the AI is. 

That’s the lesson for AI in education: if no one’s using it, no one’s paying for it. Too many edtech products in Africa are still being pushed onto schools, teachers, and parents. The real question is: where are the products being pulled?

AI won’t save edtech, business model innovation might 

Africa’s education history is littered with $50M and $100M projects—flashy tech pilots and ambitious programs that failed to scale because they lacked one thing: demand. Without a business model, even the most well-intentioned investments end up shelved.

To unlock AI’s true potential, we must rethink how edtech is financed, deployed, and scaled. We’ve seen this model work before: Gavi, the Vaccine Alliance, helped vaccinate over a billion children by enabling governments to buy and deliver what their people needed.

Is it time for Africa’s edtech ecosystem to build its own Gavi? The learning crisis is urgent—and unless we tackle the financing question head-on, we risk failing not just today’s students, but tomorrow’s economies. AI won’t leapfrog these challenges.

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Karim Mohamed is an African investment professional with nearly 20 years of experience as an engineer, finance expert, and venture investor. Over the past decade, he has led and advised three African edtech funds totaling over $200M in capital, focused on improving learning and expanding employment opportunities across the continent.