Africa’s Tech Scene: A Story of Resilience and Growth
As 2024 drew to a close, Africa’s tech scene celebrated a notable achievement: the emergence of two new unicorns – startups valued at over $1 billion – in quick succession. Fintech firm Moniepoint from Nigeria and South Africa’s TymeBank joined the ranks of seven other African unicorns, solidifying the continent’s presence in the global startup landscape.
This boost came amidst a challenging year for venture funding in Africa, where a widely cited report indicated a 25% drop to $2.2 billion raised in equity, debt, and grants across the continent. The report, compiled by Africa: The Big Deal, which tracks African startup funding, noted a stronger second half of the year, but the overall numbers for 2024 were significantly lower than the nearly $4.6 billion raised in 2022.
Africa was not alone in facing funding headwinds. Startups across emerging markets, including the Middle East, South East Asia, Turkey, and Pakistan, also experienced investment declines. Despite these challenges, investors and entrepreneurs in Africa remain optimistic, citing the continent’s young, rapidly urbanizing, and tech-embracing population as fertile ground for mobile-based and tech-driven solutions.
“We are just at the beginning of the Africa tech growth story,” said Lexi Novitske, the managing partner of Norrsken 22, an Africa-focused tech growth fund. “There is huge untapped demand and significant improvement in talent across the ecosystem, with angel investment spurring that growth. We are also seeing rapid adoption in tech platforms. The world will see several big success stories coming soon.”
Fintech and Logistics Lead Investment
The first month of 2025 “kicked off on a high note,” according to Africa: The Big Deal. Startups raised $289 million, which was the second-best January for startup funding in Africa since at least 2019. Fintech companies, along with firms in logistics and transport, have been the primary targets for investment. Lagos-based fintechs Flutterwave and Paystack have drawn international attention through rapid growth and expansion. Paystack was acquired by Stripe in 2020, and Flutterwave is preparing for an initial public offering (IPO), its last funding round in 2022 valuing the company at $3 billion.
Addressing Challenges, Unlocking Opportunities
Investors recognize both the obstacles and opportunities present on the continent, including gaps in physical and digital infrastructure. Tunde Kara, founder of Vendease, identified an opening within Africa’s nearly $1 trillion food industry. His firm utilizes ‘Buy Now, Pay Later’ technologies for restaurants and food businesses, creating “a ripple effect across the food economy,” Kara says.
The Vendease platform streamlines procurement and operations, connecting restaurants and suppliers while providing software and financial services. Kara notes the company has provided $90 million in credit funding, supporting 135,000 farmers and decreasing food waste. The Food and Agriculture Organization (FAO) estimates that approximately 30-40% of global food production is lost due to inefficiencies in the production and supply chains.
Innovation Across Sectors
Nnamdi Emefo is tackling a different challenge: identifying sports talent. His firm, Afriskaut, uses AI and proprietary data to discover top African football talent, analyzing match videos to extract key performance metrics. This provides clubs, scouts, and agents with advanced scouting tools.
“I see today as pre-early days because a lot of the founders are building the infrastructure required to catapult their industry to the next level, and the next set of entrepreneurs and founders will build on the current foundations we are laying,” said Emefo.
Aubrey Hruby, an investor and co-author of The Next Africa: An Emerging Continent Becomes a Global Powerhouse, is bullish on Africa’s creative industries, highlighting their potential to tap into global markets. She acknowledges the difficulties, citing factors like major currency devaluations in Egypt and Nigeria, but believes the African market will recover, depending on stability and economic recovery in Nigeria.
Navigating Headwinds and Looking Ahead
Challenges acknowledged by Novitske include economic headwinds and currency issues, particularly the impact of eroding dollar-based spending power. She also highlights the existing perception of Africa among international investors, which often focuses on poverty, corruption, and infrastructure deficiencies. However, she emphasizes the substantial untapped market and upcoming growth potential.
“Payments have taken off. Digital identity is starting to work. For the first time, consumers have credit history and banking history,” Novitske says. “International transactions are being liberalized, but we are still seeing a lot of friction and fragmentation around supply chains, trade, and manufacturing. That’s where we see the next big wave of opportunity.”
Tunde Kara adds, “Africa’s tech entrepreneurs are not just building businesses; they are creating solutions with transformative potential, from advancing healthcare to driving financial inclusion. This purpose-driven innovation, combined with one of the world’s youngest and most energetic workforces, positions Africa as a rising hub for global innovation.”
According to Ahunna Eziakonwa, the UNDP Africa Bureau Director, investment remains scarce, regulations are inconsistent, and markets are fragmented. Although most investment goes to Nigeria, Kenya, South Africa, and Egypt, other markets are becoming innovation hubs. Ghana and Tanzania experienced the most success in 2024 within the “non-Big Four,” and other notable rising hubs include Senegal, Ivory Coast, and Tunisia, according to journalist Oluwatomisin Amokeoja.
Landry Signe, a senior fellow at the Brookings Institution, believes Africa presents “the next big opportunity in global markets.” He cites a rising middle class, increasing digitalization, growing regional integration, and improved infrastructure as key elements of Africa’s rise. He points to opportunities in healthcare, pharmaceuticals, mining, insurance, and entertainment.
“Africa’s economic transformation and business potential,” he writes “are more substantial than many think.”
