Silent revolution : Africa’s tech emerges from the shadows

Africa is undergoing a silent yet profound digital transformation, marked by exponential growth in the tech sector. Over the past decade, the continent has attracted the attention of global investors and local actors drawn by its vast market potential. This evolution, though fraught with many challenges, is a testament to the rise of the African tech ecosystem.

From 2013 to 2023, Africa raised nearly $20 billion in venture capital, across approximately 3,000 deals. This momentum was especially strong over the last three years, accounting for 68% of all investments during this period. Despite global economic turbulence, the sector has shown significant resilience. A key factor behind this performance has been the increased access to debt financing, which represented 35% of total funds raised in 2023, up from 24% in 2022.

Tensions and challenges: A difficult 2023

However, 2023 was marked by significant difficulties. The venture capital market experienced a sharp contraction, with funds raised dropping by 46%, from $6.5 billion in 2022 to $3.5 billion in 2023. Additionally, the number of deals fell by 28%, with 547 agreements concluded. This decline can be attributed to several factors. Firstly, the number of active investors dropped by 50%, from 1,149 in 2022 to 569 in 2023, indicating a notable withdrawal of foreign actors. Meanwhile, the fintech sector, while still dominant, accounted for 37% of equity investments but faced rising competition from other sectors such as e-commerce and clean tech. Finally, macroeconomic challenges including high interest rates, currency devaluation, and inflation heavily impacted the attractiveness of the African market.

Outlook: A tentative but promising recovery

Nevertheless, 2024 has shown signs of stabilization for African venture capital. Funds raised reached $3.2 billion, registering only a modest 7% decline from the previous year, while the number of deals remained stable at 534. Several factors explain this slight recovery. First, the rise of debt financing has allowed startups to partially offset the drop in equity funding. Furthermore, the fintech sector, still leading the charge, continued to grow by raising $1.3 billion, representing 60% of equity investments, with a 16% increase in deal count. Lastly, the growing engagement of local funds, particularly in Ghana, Kenya, and South Africa, has helped diversify funding sources, reducing dependency on foreign investors.

African investors gaining ground

A strong trend is emerging: the growing influence of African funds and structures in financing the continent’s tech. Better connected to local realities, these African investors are playing an increasingly strategic role—not only financing but also co-investing alongside international players. According to data from Partech Africa, African investors participated in more than 40% of the deals made in 2023, a steadily rising figure since 2020. Structures such as Future Africa (Nigeria), Janngo Capital (Côte d’Ivoire), Norrsken22 (South Africa), and Catalyst Fund have injected millions of dollars into local startups. Their deep knowledge of the field allows them to more quickly identify viable projects and provide more tailored support. This rebalancing of power is helping to root innovation more firmly in African models that are more resilient and suited to local contexts.

Africa stands at a critical crossroads in its digital revolution. Although the path remains strewn with obstacles, the continent’s tech ecosystem displays remarkable adaptability and resilience. Thanks to diversified funding sources and a focus on high-potential sectors, Africa is now well-positioned to play a key role in global technological innovation.