Tech : unlock the potential… unleash the investment!
African tech is all the rage. With a record $6.5 billion in funding to be raised by 2022, investment continues to grow... and diversify. Especially as Africa boasts a growing pool of entrepreneurs and tech professionals, with over 500,000 software developers. But for the sector to reach its full potential and play its full role as an accelerator of socio-economic development, even more investment is needed. To achieve this, the pan-African tech ecosystem needs to be enriched in terms of digital infrastructure, skills and the adoption of appropriate regulations. So many challenges for an Africa destined to become the world's largest digital economy...
By Dounia Ben Mohamed
900 exhibitors and startups, 250 investors and as many speakers, around thirty ministerial delegations and tens of thousands of participants from 120 countries… « Proof of the growing interest in African technology, » says Mehdi El Alaoui, Head of the Startup Ecosystem Department at the Moroccan Agency for Digital Development (ADD), one of the stakeholders in GITEX Africa, which was held for the first time on the continent in Marrakech from May 31 to June 2.
The African tech ecosystem has grown faster than any other
Indeed, the numbers bear this out. African startups raised a record $1.5 billion in funding in 2019, and investment continues to grow despite the COVID-19 pandemic. On the contrary, the pandemic has revealed the resilience and social impact of these made-in-Africa tech players. And as a result, the interest of more investors. As a result, the African startup ecosystem raised $6.5 billion in 2022, according to the latest report published in January 2023 by Partech Africa, the largest venture capital fund dedicated to tech startups in Africa. The report confirms that « the African tech ecosystem has grown faster than any other global market, despite a global slowdown in venture capital. »
Admittedly, this interest remains limited, with four countries – Nigeria, South Africa, Egypt and Kenya – accounting for 72% of the investment volume in 2022_, and also in terms of sectors, with fintech remaining well ahead of other sectors in terms of amounts raised. There are also a number of success stories, including Nigeria’s Flutterwave, which broke its own record in 2021 by raising $250 million in February 2022. However, Francophone Africa is still largely lagging behind, with areas such as Central Africa left out of investment and little sectoral diversification, although agritech, e-health and e-learning are emerging, albeit cautiously, as is the rare presence of women. By 2022, women will have raised only 22% of total equity rounds, although this will increase by two percentage points to 20% by 2021. This is still very marginal.
More than 600 active technology hubs in Africa
Meanwhile, the continent’s digital transformation is continuing and even accelerating, thanks to the combined efforts of governments, financiers and private investors. There are currently more than 600 active technology hubs in Africa, According to the GSMA. Internet and smartphone penetration in Africa is growing rapidly, with more than 450 million people expected to be online by 2025. Meanwhile, Africa has a growing pool of talented entrepreneurs and technology professionals, with more than 500,000 software developers.
Access to finance and venture capital remains a challenge for many African startups, who receive only a fraction of the funds
« Access to finance and venture capital remains a challenge for many African startups, who only receive a fraction of the funds, » says Mehdi El Alaoui. Infrastructure and regulatory barriers can make it difficult for startups to operate and expand in Africa, but this also presents an opportunity for innovation and disruption in untapped markets. »
Africa is ready to write its own story in the history of global technology. It is time for Africa to position itself as a leader!
In other words, it is up to the governments of African countries to put in place the appropriate frameworks for the emergence of this African tech ecosystem. Governments meeting at GITEX Africa have pledged to « unleash digital technology for a new Africa ». “Africa has a population of over 1.2 billion people of which 60 per cent are under 25 years and 70-75 per cent are under 40. This is a significant opportunity for growth and technology.” More so, most of the tech founders are under 35 years of age, » says Babajide Sanwo-Olu, Governor of Lagos State. Furthermore, the rise in mobile payments has increased with new opportunities for Financial Inclusion and economic empowerment. “Lastly, investment in Africa has seen higher growth frontiers reaching over $80bn in 2021. This has increased over the years. Startups in Africa raised over $4.4bn in 2022 according to intel from Africa: The Big Deal. The influx of these funding is helping to fuel the growth of startups and tech companies across the continent.” And he urges his peers to get on board. « Africa is ready to write its own story in the history of global technology. It’s time for Africa to position as a leader! »
