Since 2020, African technology entrepreneurs have been struggling to access funds. The growth recorded since 2018 has been slowing down and investors are becoming more cautious.
African technology startups secured $1.8 billion in funding in 2023, a 40% decline from $3 billion in 2022, according to data from CB Insights’ “State of Venture” report published January 4. The total represents 486 deals, down nearly 49% from 709 in 2022.
Africa’s 2023 funding figure falls nearly as low as 2020’s $1 billion (493 deals), a year heavily impacted by the COVID-19 pandemic. This decline reflects the relative underperformance of major tech ecosystems like Nigeria, Kenya, and Egypt, which typically attract the most investment and drive overall figures.
Nigeria, for instance, saw a sharp drop, with startups raising $224 million in 2023 compared to $531 million in 2022 and over $1 billion in 2021. This trend aligns with a global slowdown in startup funding, driven by rising interest rates at central banks worldwide.
“In the past 18 to 24 months, particularly due to rising interest rates in the United States and Europe, capital for African startups has significantly diminished. This has led to a scarcity of funds for these startups, many of which relied on this capital for growth and ongoing development. As a result, these startups have found themselves in precarious positions, necessitating cost structure reductions and subsequent staff layoffs,” said Tamim El Zein, founder of Seedstars Africa Ventures, in an interview with RFI in November 2023.
Africa’s 40% decline is lower than those seen in other regions with the global trend remaining concerning. Latin America saw a 56% drop to $3.3 billion, Europe a 45.25% decline to $48.4 billion, and Asia a 49.48% fall to $53.4 billion.
Adoni Conrad Quenum
