According to a recent analysis of startup financing in the African continent conducted by AfricanDataStoryteller in 2023, Kenya, Egypt, South Africa, and Nigeria dominate startup financing in the continent, thus eclipsing Tunisia and Morocco from the TOP 4 despite the two countries reputation for business innovation.
The news represents a major disappointment for the Tunisia, once renowned for its innovative business climate. Together, Kenya, Egypt, South Africa, and Nigeria have attracted 87% of the total investments destined for African startups, setting a record since 2019. Equally important, the “Big Four” also accounted for 71% of startups successfully raising $100,000 or more.
Kenya, with a substantial share of 28% of the total investments destined for African startups, dominates the continent in terms of startup financing securing nearly $800 million in funding in 2023.
These figures not only underscore Kenya’s prominent position in the African startup landscape but also the success of policies aimed at creating a business friendly ecosystem and attracting foreign investment.
In November, Kenya’s President William Ruto announced that the startup bill 2022, which “seeks to provide employment opportunities for Kenyan youth and tax breaks for startups, will be signed into law by April 2024.”
Egypt comes second with a 23% share, while South Africa and Nigeria claim 21% and 15%, respectively.
A year ago, Nigeria’s Startup Act 2022, which seeks to bridge the gap between regulators and high-tech startups, was passed in an attempt to shut down a number of regulatory hurdles.
Beyond startup innovation, Nigeria aspires to become Africa’s High Tech hub. In this undertaking, Nigeria has placed high hopes on information communication technologies (ICT).
Data from the Nigerian Communications Commission (NCC) and discussed by the Official Website of the U.S. International Trade Administration indicate that “the ICT sector contributed 9.88% to the total nominal GDP in Q4 of 2021,” which though “lower than the rate of 10.58 per cent recorded in the same quarter of 2020,” still bears witness to Nigeria’s leading role in ICT in the continent.
Despite its relentless efforts at leading a startup revolution, Morocco is still lagging behind the “Big four” despite the $17 million raised in 2023. These figures also show that Tunisia’s long-time acclaimed leadership of technological and startup innovation in the continent might be facing some hurdles that need to be addressed soon.
