Agence Ecofin TikTok Agence Ecofin Youtube Agence WhatsApp


African tech investment sees first decline in a decade, but resilience sparks optimism (Report)

Wednesday, 14 February 2024 20:26
African tech investment sees first decline in a decade, but resilience sparks optimism (Report)

(Ecofin Agency) - After a decade of consistent growth, the volume of investment captured by African startups has seen a year-on-year decline in 2023. This drop is attributed to a combination of primarily external factors, but a recent report sheds light on the decrease as a realignment of investment strategies.

According to a recently released report by Briter Bridge, the investment volume in African tech experienced a 21% year-on-year decline in 2023, dropping to just over $4 billion compared to the $5.2 billion recorded in 2022. This marks the first decline in the past decade (2014-2023).


During the decade considered, the continent attracted $22 billion in venture capital. The Briter Bridge report highlights that the period “saw investment into venture operating in Africa go from virtually nothing to a market of between $2 and $5 billion per year over the past five years, with hundreds of new companies and investors entering the ecosystem”.

The decrease in 2023 is primarily attributed to a drying up of mega-deals (fundraising rounds of $100 million and above) due to the slowdown in global venture capital markets. While this might initially raise concerns of a crisis, a closer analysis reveals a more nuanced reality.

Resilient and dynamic industry

The investment volume recorded in 2023, despite the decline, nearly doubles the average annual value of the decade. Furthermore, the number of transactions increased by 11% in 2023, surpassing 1,080 deals compared to 975 in 2022. This uptick is accompanied by a noteworthy trend, a rise in merger and acquisition activities, with over 30 transactions recorded.


As usual, investment allocation remains concentrated among the big 4 (Nigeria, Kenya, Egypt, and South Africa), which accounted for 68% of the funding. However, a new dynamic is emerging with the diversification of funding sources.

Credit tightening

While the investment volume sees a significant drop, the debt portion experiences a noticeable increase. Fintech continues to attract the majority of investments (23%), but the emergence of new specialized sector funds is driving investments in areas such as health, biotechnology, climate, and logistics.

The main explanation for the overall decrease in investment volume lies in the scarcity of large deals exceeding $100 million. Termed as a "funding winter," this phenomenon results from the refocusing of international funds that accounted for the majority of large investments in their primary markets.

According to Briter Bridge, more than 50% of transactions reported in 2023 involved amounts below $250,000. This downturn does not signify a crisis but rather a "reconfiguration" following years of post-pandemic liquidity abundance.

Cautious optimism

This analysis aligns with the findings of the 2023 Africa Tech Venture Capital Report by Partech Africa, which observes a similar slowdown in venture capital financing. Despite differing figures (Partech Africa reports $3.5 billion and 547 transactions), the trends converge.


Despite the current context, the funding levels in 2023 remain higher than those observed before the pandemic. This resilience indicates that the African tech sector maintains a robust underlying growth trajectory and continues to attract investors. However, the current economic climate calls for a more cautious approach, especially regarding large-scale funding.

Partech Africa explained that “almost all of the funding at the Growth stage was previously sourced from large global funds with no dedicated African mandates. These funds are now redirecting their focus towards their core mandates. This has created a new scarcity of large growth stage tickets and the absence of megadeals with only 1 equity deal above $100M compared to 7 in 2022 and only 4 deals above $50M vs. 21 in 2022 (-81% YoY)”.

According to this investment platform, although challenging, the “current scenario reflects in part a natural evolution in the venture capital industry, which previously experienced exceptionally high valuations and multiples, along with a significant surge in funding in 2021”.

"The industry is now undergoing a correction which we hope will be followed by a more stable growth trajectory. Such adjustments are typical in the evolution of any emerging ecosystem, representing a phase of consolidation that paves the way for more sustainable and balanced development,” Partech said, showing optimism.



Public Management

ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

Mediamania Sarl
Rue du Léman, 6
1201 Genève
Tél: +41 22 301 96 11


Benjamin FLAUX
Tél: +41 22 301 96 11
Mob: +41 78 699 13 72


Please publish modules in offcanvas position.