Debt financing saw a double-digit decline over the past year, mainly due to rising interest rates and the strengthening of the U.S. dollar against African currencies. Despite this drop, debt financing still accounts for nearly a third of the total funds raised.

African startups raised $3.2 billion in equity and debt funding in 2024, marking a 7% drop from the previous year, according to a report released on January 23 by venture capital firm Partech Africa.

Titled Africa Tech Venture Capital 2024, the report reveals that equity funding remained steady at $2.2 billion, matching the figures from 2023. However, debt financing saw a significant decline, dropping by 17% to $1 billion.

The decrease in debt funding can be mainly attributed to rising interest rates and the strengthening of the U.S. dollar against African currencies. This put pressure on local currencies, raising the cost of loans in dollars and increasing repayment burdens for African startups.

Despite this setback, debt still accounted for 31% of the total funding raised by startups across the continent. The report also noted that activity in Africa’s tech ecosystem remained relatively stable, with 457 equity deals (down 3%) and 77 debt deals (up 4%).

In terms of average deal size, most stages of investment saw a decline, particularly Series A (down 18%) and Series B (down 27%). However, Seed stage investments showed positive growth, with average deal sizes increasing by 26%.

Total funding amounts dropped across all stages of development, except for the Growth phase. Notably, megadeals (transactions over $100 million) saw an increase in both number (+43%) and value (+57%). In 2024, there were three megadeals in debt and four in equity, totaling $1.1 billion.

Fintech Dominates Funding in Africa

Looking at equity funding by country, Nigeria led the pack with $520 million, followed by South Africa ($459 million), Egypt ($297 million), and Kenya ($221 million). These four countries, often referred to as the “Big Four,” continued to dominate equity funding on the continent, though their share was smaller compared to previous years—67% of the total in 2024, down from 79% in 2023 and 72% in 2022.

Beyond the Big Four, only Ghana, Morocco, and Tanzania raised more than $50 million in equity in 2024.

In terms of sectors, fintech remained the largest beneficiary of equity funding, receiving $1.3 billion, or 60% of the total. Other sectors attracting significant funding included cleantech (9%), e-commerce (7%), business services (7%), and agritech (4%).

When it comes to debt funding, Kenya led with $382 million, followed by Egypt ($142 million), South Africa ($132 million), and Ghana ($118 million).

As in previous years, cleantech captured the largest share of debt funding (40%), followed by fintech (34%) and connectivity-focused startups (11%).

The report also highlighted a 2% increase in the number of unique equity investors, reaching 583 in 2024. These investors were particularly active in Seed stage investments but less involved in Series A and B compared to previous years.