TLDR: Venture capitalists should look beyond the “big four” countries in Africa – Kenya, Egypt, South Africa, and Nigeria – to explore untapped potential in other regions. Despite a slight dip in funding and deal count in 2023, Africa’s venture capital ecosystem remains strong, with the continent being one of the fastest-growing VC markets globally. However, foreign investors still outnumber local investors, and non-“Big Four” countries receive smaller percentages of funding. To attract more VC investments, Africa needs to improve its infrastructure, revitalize its education system, and create a hospitable investment ecosystem.
Africa’s “big four” countries – Kenya, Egypt, South Africa, and Nigeria – captured 87% of all startup funding in Africa in 2023.
The decline in global IPO volumes and proceeds has shifted the focus towards outright acquisitions as the primary avenue for investment in Africa.
West Africa continues to attract the highest volume of VC deals in Africa, followed closely by North and East Africa.
Foreign investors outnumbered local investors, with Africa-based investors accounting for slightly less than a quarter of the total number of investors active in Africa.
Africa needs an increased number of data scientists, software developers, data engineers, analysts, and other data professionals to meet the growing demand on the continent.
African governments can leverage the African Continental Free Trade Area (AfCFTA) to attract investments by reducing investment barriers and enhancing investment governance within their respective countries.
A tailored approach is needed for each African region to extend investor interest beyond the “big four” countries.
African governments must enhance their legal and institutional environments to foster a hospitable investment ecosystem for both investors and start-ups.
