It’s Gold Season in African Tech

Welcome to The Afro Pivot Point

Showing you What's Art And What's Not In African Tech

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Every week, we post an opinion article on something we found Interesting. Here goes this week’s take:

Three key forces drive African tech. The techies dream big, the investors fund those dreams, and the governments set the stage. But in this game, it’s not just about playing your part—it’s about knowing when to step up and make history. The tech scene is buzzing, investments are flowing, and the government is watching closely. Everyone’s got their role, but who’s going to lead the charge and truly change the game?

What You Should Know

• Kenyan startups attracted $800 million in 2023, leading the continent in funding, with Nigeria following at $410 million.

• In the first half of 2024, African startups collectively secured $780 million, with Kenya grabbing the largest share of $244 million, representing 32% of the total funding.

• Local investment is crucial for sustained growth, and there’s a growing need for more success stories like Mpesa that have a tangible impact on local economies.

• To truly unlock Africa's tech potential, the ecosystem needs more transparency, better communication from founders, and an end to unethical practices like unpaid internships and inflated valuations.

It feels like Christmas in the African tech scene. It's bussin'!

Every day, a new announcement on funding, a new partnership announcement, and a story of brilliant entrepreneurs rising against adversity to solve problems using tech. Many take to social media to express their gratitude to their communities, customers, and fans—writing in detail how they plan to use the funding they just received, often to the tune of a couple of million dollars.

It is very inspiring, I’ll tell you that much. And especially to the brilliant and hopeful tech students either at university or in the many programs by organizations in Africa, such as ALx and Power Learn Project (both of which I attended and can vouch for—anyone looking for where to start their journey in tech should consider these).

Many of the students in these institutions hope to one day become these outliers that receive funding and create the change they very much hope to see. While in school, you often dream about how your idea will change the world, how you will never let interns in your startup go unpaid, and how yours will be the idea that pushes your country (and continent) to Silicon Valley levels.

For African women in tech, never has the future looked so bright and beaming with possibility. A lot of communities here are doing the hard work of nurturing and equipping women (often from underserved communities) with highly competitive tech skills aimed at helping them launch illustrious tech careers either in Big Tech or the startup space (shout out to She Code Africa, WomenTechMakers, and Women in Data, just to name a few). Heck, there are even women in powerful leadership positions like Catherine Muraga of Microsoft ADC, defying gender norms in tech and creating a template for future generations.

Evidently, the African tech ecosystem is buzzing with activity—from niche community building to tech events like the African Fintech Summit happening in Nairobi from September 5th-7th, and weekly events and webinars discussing industry-specific challenges and opportunities.

Funding currently: What’s art?

In recent weeks, several African startups have closed impressive funding rounds:

• Workpay raised $5 million in Series A funding, following a previous $2.7 million pre-Series A raise earlier this year.

• Chpter secured $1.2 million in a pre-seed funding round.

• Payd received a Ksh 4.5 million grant from Mozilla, plus an additional Sh500,000 in technical support.

• Ampersand received a $2 million Series A extension, bringing the company’s total funding to $21.5 million.

• Zuri Health has raised $1.3 million in 5 funding rounds.

• Waza secured $8 million in equity and debt funding, which consists of a $3 million seed equity round and $5 million in debt funding.

  The list goes on…

The Renaissance

In 2023, Kenyan startups drew in around $800 million, making it the highest amount secured across the continent, with Nigerian startups following at $410 million. During the first half of 2024, African startups collectively raised $780 million in funding. Out of this total, Kenyan startups attracted the largest share at $244 million, accounting for 32% of the overall funding. Nigerian startups brought in approximately $172 million, while Egypt and South Africa secured $101 million and $85 million, respectively.

What’s not?

Like any other industry, though, it’s not always rosy. Cases of embezzlement, fraud, and misappropriation are nothing new. There have been cases of founders using VC money to fulfill their V12 engine dreams and desires, often running the cash reserves dry with little to no ROI for the investors' hard-earned money. In rare cases, the founders go ahead to start other businesses with the looting (let’s call it what it is). Some founders in the ecosystem have also been accused of inflating their numbers with the aim of misleading investors on expected returns.

In Africa especially, these cases, just like in our political circles, thrive due to faulty legal frameworks that enable this behavior due to gaps in the governance systems. But in actuality, fraud and corruption are stark examples of character flaws and bad leadership.

Birthing a brilliant idea does not a good leader make.

We have a long way to go, no doubt. But we’re still quite young as an ecosystem, and this may just be a few teething problems that can be resolved with proper frameworks.

And if you’re still not convinced about investing in African tech, please indulge me as I try to change your mind. Will you?

The opportunity

Africa has the youngest population in the world, with 70% of sub-Saharan Africa under the age of 30. A large majority of this population is educated, digitally literate, and with a burning desire to change the continent for the better.

Currently, there is a digital renaissance happening, if the emergence of boot camps teaching tech skills and increased VC funding is anything to go by. Even Big Tech is betting big, with key players like Google, Microsoft, Amazon, and Starlink seeking to make their mark on the continent with a variety of projects.

And as promising as all this may sound, we STILL ought to encourage local investment in the space. I promise you, you are way better off putting your money in an industry with a demonstrated growth ratio than betting your money on another useless mall in Nairobi, another property scam, or the Ponzi schemes that are becoming all too common.

For that to happen, though, more proof of concept is needed. We desperately need more success stories like Mpesa that have a felt impact on the local economies, much to global speculation. We need to check back in 10 years on companies like Chpter, Workpay, and Payd and see how much these companies changed local businesses. We need to see the impact of Ampersand’s technology and growth on the continent’s carbon footprint—or GDP, for that matter.

So if you are a VC reading this, I hope you are challenged to go beyond the ordinary. Our development as a continent is not only dependent on the innovation and ideas pushing our narrative forward but also on the people with pockets deep enough to help execute the ideas at scale.