So far this year, start-up funding in Africa is not quite what it was in previous years, in line with a global context that remains quite gloomy. One of the key reasons is the significant drop in investments in the Fintech space. Indeed, Fintech only represents 22 percent ($158 million) of the funding raised this year so far in Africa, while at the same time last year, it made up more than half of the total ($852 million out of $1.7 billion), according to a new report by Africa: The Big Deal.
Shift in Leading Sectors
The consequence is that the sector attracting the most funding in 2024 so far is not Fintech but Logistics & Transport (29 percent, $215 million); and Energy & Water is a not-so-distant third (18 percent, $132 million).
Rise of Climate Tech
What’s particularly interesting is the proportion of funding going to ventures considered as ‘Climate Tech.’ Climate Tech represents 45 percent of the funding announced on the continent this year so far ($325 million), an all-time high since tracking began in 2019. While Climate Tech funding has been growing in absolute numbers over the past five years ($340 million in 2019, $344 million in 2020, $613 million in 2021, $959 million in 2022, and $1.1 billion in 2023), the investment boom in 2021 and 2022 did not benefit this space as much as others (such as Fintech), resulting in a drop in its share of total investments: from 25 percent in 2019 and 32 percent in 2020 to 14 percent in 2021 and 21 percent in 2022. This share started to pick up again in 2023 (36 percent) and seems on track to grow again in 2024 (45 percent so far), despite the fact that topping last year’s $1.1 billion invested in Climate Tech seems unlikely at this stage.