Nigeria’s fintech industry made a mark in the African startup ecosystem as research firm ‘Africa: The Big Deal’ reported that a single raise by Nigerian fintech company Waza contributed to the country’s 14% share of the total funds raised by African startups, totaling $56 million in August 2024.
Waza’s Fundraise
Waza, renowned as a Y Combinator-backed B2B payment and liquidity provider for emerging market businesses, secured a notable $8 million in equity and debt funding during August. This funding consisted of a $3 million seed equity round combined with a $5 million debt funding element, marking it as one of the three largest deals sealed by African startups during the same period. Other notable deals included Dutch DFI FMO’s $10 million investment in Ghanaian Fintech Fido and Solarise Africa’s $9 million announcement.
Funding Trends and Challenges
From the record-breaking $443 million raised in July, the $56 million amassed by African startups in August represented a staggering 87% decline in funding month-on-month. This reported August 2024 as the second-slowest month in four years in terms of funding raised, following the $42 million raised in June 2024. The majority of funding raised in August comprised equity at 87%, with 9% in debt and 4% in grants. Moreover, only 27 startups announced funding in August, well below the monthly average over the past twelve months of over 40, with no exits recorded during the same period.
Challenges and Record-Breaking Performance
Despite the funding challenges observed in August, the report raises concerns regarding the prospects of African startups surpassing the extraordinary July record of $443 million. The July 2024 achievement not only marked the highest funding in the year but also the past 14 months, surpassing the amount raised in the entire Q2 2024 and 2.5 times the average monthly funding over the previous 12 months. This record also marked a significant milestone for African startups, crossing the $1 billion funding mark, showcasing remarkable progress amid funding constraints.
Challenges for Nigerian Startups
The report highlighted the challenging fundraising landscape for Nigerian startups in 2024. In August, the country recorded only one fundraising, following Intrion Health’s $1.6 million pre-seed round in July, which was the sole major funding by a Nigerian startup during the period.
Nigeria’s Position in the Funding Landscape
Nigeria, previously a leader in startup funding in Africa, lost its top position to Kenya in 2023. Kenyan startups attracted approximately $800 million, surpassing Nigerian startups at $410 million. In the first half of 2024, African startups collectively secured $780 million in funding, with Kenyan startups leading at $244 million, followed by Nigeria at approximately $172 million. Egypt and South Africa also secured significant shares at $101 million and $85 million, respectively. Over the last five years, from 2019 to 2023, Nigerian startups received the largest portion of funds raised by African startups, accounting for 29% of the $15 billion total investments during the period.