A recent report has unveiled that Africa’s climate tech startups have outpaced their fintech counterparts, securing nearly half of all funding amassed in 2024. This shift in investment preferences highlights the rising prominence of climate tech startups within the continent’s tech ecosystem.
Investment Trends and Sectoral Analysis:
The analysis conducted by startup funding data tracker Africa: The Big Deal reveals that African climate tech startups have secured 45% of the total funding amassed by tech startups in 2024, amounting to US$325 million. While this marks a significant surge in percentage terms, the overall funding landscape for African startups has witnessed a downturn in recent years, impacting the total funding for the sector.
Steady Growth in Climate Tech Funding:
Despite the broader funding challenges, climate tech funding has shown promising growth over the past five years. The report outlines a steady rise in investments, with figures escalating from $340 million in 2019 to a landmark $1.1 billion in 2023, indicating the sector’s potential for sustained growth.
Comparison with Fintech Sector:
The contrast between the climate tech and fintech sectors is notable, with fintech startups experiencing a significant decline in funding. The report attributes the slowdown in the climate tech sector’s overall investment to the diminishing financial influx within the fintech space.
Sub-Sector Insights and Diversified Funding:
Within the climate tech realm, the Logistics & Transport sub-sector emerged as a key recipient of funding, securing 29% or $215 million, closely followed by Energy & Water, which garnered 18% or $132 million. Additionally, the report emphasizes the wide range of use cases within the climate tech landscape, highlighting the diverse impact of funding in various sub-sectors.
Hope for Climate Transition and Action:
The sustained funding interest in climate tech presents a positive outlook for climate transition and action in Africa. Innovators are leveraging technology to accelerate resilience efforts, with the backing of global investors providing vital resources and expertise.
Impact of Increased Funding and Global Partnerships:
The impact of amplified funding is already evident, with global investors offering crucial support, enabling innovations such as battery-swapping technology solutions to gain traction across the continent. Notable partnerships, such as the collaboration between Chinese EV manufacturer BYD and Kigali-based EV line Ampersand, signify the growing momentum towards sustainable, mass-market EV solutions.
The ongoing funding surge in climate tech not only signifies a shift in investment patterns but also underscores the potential for transformative solutions to address climate challenges and drive sustainable development in Africa.