Egypt is becoming the tech powerhouse of Africa. According to new data, it has surpassed Nigeria as the community that has raised the most money between June 2022 and June 2023.
This indicates that venture capitalists and private equity firms, which have invested heavily in Africa in recent years, are slowing down.
Experts say this is a global reaction to high volatility and inflationary factors in many nations, which are making investors reassess their risk tolerance, especially in the global tech sector.
Leaders and IT companies in Africa must do more before investors will back their ideas.
Read also: President Tinubu signs executive orders to boost Nigerian technology sector
The data released by Africa
The Big Deal says that funding for tech startups in Nigeria has dropped the most, by 77 percent, to $470 million from $2 billion year over year. This is one reason why Egypt, which is in North Africa, has become the biggest economy on the continent.
From June 2022 to July 2023, Egyptian startups raised $540 million. This is 25% less than the $710 million they raised the year before. The 25 percent drop is the smallest of the big four countries in the region that gets the most money. Egypt is also the only country in the time frame to reach $500 million.
South African startups lost 53% of the money they got from investors the year before. From June 2022 to July 2023, funding for startups will be $420 million, down from $890 million from June 2021 to June 2022.
The amount of money given to Kenyan startups also dropped by 69 percent, from $970 million to $300 million.
Aside from the Big Four, other countries on the continent are also being hurt by the budget crisis. Tanzanian tech startups lost 68 percent of the money they had last year; Ghana lost 81 percent; and Senegal went from having $222 million in funding to only having $6 million. These were markets that had gotten more than $100 million in funds before.
Seven markets raised between $10 million and $100 million because of the recession. These include the DRC, Namibia, Zambia, and Uganda.
“In spite of all odds, three markets were able to grow in this bad situation. In Côte d’Ivoire, funding grew by 15% year over year, and in Cameroon, funding grew by 34% and went over $10 million. Algeria had the biggest jump by far, from $30 million to $150 million. This was almost completely due to one deal: Yassir’s $150 million Series B in November 2022, according to Max Cuvellier, Head of Mobile for Development at GSMA, who helped write the report.
Startups are also looking inward and attempting to increase their revenue in order to survive, but they are unsure of how long the financial winter will last.