Foreign Direct Investment in Africa – Nigeria Pushes Kenya off the top spot

Investors from Silicon Valley to China have caught the African fintech bug. Lagos is attracting the lion’s share of investments after stealing Nairobi’s crown as leader of Africa’s tech revolution. Nigeria entices investors with the world’s seventh-biggest population. But there are many inefficient processes to improve and 95% of transactions are still in cash, entailing huge costs including the need for large bank branches to store the cash. Nearly 36% of adult Nigerians still do not have access to financial services. Nigeria has attracted more than $1bn in venture capital investment in the last 2 years.

In one week in November 2019 the inflow totaled $400m: Visa invested $200m in Interswitch, a group of investors led by Sequoia Capital China and SoftBank Ventures Asia invested $120m in OPay, and China’s Tassion invested $40m in PalmPay. This was a significant proportion of the total $1.2bn invested via venture capital tech in Africa in 2019. In October 2020, US and Ireland-based payments giant Stripe acquired Nigerian payments company Paystack for a reported $200m in cash and stock, giving an exit for earlier investors such as Visa and China’s Tencent.

Meanwhile, for women in tech Africa’s female startup founders are among the most underfunded and over-mentored groups of entrepreneurs.  But they are also driving some of the most exciting and important changes on the continent.