Investment and Venture Capital in Africa is Dominated by Nigeria, Egypt, Kenya and SA

A McKinsey report just out says that Africa’s fintech revenue may soar to $30.3bn by 2025 – eight times higher than in 2020 – as a growing, young, and under-banked population gets more access to the internet. The vast majority of venture capital in Africa goes to Nigeria, Egypt, SA, and Kenya, according to the African Development Bank’s (AfDB) 2021 report. These 4 countries account for about a third of the continent’s start-up incubators and accelerators and receive 80% of foreign direct investment (FDI) into Africa. This is also the finding of the seventh edition of Disrupt Africa’s African Tech Startups Funding Report, which showed that start-ups in those countries raised a combined $1.9bn in 2021 — about 92.1% of the overall total investments raised in Africa for that year.

The latest figures are, in fact, part of a year’s-long trend of their dominance in Africa’s start-up scene. Funding secured by Nigeria, Egypt, SA, and Kenya has continually increased over the years: from a 79.4% share in 2018 to 87.5% in 2019 and then 89.2% in 2020. A substantial portion of this investment went to fintech, especially in SA. The Disrupt Africa report also indicates that start-ups from Ghana, Morocco, Algeria, and Tunisia were the runners-up. Vying for just 7.9% of the continent’s total. These figures stand in sharp contrast to investments raised by countries like Ethiopia, the DRC, and Tanzania, all of which recorded a low level of start-up investment activity.

Meanwhile, according to its government’s claims, Egypt has remained a top recipient of foreign direct investment in Africa for the fifth year in a row in 2020/2021, reaching $5.9bn, which represents 53% of foreign direct investment directed to North Africa. Egypt has improved the business environment, which includes benefiting from and building on institutional and legislative reforms, such as the new investment and bankruptcy laws, as well as amending the Public-Private Partnership Law, amending the Capital Market Law. Egypt has also launched the National Structural Reform Program, which includes a set of supporting pillars like increasing the relative weight of sectors Industry, agriculture, communications, and information technology in the Egyptian economy, in addition to improving the efficiency of the labor market and technical and vocational education and training through developing the technical education and vocational training system.