Kenya has emerged as the predominant hub for technology investments, surpassing Nigeria in the race for startup funding. According to a report from ‘Africa: The Big Deal,’ Kenya secured the top position by raising just under USD 800 million, constituting 28.0 percent of the continent’s total tech investment, which amounted to USD 2.9 billion.
Traditionally, Nigeria had been the primary recipient of startup investments; however, the dynamics shifted in 2023. Kenya’s rise to the forefront can be attributed to strategic reforms that noticeably improved the country’s business environment. President William Ruto expressed pride in Kenya’s accomplishment on Twitter, attributing it to the nation’s commitment to fostering innovation and economic growth.
President Ruto stated, “Kenya leads Africa in startup capital, securing an impressive USD 800 million in 2023. Our strategic reforms have enhanced the business environment, positioning Kenya as the preferred choice for investors.” He emphasized the substantial funding’s role in driving groundbreaking ideas, fueling technological advancements, and propelling job creation.
The report points out that despite a 25.0 percent year-on-year decline, Kenya’s share of Eastern Africa’s funding grew from 86.0 percent in 2022 to an impressive 91.0 percent in 2023. During this period, 93 Kenyan startups raised USD 100,000 or more, contributing to 19.0 percent of Africa’s total.
In contrast, Nigerian startups faced a significant setback in 2023, with funding plummeting by 65.8 percent year-on-year. The total funding for Nigerian startups dropped to USD 410 million from USD 1.2 billion in 2022. While Nigeria still claimed the highest number of startups raising USD 100,000 or more, the report highlights a dramatic shift in the amount raised.
The report states, “Nigeria is the country where the most dramatic change happened in 2023. While the country still claimed the highest number of startups to raise USD 100,000 or more, the amount they raised was divided by 3 YoY, reaching USD 410 million compared to USD 1.2 billion in 2022 and USD 1.7 billion in 2021.”
This decline has sparked discussions around factors contributing to Nigeria’s drop in startup funding. Some experts suggest it could be due to shifts in investor sentiment, changes in government policies, or even a recalibration of the startup ecosystem.
Kenya’s success in attracting tech investments underscores the importance of a conducive business environment and strategic reforms. The competition between these two African tech giants reflects the evolving landscape of the continent’s startup ecosystem. In 2024, the African tech industry is anticipated to witness remarkable advancements, as technology becomes a fundamental catalyst for advancement.
A surge in digital companies targeting African-specific problems in industries like fintech and health tech is predicted.
