March 30, 2023 2022 Could be African Tech's Biggest Year Yet

By Samuel Ancer

Disrupt Africa released its 2021 African Tech Startup Funding Report where it collected and curated disclosed and confidential funding information among hundreds of startups over the year. The report shows that funding in African tech startups has almost doubled, reaching more than two billion United States Dollars. 

This is an increase of over two hundred percent from 2020. The majority of funding rounds that were recorded seemed to be in the pre-seed and seed phase of funding. Around 225 of the 316 recorded funded startups were in the seed and pre-seed rounds. Beyond that, there is also a three billion rand fund set up by the Norrsken Foundation that is looking to grow African tech startups in 2022 and is hoping to raise more than 30 billion rand. We’ve also got awesome tech startups like Nigeria’s PiggyVest or South Africa’s Carscan paving the way. With all this continued growth and enthusiasm for Africa’s tech scene building, it’s clear to see why 2022 could be African tech’s biggest year yet.

The Big Four

Nigeria, Egypt, South Africa and Kenya are the four biggest countries in African tech respectively. Nigerian startups raised almost one billion dollars alone, with over 160 tech startups being funded in 2021.

More than half of Nigeria’s funding has come from Fintech, which makes sense since Nigeria has recently emerged as the continent’s strongest economy and largest market. Fintech is also famous for breaking down barriers in markets that have been previously limited by a lack of development. Thanks to these shortcuts created naturally by Fintech disruption, Nigeria’s true potential for a growth economy has been realised and its people have had the opportunity to develop their economic power through financial technology like PiggyVest. 

Egypt’s funding has also exploded with more than double the amount of funding in 2020. While Fintech is also a large part of the Egyptian startup market, e-commerce is just as large of a force. This is likely because Egypt has a reasonable amount of infrastructure which makes Fintech companies less appealing than in other African countries since their services are not as essential. However, Egypt is still a wealthy market and Fintech still has value despite existing infrastructure so the industry in Egypt is still going strong.

South Africa had an incredibly strong year as well with the amount of funding startups received more than doubling the previous year. It, much like other African countries, had most of its growth in the Fintech sector. However, there is also the reality that South Africa is no longer the only big fish in the African tech pond, its nearest competition is Kenya, with both Egypt and Nigeria eclipsing South Africa massively in terms of funding. This is not a bad thing however, with more countries growing and emerging within African tech, consolidating, coordinating and partnering become viable opportunities for South African tech startups. Real growth and power plays can be made in this environment.

Kenya has consistently been pushing itself into the forefront of the African digital revolution. By being an early adopter Kenya has found itself to be in a powerful position regarding the African tech industry. While they are the smallest of the big four with just over 50 percent increase in funding since the previous year. While this might not be as insane as Nigeria, Egypt and South Africa’s growth, it is an astonishing jump from a country whose economy is not as robust as the previously mentioned countries. Kenya is also at the forefront of AI in Africa with most of its funding going to tech companies involved in Artificial Intelligence.

Seeding Means Big Things

With the exception of South Africa the majority of African tech, funding has come in the pre-seed and seed rounds of funding. This means that there are a lot of groups believing in African growth. It also means that this is the best time to get on board the African tech hype train since growth is all but guaranteed with the number of startups getting funding. South Africa already has an established tech market and so has received more funding around the B and C stages. But this is also good news because it means investors really believe funding startups in Africa is worthwhile and that there are real avenues for success in doing so. This shows that things are just getting started for African tech startups.

The Norrsken Foundation

In that same vein, the Norrsken Foundation is a three billion rand fund created by Norrsken, a Venture Capitalist company that is looking to invest and develop in Africa. The fund boasts a number of big players in the tech industry including Skype, Mojang, Flutterwave and other established tech companies, both overseas and in Africa. The fund is hoping to generate more than thirty billion through investments from other VC firms and big players in tech and beyond. If successful this, by itself, would make 2022 the most successful year for tech startups funding. The foundation is mostly looking at Southern African startups but will likely place funds throughout the continent.

PiggyVest

PiggyVest is a Nigerian-based startup that provides its users with a money-saving application. The basic premise is that you store a certain amount of money, chosen by you, at a certain frequency, chosen by you. Giving you complete control over how much you are saving. The goal is to help people save their money digitally. You can also decide when you want to withdraw your funds, and there are different plans available for different goals. The app invests your money giving you interest based on how much you are saving and for how long. These investments are also how the app makes a profit since they are able to collect large sums of money all at once. The app is incredibly popular with over three million users already, with more joining every day. With the growing markets in Africa, it seems like PiggyVest is on the verge of something truly huge in 2022.

Carscan

Anyone who owns a car knows how much of a pain it can be to have it inspected for insurance purposes. The process usually takes weeks and that’s if you don’t have anything to dispute. Carscan has made this entire process simpler and easier. Using computer vision and AI Carscan has made an application that can access and provide all your relevant vehicle information within minutes. The app has already built traction in South Africa, Nigeria and India with plans to go further afield being created as we speak. The app also works when you want to make claims in case of accidents or breakage, once again streamlining the entire process and making it take minutes instead of days or weeks. Investors have recognised the potential of the application and it has raised over twenty million rand in follow-up funding.

Conclusion

2021 was a record-breaking year in many ways for African tech startups. However, 2022 is looking to be an even bigger year, with many African startups wanting to maintain their positive momentum. The big four are leading the way in the development of African startups but there are more and more countries that are getting attention. The growth in Africa is spreading as tech is breaking down existing barriers and disrupting industries, allowing for positive change and development to emerge in Africa. If you’ve looked closely at the last year you know exactly why 2022 could be African tech’s biggest year yet.