African startups raise US$4bn in 2021 with fintechs representing 62% of the funds

AFRICA – African startups raised US$4.65 billion in disclosed funding in 2021; 62 per cent of which went to fintechs African startups last year raised US$4.65 billion in disclosed funding rounds, according to the latest Africa Investment Report.

According to the report, the amount raised is twice as much as the total volume that was raised by African startups in 2020.

The report said there was also a 25 per cent increase in the total number of deals last year com­pared to the number of deals that were announced in 2020.

The report explained that some of the funding deals that were sealed last year were not disclosed.

Therefore, factoring in all these undisclosed deals, the report noted that an estimated sum of US$4.9 billion was actually raised in 2021. As many as 240+ deals were not disclosed.

The report was compiled using data gathered by analysts at Briter Intelligence, as well as information provided by investors and found­ers.

While commenting on the re­port, the Director of Briter Bridg­es, Dario Giuliani, said the huge capital raise last year was indicative of Africa’s growing attractiveness as an investment destination.

“Approaching US$5 billion in known funding in 2021, especially after nearly 24 months since the COVID-19 pandemic began, is a clear sign that Africa is undergoing tangible changes, and the increas­ing presence of local exits and returns is shaping the continent’s attractiveness,” he said.

Startups in the following African countries received much of the funds in 2021: Nigeria, South Afri­ca, Kenya and Egypt.

The top 20 deals of 2021 captured 65 per cent of the total funding volume.

“It is well recognised that investment, whether it is domestic inward investment or foreign direct investment (FDI), targeted at specific strategic sectors, has the potential to enable Africa to leapfrog the development ladder,” said Ambassador Albert M. Muchanga, Commissioner for Trade and Industry, AUC.

“Deepening regional integration is also an important aspect of enhancing the attractiveness of Africa as an investment destination – the challenges of small markets and heterogeneous regulatory environments are well known – as well as harmonising payment systems, capital markets and addressing trade barriers are all important elements that have been identified as critical in moving forward.”

The report added that by investing in Africa, African companies are pushing integration on the continent further ahead. Business investments cross borders, taking Agenda 2063 from aspiration to action.

The goal to move Africa towards a Continental Free Trade Area of 54 countries with a total population of more than one billion people and a GDP of more than USD 3.4 trillion will be a global first.

The plan is to create a single market for goods and services, with free movement of business people and investments.

Regional Economic Communities are making progress, and the planned Tripartite Free Trade Area of COMESA, EAC and SADC is an important step. The bold aims of Africa’s political leaders and policymakers can be best matched by the bold mindset of Africa’s companies in driving closer integration by investing in Africa.

Highlights from African companies with a big footprint on the continent show how many expanded from a home base into their region before continuing to invest Africa-wide.  

Higher levels of investments bring Africa’s policy frameworks to life. Channelling African private capital into Africa is a vital part of shaping the continent’s future. Already data from some of the leading African companies investing in Africa gives a positive signal of jobs created and development projects being supported in new business locations.

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