Startups in Africa have been on the rise in the last decade or less. It has led to economic empowerment and growth in all African countries.

Establishing a new business is relatively common in Africa.

The Reasons Being:

1) Unemployment

2) Market opportunities

3) Capital, Investors

4) Tech-savvy young population

Africa's largest economies present the most competitive startup environments.

The Indicators of this include:

1) Number of startups

2) Incubators

3) Co-working spaces

4) Economic ecosystem

South Africa, Nigeria, and Kenya were the most favorable African countries for startups in 2022. The number of startups in Nigeria was estimated to have exceeded 3,360 in 2022, the highest number in Africa. To follow, Kenya and South Africa counted approximately 1,000 and over 660 startups in the same year. Other key African startup markets were Ghana, Morocco, Tunisia, and Rwanda.

COMPANIES DOMINATING STARTUPS

1Fintech

Financial technology has been one of the most dominant sectors in African startups

Fintech Types include:

1) Mobile money platforms

2) Digital banking solutions

3) Peer-to-peer lending

4) Remittances

5) Insurance technology (Insurtech)

6) Payment processing systems

As of 2021, 576 fintech startups had headquarters in Africa. The number of companies increased from 491 in 2019, a growth of 17.3 percent.

Most of the funding raised for fintech startups in Africa landed in companies in Nigeria, South Africa, and Kenya. From 2015 to 2021, African fintech startups secured nearly 900 million U.S. dollars in investment. Over 53 percent of this amount went to Nigeria, while companies in South Africa received some 25 percent. Kenyan startups secured approximately 10 percent of the total funding.

2E-commerce

E-commerce, connects buyers and sellers, often overcoming logistical challenges in regions with underdeveloped infrastructure.

Startups in the e-commerce and retail tech industries secured the second-highest funding volume among Africa's tech startups in 2021. Similar to the fintech sector, the capital raised by e-commerce and retail tech businesses increased substantially in 2021 compared to the previous years.

The revenue in the E-commerce market in Africa was forecast to continuously increase between 2023 and 2027 by in total of 23 billion U.S. dollars (+63.62 percent). After the fifth consecutive increasing year, the indicator is estimated to reach 59.18 billion U.S. dollars and therefore a new peak in 2027.

Other startups are Agri-tech and e-health, which account for 10.1 percent of Kenyan startups each, with e-commerce and retail-tech, recruitment and HR, and ed-tech coming in third, fourth, and fifth respectively

3EdTech

Education technology startups have been addressing the gaps in the education system by providing online learning platforms, digital educational content, and tools for skill development.

4Transport and Logistics

Startups in this sector are tackling transportation, delivery, and logistics challenges.

5Real Estate and Property Tech

These startups provide platforms for property listings, rentals, and real estate transactions.

6Tourism and Hospitality

These startups focus on providing travel booking platforms. tour guides, and experiences that showcase the continent's diversity.

7Agriculture and Agri-tech

These startups focus on improving agricultural practices, supply chain management, market access for farmers, and providing real-time agricultural information through technology.

Investors

In recent years, the number of venture capital deals in Africa has increased considerably, jumping from around 70 in 2014 to over 300 in 2020.

Investment into the African tech startup ecosystem passed the US$3 billion mark for the first time in 2022, with the space withstanding global economic headwinds to post a record year as 633 startups raised funding according to Statista.

Future of startups in Africa

The number of newly registered businesses in South Africa was forecast to continuously increase between 2024 and 2028 by in total 0.1 thousand companies (+18.52 percent). After the fourteenth consecutive increasing year, the number is estimated to reach 0.62 thousand companies and therefore a new peak in 2028. Notably, newly registered businesses have continuously increased over the past years.