The tech startup scene in sub-Saharan Africa has grown exponentially, making the region a hub for innovation, according to the Global Startup Ecosystem Report 2023 (GSER 2023).
The report highlighted the top 5 African cities with thriving startup ecosystems, which showed remarkable achievements in financing, number of deals, progress in a specific sector, and attracting entrepreneurs and investors alike, according to “Insider” and viewed by Al Arabiya.net.
Cairo
Cairo jumped from 71-80 internationally, to 51-60 in the ranking of emerging ecosystems, and that was, in part, helped by the $1.5 billion acquisition of a stake in Swvl.
The value of the ecosystem has grown by 97% to $8 billion, and it ranks among the top 20 global cities for talent abundance.
This comes as Cairo’s ecosystem continues to grow despite global challenges. Investors poured $517m into the country in 2022, up 3% from 2021. In addition, 160 deals were closed – more than any other country in the MENA region, according to Magnitt’s 2022 Egypt Venture Capital report.
In November 2022, the American venture capital fund “500 Global” signed an agreement to open an office in Cairo, its first in Africa, and launch several programs to support Egyptian startups. The United Nations Development Program plans to launch a $1 billion financing project for Africa and establish 8 centers across the continent in 2023, including one in Cairo.
In December 2022, the Indian multinational “Tech Mahindra” signed an agreement with the Egyptian Information Technology Industry Development Agency to establish a global call center in Cairo that will employ more than 1,000 people.
Nairobi, Kenya
Nairobi has established itself as a leading center for technological innovation in sub-Saharan Africa. It highlights the city’s thriving fintech ecosystem, which accounted for 41% of all technology VC deals from 2018 to 2022 in sub-Saharan Africa. Notable successes include Network International’s $291 million acquisition of the payments company “DPO” in 2021.
Sun King, a maker of solar home systems, has secured an impressive amount of funding, raising $499m in total venture capital funding, including $330m in growing Series D rounds in 2022. The value of the Nairobi start-up ecosystem increased by 281% from July 2019 to December 2022, cementing its position as the continent’s top destination for entrepreneurial companies.
Lagos, Nigeria
Nigeria’s economic powerhouse, Lagos, continues to play an important role in the tech startup scene in the region. The city’s outstanding achievements in financing and evaluation have earned it a place among emerging ecosystems. Sub-Saharan Africa’s largest deal came out of Lagos with Opay’s $400m Series C funding round in August 2021. Flutterwave, another Lagos-based fintech company, also raised $250m in a Series D round in February 2022, pushing its valuation to more than $3bn.
The startup ecosystem in Lagos is further supported by the Nigerian Startup Act, which was enacted in October 2022, providing a regulatory framework for the growth of the technology sector.
Cape Town, South Africa
For its part, Cape Town has emerged as a promising player in the startup ecosystem in Africa, making it into the top 100 startup ecosystems. The city saw a 23% increase in ecosystem value and a 26% growth in early deals.
With the introduction of 22 new life sciences majors, the startup scene in Cape Town has diversified. Its picturesque background, entrepreneurial ecosystem, and access to resources create a thriving environment for startups.
Johannesburg, South Africa
Johannesburg, the economic hub of South Africa, hosts a dynamic tech startup ecosystem driven by innovation and growth. The city provides a suitable investment climate, a skilled workforce, and a vibrant entrepreneurial culture. Fintech, e-commerce and health tech are among the sectors driving the startup scene in Johannesburg.
The city also provides the necessary support and resources for startups to scale and attract financing, making it an attractive destination for entrepreneurs and investors.
