AfricArena has recently released a report which indicates that Nigeria and Kenya are the hotspots for African Venture Capital Investment (VC) with $307 million and $305 million raised in 2020, respectively. Egypt is also a major player with $269 million of funding recorded last year while South Africa had $259 million. Rwanda has positioned itself as a hub for East Africa and has chalked great success with $126 million raised in 2019. However, Rwanda like many other countries the pandemic has halted its impressive progress in VC and its figure has decreased to $11.6 million in 2020.
Using Partech data, the report also forecasted that virtual capital funding for African startups will amount to between $2.25 billion and $2.8 billion in the year 2021, a record high for the continent. VC investments in Africa reached an all-time high in 2019 when 234 tech companies raised $2.02 billion in 250 equity rounds, which is a 74 percent increase on the $1,163 recorded in 2018.
While the pandemic resulted in major setbacks in 2020 with growth declining 29 percent in VC, the good news is that major improvements are expected in 2022 and beyond.
This progress in VC on the continent can be attributed to the increase in allocation of capital from corporates to their corporate VC activities, acquisitions of African tech companies, intensified Foreign Direct Investment (FDIs) and major initiatives from Europe such as the Enrich in Africa program.