Chapter54: Why the African tech market is a hotbed of expansion potential

As little as five years ago, the thought of Africa becoming a place in which international tech giants would inject large amounts of capital, where unicorns and “soonicorns” could grow and flourish, and where talent would be not only in hot demand, but flocking to the action, was almost unimaginable.

In the current day, however, Africa is a veritable playground of tech innovation activity.

Take the story of fintech scaleup Stripe. Picking up $600m (£445m) of funding in early 2020, the US-based company swiftly made its biggest acquisition to date with Paystack, a Nigerian payment-processing startup that already has over 60,000 corporate clients.

Despite the deal representing the largest startup acquisition to ever come out of Nigeria, it is no anomaly. Nor is the US alone in its penchant for Africa.

Just a few months later, DiDi Global, China’s answer to Uber, spotted South Africa as a launchpad for its African ambitions. It later piloted its ride-hailing app in Cape Town, and officially kicked off operations in the city, with over 2,000 drivers and 20,000 local users downloading the app in its first two months.

From acquisitions we turn to local players, and it is important to note here the diversity of profiles seen in Africa’s home-grown unicorns, both in terms of location and in terms of sector.

Thinking of Africa, we often picture its unbanked masses (over 50% of the population) and are perhaps too quick to assume that fintech is one of the very few sectors that may see unrivalled success here. Fawry, Egypt’s first electronic payments company to be valued at over $1bn, is an obvious illustration.

While it is true that in 2020 fintech dominated the investment space, gaining 25% of the total capital raised in Africa, the 2020 Partech Africa Report also shows that there are six main verticals that attracted over $100m (£74m) in equity funding in 2020, and plenty more that secured smaller amounts of funding.

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