“Only four countries recoup 80% of investments in start-ups in Africa”

By celebrating the entrepreneurial scene of the African continent with its Africa Tech Awards, VivaTech is drawing attention to technological nuggets from a very limited market. However, as Fabrice Perez, head of venture capital investments* on the African continent for Proparco, a French development finance institution operating in developing and emerging countries, said, “it is therefore a very active market, which still includes many differences. ”.

He cited the example of Go My Code, a Tunisian start-up in the field of code education and IT development, present in the 2022 edition of VivaTech. “It’s kind of School 42”, narrates Fabrice Perez. Founded five years ago, Go My Code meets an important need of the African tech market: to recruit local talent and above all to retain it. “There is a lack of training in Africa,” Fabrice Perez explains. And even if the training is there, it does not always match the needs of the job market ”. The venture capital investment expert provides some keys to understanding this tech market in Africa.

What are the most innovative sectors of African tech?

The reality is different. The African market shows major asymmetries in terms of countries and sectors. It’s a very small market compared to other giants: between 2013 and 2019, it was less than 4 billion dollars, while in the United States, we’re talking about a market of over 500 billion and in Europe, approximately 100 billion euros. .

The disparities are dazzling on a geographical level because 80% of the funds raised by start-ups in Africa are earmarked for four countries: Nigeria, Kenya, Egypt and South Africa. This is the ratio in 2020 and it will also be the same in 2021. In French -speaking Africa, there is a real deficit. There are four major sectoral verticals that recoup 60% of funds invested in start-ups in Africa: fintech, agritech, GreenTech and business services (also called BtoB).

Although this means comparing to the African continent, it is best to do it in India: approximately the same population size, same GDP and same level of mobile Internet penetration. In Africa, there will be 1.4 billion venture capital investments in 2019 compared to 10 billion in India, i.e., almost eight times less. The shortage is clear, but in recent years, growth has been very strong. The investment rate increased by 155% between 2017 and 2020 and the number of companies funded in the same period was more than 187%. The fintech sector remains one where we see the most success stories.

A dozen African start-ups are participating in VivaTech this year. To export their solutions abroad?

The African market is huge. It depends on the sector: in the energy sector, some start-ups are exporting to Asia, for example. A solar system to have access to energy, because the network works poorly, does not seem to meet the needs of the population of Europe.

The advantage of some African start-ups that are present is finding investors because many are on site, to advance their solutions for inter-country development in Africa. Countries came to VivaTech with their nuggets to put on a good showcase. This is possible opportunity to meet partners, new customers, etc.

Where is the African tech market more than two years after the Covid-19 pandemic?

The Covid-19 crisis has stopped the growth of start-ups in Africa because they regularly need to raise money, fundraisers organized every 12 to 18 months. At Covid-19, investments stalled and some needed to raise money had to cut costs and even others closed. At Proparco, in partnership with Digital Africa, we offer cash bridge loans pending their fundraising. We funded 12 between 2020 and 2021.

Growth rates have risen, trends have continued at their pre -crisis pace and finally, the pandemic has made it possible to generate digital activities, as well as in Africa.

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