African Tech in 2023: Navigating a Turbulent Year with Resilience and Green Innovation

2023 in Review

Photo by Christopher Gower on Unsplash

Happy New Year, entrepreneurs & tech enthusiasts!

As we step into 2024, at Rooibos Radar we remain committed to our mission to analyze, ask questions, and connect the dots within the dynamic landscape of tech in Africa. As we do our own reflections for the year 2023, let's also take a dive into a comprehensive analysis of African tech, reflecting on the challenges, triumphs, and emerging trends that continue to shape the sector.

Global Economic Shifts and Africa's Tech Landscape

The year 2023 marked a pivotal moment for the global tech industry, with startup funding dropping to the lowest in 5 years. Africa was no exception to this trend. As Silicon Valley grappled with layoffs and a cautious investment climate, the African tech scene felt the consequences of this shift. The continent experienced a 36% decline in venture capital fundraising, gathering a total of $3.2 billion, down from $5 billion in 2022. This figure was the lowest since the $2.1 billion recorded in 2020, signaling a recalibration in investment trends.

In the Big Four, Nigeria, Egypt, Kenya, and South Africa collectively raised $2.37 billion, approximately 74.9% of Africa's total funding. Kenya led this group with $756.2 million, while Nigeria faced a significant drop to $398.2 million, a 66% decrease from its over $1 billion annual raises since 2021.

A Reality Check for Startups

In 2023, the African tech ecosystem witnessed a significant number of startup closures, signaling a departure from the previously experienced high-growth, high-investment phase. These closures not only highlighted the reality of dwindling investments but also underscored the inherent challenges of operating business in Africa. For some, these closures raised critical questions about the sustainability of growth strategies and the capacity to navigate the unique complexities of the African market by startup founders. Does the young startup ecosystem in Africa have what it takes to turn good ideas into successfully executed businesses?

Prominent Startups That Ceased Operations:

• Sendy: The Kenyan fulfillment startup struggled with high operational costs, leading to its closure despite a $20 million capital injection.

• 54gene: This genomics research company, having raised $45 million, ceased operations amid financial strains.

• Dash: The Ghanaian payments startup, despite a $86 million funding, closed amid financial allegations.

• WhereIsMyTransport: With over $27 million in funding, this South African startup folded after failing to secure further investment.

• Lazerpay: This Nigerian crypto startup ceased operations due to funding challenges and unclear crypto regulations in Nigeria.

• Zumi: Despite significant sales, this Kenyan B2B e-commerce startup closed due to funding difficulties.

• Hytch: This Nigerian logistics startup closed shortly after its launch, unable to secure more funding.

• Pivo: Closed its doors despite a $2 million seed round, partly due to founder conflicts.

The Emergence of the Green Economy

Amidst the economic downturn, the green economy emerged as a promising sector. Aligning with the global shift towards sustainable investments, Africa's rich renewable energy potential began to attract significant attention. The energy sector, particularly cleantech, witnessed substantial deals like SunKing's $130 million and Wetility’s $48 million rounds, positioning Africa as a potential leader in sustainable development.

Technological and Infrastructural Advances

Despite the challenges, 2023 witnessed significant strides in the technological and infrastructural landscape of Africa. Infrastructure remains an important factor in Africa's journey towards comprehensive tech development, particularly in fields like Artificial Intelligence. Here’s an overview of some key developments:

• 5G Network Expansion: Both Uganda and Kenya made headlines with the rollout of 5G networks, a leap forward in connectivity. This move, coupled with the introduction of digital-only banking solutions, heralds a new era of digital transformation in these countries.

• Telecommunications Innovations: Safaricom led the way in combating SIM-swap fraud, enhancing security and trust in digital communications. Additionally, the expansion of Microsoft's Airband and substantial investments like the Kenya-DRC fibre route underscored the commitment to building robust digital infrastructures.

• Starlink’s Entry into Africa: Elon Musk’s Starlink made a groundbreaking entry into the African market, launching in Nigeria and rapidly expanding to Rwanda, Mauritius, Mozambique, Sierra Leone, Zambia, and Malawi. This satellite-based internet service is set to revolutionize Africa's digital landscape, offering high-speed internet access even in remote regions.

• Continued Financial and Policy Support: Despite a slowdown in investment flows, there were significant financial injections and policy initiatives that sustained the tech ecosystem’s growth momentum. A prime example was M-KOPA’s impressive $250 million fundraising and the launch of Rwanda’s AI policy, highlighting the region's commitment to embracing and fostering technological innovation.

As we close our comprehensive review of Africa's tech landscape in 2023, it's clear that the year was a complex tapestry of challenges, innovations, and crucial learnings. Despite the hurdles, the spirit of resilience and adaptability that defines the African tech community continues to blaze a trail for a brighter, more sustainable future.

Here's to a year of innovation, growth, and continued exploration in the ever-evolving world of African technology. Happy 2024! 🚀🌍💡