Hey Hustlers!
The sleeping giant is waking up. The time for Africa has arrived.
The tech startup scene in sub-Saharan Africa is booming, and we've got the scoop on the top five cities that are leading the charge.
Sub-Saharan Africa increased 227% in early-stage funding amount and 43.8% in early-stage deal count from 2018 to 2022, highlighting the rapid development of the region’s tech startup scene.
According to The Global Startup Ecosystem Report 2023 (GSER 2023), these African cities have carved out a niche for themselves with impressive funding, deal count, and exciting sector-specific advancements.
Let’s dive in!
Nairobi, Kenya: Fintech's Thriving Haven
Nairobi takes the top spot on our list and for good reason. This Kenyan gem has solidified itself as a tech innovation hub in sub-Saharan Africa, particularly in the fintech space, accounting for a whopping 41% of total technology startup deals from 2018 to 2022. One standout success story is the acquisition of payments startup DPO by Network International for an impressive $291 million in 2021.
But that's not all; Nairobi's fintech stars continue to shine brightly. Solar home systems producer, Sun King, secured a massive $499 million in total VC funding, with an impressive $330 million coming in Series D rounds in 2022. Nairobi's startup ecosystem value has soared by a remarkable 281% from July 2019 to December 2022, cementing its position as the go-to destination for innovative entrepreneurs and savvy investors.
Lagos, Nigeria: The Economic Powerhouse
Lagos, the economic heart of Nigeria, has firmly established itself as a major player in the African tech startup landscape. It stands as the regional leader in ecosystem value and early-stage funding. The city boasts significant funding and sky-high valuations, earning its place among the emerging startup ecosystems.
Lagos' shining stars include OPay, which closed an astounding $400 million Series C funding round in August 2021, the largest deal in sub-Saharan Africa. Flutterwave, a fintech company also founded in Lagos, raised an impressive $250 million in a Series D round in February 2022, pushing its valuation over a staggering $3 billion.
Lagos enacted the Nigeria Startup Act in October 2022 to further support its bustling startup scene, providing a robust regulatory framework for the tech sector's continued growth and success.
Cape Town, South Africa: Diversification and Growth
Cape Town is on the rise! This South African gem has earned a spot in the top 100 emerging ecosystems, and it's not hard to see why. The city experienced a remarkable 23% increase in ecosystem value and an impressive 26% growth in early-stage deals.
What makes Cape Town stand out? The introduction of 22 new life sciences disciplines has breathed new life into its startup landscape, bringing fresh ideas and innovation to the table. Backed by its stunning scenery, supportive entrepreneurial ecosystem, and abundant resources, Cape Town is the place to be for startups with big dreams.
Johannesburg, South Africa: A Dynamic Hub of Innovation
Johannesburg, the economic powerhouse of South Africa, is a driving force in the African startup ecosystem. The city's vibrant and dynamic startup scene is fueled by a culture of innovation and growth.
With fintech, e-commerce, and health tech leading the charge, Johannesburg has created a favourable investment climate, attracting a skilled workforce and a buzzing entrepreneurial community. Startups here have the support and resources they need to scale and succeed, making it an attractive destination for entrepreneurs and investors alike.
Accra, Ghana: Rising Star of West Africa
Accra, the capital city of Ghana, is making waves as a burgeoning tech hub in West Africa. The city has seen a surge in startups, particularly in the fintech, agri-tech, and e-commerce sectors.
Government initiatives that promote entrepreneurship and innovation have played a vital role in Accra's rise, along with increased access to funding and resources. With a thriving business environment and a vibrant community of forward-thinking entrepreneurs, Accra presents exciting opportunities for startups looking to make an impact in Africa.
And there you have it, Hustlers — the top five African cities with the most vibrant and promising startup ecosystems of 2023. Keep an eye on these rising stars as they continue to shape the future of innovation on the continent.
Other African cities that are emerging as tech-entrepreneurial hubs include, Kampala, Dar es Salaam, Dakar, Abidjan and Abuja.
African Start-up Landscape
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SPOTLIGHT: KENYA
Kenya gained independence on December 12, 1963, and became a republic a year later, with Jomo Kenyatta as its president.
Kenya has had a total of 5 presidents since independence, in successive order: Jomo Kenyatta, Daniel Arap Moi, Mwai Kibaki, Uhuru Kenyatta, and the incumbent, William Ruto, who was inaugurated on 13 September 2022.
In addition to Kenya’s two official languages of Swahili and English, there are 62 other languages which are used by different ethnic groups across the country- including the Bantu and Nilotic languages.
As of 2020, Kenya is the third-largest economy in sub-Saharan Africa after Nigeria and South Africa
Kenyan, Wangari Muta Maathai, is the first African woman to win a Nobel Peace Prize. In 2004 she won the coveted prize for her contribution to sustainable development, democracy and peace. She was the founder of the Green Belt Movement, which has planted over 51 million trees in Kenya.
Kenya is bordered by South Sudan to the northwest, Ethiopia to the north, Somalia to the east, Uganda to the west, Tanzania to the south, and the Indian Ocean to the southeast.
Kenya is famous for its long-distance runners, most of whom come from the western part of the country. There are 17 American men in history who have run under 2:10 in the marathon yet there were 32 Kenyans who did it in October of 2011 alone.
Agriculture Sector is the mainstay of the economy. As of 2021, the sector contributed 22.43% to GDP directly, forms over 50% of Kenya’s total exports and provides 18% of formal employment.
Tourism in Kenya is the second-largest source of foreign exchange revenue following agriculture
The main tourist attractions are photo safaris through the 60 national parks and game reserves. Other attractions include the wildebeest migration at the Masaai Mara; historical mosques, and colonial-era forts at Mombasa, Malindi, and Lamu; renowned scenery such as the white-capped Mount Kenya and the Great Rift Valley; tea plantations at Kericho; coffee plantations at Thika; a splendid view of Mount Kilimanjaro across the border into Tanzania; and the beaches along the Swahili Coast.
The "Big Five" game animals of Africa, that is the lion, leopard, buffalo, rhinoceros, and elephant, can be found in Kenya
According to a 2020 survey by the Pew Research Center, 83% of Kenyans believe that homosexuality should not be accepted by society.
Kenya’s startup ecosystem has been lauded as one of the most progressive in Africa, with achievements including a commendable level of funding received, an increase in the number of technology hubs and other startup support organisations, and introduction of supportive policies.
Mining in Kenya yields high-grade quantities of gold, copper, ilmenite and tantalum. Kenya is also an important source of non-metallic minerals including soda ash, limestone, salt, niobium, fluorspar and fossil fuels.
GDP is projected to grow 5.6% in 2023 and 6.0% in 2024, driven by services and household consumption. Inflation is projected to rise to 8.6% in 2023 and 5.9% in 2024, driven by food and energy inflation.
