Sylvia Duruson
As we enter 2024, Africa’s dynamic tech landscape is poised for rapid evolution across various sectors. From crypto to AI to shifting investment patterns, several key trends emerged in 2023 that will likely accelerate in the new year. After a period of overheated growth and steep market correction, the African tech ecosystem seems to have achieved more rational expectations. What’s next for the continent’s burgeoning digital economy? Let’s examine some of the top trends to watch in 2024.
The Promise and Perils of Crypto
Cryptocurrency endured a rollercoaster year in 2022, from Terra’s collapse to FTX’s implosion. But 2023 closed on a high note with Bitcoin over 150% above its starting price point. Tokens like Solana also staged powerful comebacks, rising 1000% year-over-year. With crypto prices resurgent, the market’s speculative frenzy may return in 2024.
Higher prices drive more funding into crypto startups and infrastructure. Africa is already the fastest-growing crypto market in the developing world as people seek to hedge against inflation. Crypto also appeals to the youth seeking wealth-building opportunities with low barriers to entry.
The regulatory environment is gradually coming around as well. In December, Nigeria’s central bank lifted its crypto trading ban, citing global trends that necessitate proper regulation rather than prohibition. If managed prudently, crypto adoption could spur financial inclusion. But risks around volatility and criminality remain.
The AI Land Grab Accelerates
Artificial intelligence exploded into the mainstream after ChatGPT dazzled the world. Tech giants are now locked in an AI arms race, with new offerings like Google’s Gemini and xAI’s Grok competing with OpenAI. Vast funding poured into AI startups in 2023, with McKinsey reporting a 5-fold year-over-year increase in the first half alone.
AI startups attracted 25% of all funding in the U.S., showing its rising prominence. Demand for AI talent has also spiked globally. In Africa, more startups are either fully focusing on AI or integrating it into their products. For instance, Nigerian fintech OnePipe uses AI for biometric identity verification and natural language processing.
But Africa’s biggest obstacle to an AI boom is insufficient data. Collecting and labelling quality datasets remains a challenge. This poses a massive opportunity for African research and data production firms in the coming years.
Consolidation Through Mergers and Acquisitions
With valuations depressed, mergers and acquisitions will likely persist as a survival strategy among African startups. Dozens of deals have already occurred since 2022, including Risevest’s acquisition of Chaka and BioNTech’s purchase of InstaDeep. Many more struggling startups may seek exits to sustain themselves.
Low valuations also deter new unicorns from emerging, with MNT-Halan as Africa’s sole new $1 billion startup in the past two years. Startup marketplaces could gain traction by facilitating consolidations and exits.
Stronger products combined with modest growth expectations make acquisitions attractive. As the funding environment remains cautious, consolidation enables startups to pool resources and talents while providing investors and founders partial liquidity.
Globally Sourced Work for African Techies
With African currencies weakening and inflation still high in 2023, remote work for foreign companies offers respite. Wage rates are also rising in traditional outsourcing hubs like India and China, potentially opening room for African talent.
Studies show China’s upper middle class now exceeds 200 million urban households. But African middle classes are shrinking as incomes fail to keep pace. With over 600 million youth entering the global workforce by 2030, Africa could contribute up to one-third of this demographic dividend.
Remote work helps absorb the 12 million youth that enter Africa’s job market annually. Apprenticeships and employment pipelines will need to scale up. Overall, startups facilitating tech training and placements are poised for strong growth.
Shifting Investor Sentiment and Preference
Investor preference across African regions could shift due to changing macroeconomic and political realities. Fifteen countries have major elections slated for 2024. Results will sway risk perceptions and direct foreign capital accordingly.
Currently, LPs favor West Africa while GPs lean towards East Africa for tech investments. But over 700 deals above $1 million between 2019-2022 went to West Africa, suggesting greater comfort in stable regions. As elections create uncertainty, investors may become more risk-averse.
Ultimately, Africa’s digital future looks bright but requires prudent navigation. With sensible crypto regulation, ethical AI adoption, strategic consolidation and global opportunities for talent, its tech ecosystem can prosper through uncertainty. The trends point to a period of rational, sustainable growth.
