Grace Ashiru
Africa’s entrepreneurial ecosystem secured $1.5 billion in equity in 2024. While this may seem like a significant achievement to the average person, experts have criticized the continent for falling short of its potential.
Statistics reveal that Africa accounts for approximately five percent of global GDP, while representing 18 percent of the world’s population.
Experts argue that attracting only $1.5 billion, a mere 0.6 percent of the global $275 billion in funding raised in 2024, highlights a larger issue. It reflects the mismatch between Africa’s size and significance and its relatively low funding levels.
They questioned how a continent with 1.4 billion people could attract nearly the same startup funding as Miami ($1.8 billion), which ranked as the 12th highest equity-raising city in the U.S. last year.
Mr. Max Cuvellier Giacomelli, Head of Mobile for Development at the GSMA, attributes this disparity to a persistent gap in global investment trends. He emphasizes that while talent exists everywhere, opportunities do not, and many investors still overlook the potential of African entrepreneurs and markets, thereby missing out on transformative opportunities.
Performance in context
In 2024, Africa’s equity fundraising experienced an 11 percent year-on-year (YoY) decline, mirroring global investment patterns, which saw a modest 4 percent YoY increase. However, when measured against other regions, Africa’s performance presented a mixed picture:
Asia saw a notable 27 percent year-on-year (YoY) decline in equity fundraising, largely due to China’s sharp 56 percent contraction. However, India—comparable to Africa in both population size and GDP—stood out with strong growth, exceeding 40 percent.
North America saw a 21 percent year-on-year (YoY) increase in equity fundraising.
Latin America experienced a 9 percent year-on-year (YoY) increase.
Despite the downturn, Africa’s resilience is evident over the long term. Comparing 2024 to pre-heatwave funding levels in 2020, the continent saw impressive growth of 62 percent ($1.5 billion vs. $0.9 billion). In contrast, other regions, including Latin America (-33 percent), Asia (-54 percent), and particularly China (-78 percent), remain significantly below their 2020 levels. Even on a global scale, startup funding declined by 11 percent during this period, making Africa a notable exception with sustained positive growth.A glimmer of hope
Africa’s long-term performance underscores its potential as a growing and adaptable market for investors. While the continent continues to struggle with equitable funding, its resilience and recovery highlight the strength of its entrepreneurial ecosystem.
Investors need to reassess their strategies for Africa, recognizing the untapped potential within its markets. With sustained backing, Africa’s entrepreneurs can foster innovation and create transformative solutions with global impact.
