“If current positive trends are sustained, and the transformative potential of technology is unlocked, Africa could secure tech-startup funding of more than $90bn by 2030,”
A new report from the Tony Blair Institute for Global Change shows that Africa could secure tech startup funding of more than $90bn by 2030 if policymakers pursue significant reforms to drive growth.
The former UK prime minister’s institute projected using data that covers the past six years, a business-as-usual scenario versus an improved policy-environment scenario. Projected until 2030, this scheme sees African startup funding reaching $93.9bn, with the assumption that gains from the past few years are maintained.
By contrast, based on Africa’s lowest positive year-on-year growth rate of 32% between 2015 and 2016, the business-as-usual case comprises a funding projection of $62bn by 2030. However, there must be a limited stakeholder and government intervention in promoting the tech ecosystem, that is, a business environment that continues to stifle startup growth, underdeveloped networks, and no significant incentives to attract additional investment.
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To achieve the goal, the institute says the governments need to create an improved policy environment, that’s by, cultivating the business environment, strengthening networks, and enabling more tech financing. This case is based on the compound annual growth rate of venture-capital funding to Africa between 2015 and 2020.
“Recognising the importance of these ecosystems for jobs and growth, governments are putting in place bold measures to support tech entrepreneurs. With the creation of the AfCFTA, the possibility of a continent-wide single digital market is now real.”
“If current positive trends are sustained, and the transformative potential of technology is unlocked, Africa could secure tech-startup funding of more than $90bn by 2030,” the report says.
Continuously growing Tech startup funding
tech-startup funding in Africa has accelerated at a rate six times faster than the global average. $4.9bn was raised in 2021, an amount more than triples a year before. Nevertheless, Africa currently accounts for only 0.2% of the value of global startups. These results from awkward regulations, limited funding, the digital-skills gap, and fragmented markets.
Finally, the report indicated that Africa’s tech sector is at an extremely hopeful moment, giving recommendations to speed up the tech startup ecosystem. They include: developing innovation funds and a fund of funds, establishing a public data-sharing platform on tech startups; developing a pan-African startup network; enabling a supportive policy environment, and many more
“Governments should provide a platform on which investors can access reliable information about tech startups to reduce information asymmetries (imbalance of knowledge between parties). The near absence of credible public databases on African startups increases the costs of transactions and due diligence while reducing investor confidence and diminishing financing inflows to tech innovators.”
