Africa has been experiencing a steady growth in its technology sector over the past few years. In the last number of years, Africa has witnessed a remarkable surge in connectivity, with a growing number of Africans gaining access to the internet and mobile phones. Leveraging this enhanced connectivity, a new generation of African startups has risen to the occasion, addressing the continent's most pressing issues through locally-developed digital technologies.
These startups have brought in investments into the continent.
In this article, we explore the best 7 sectors to invest in Africa. They are:
Fintech, short for financial technology, is one of the fastest-growing sectors in Africa. With a population of over 1.3 billion people and a large unbanked population, the continent presents a huge market for fintech solutions. Fintech, emerging as the leading sector, accounted for a significant 25% share of the total funding raised in Africa during 2020, as reported by Partech. Fast forward to 2021, and fintech startups have secured a remarkable 63% of the continent's total investments. Rounding out the top five sectors are logistics, capturing 7% of funding, followed by edtech at 6%, and e-commerce and social commerce each garnering 5%. The enterprise sector also claimed a respectable 5% share.
Examples of successful fintech startups in Africa include Flutterwave, which has been valued at over $1 billion, and Paystack, acquired by Stripe for $200 million. These startups are revolutionizing financial services on the continent through innovative solutions such as mobile payments, digital banking and lending platforms.
The e-commerce sector in Africa has also experienced rapid growth, driven by the increasing adoption of smartphones and internet usage. Projections indicate that the number of e-commerce users in Africa will surpass half a billion by 2025. Jumia, often referred to as "the Amazon of Africa," is a prime example of a successful e-commerce startup, with operations in over 10 African countries and a valuation of $1 billion.
The COVID-19 pandemic highlighted the need for improved healthcare systems in Africa, leading to an increase in investments in healthtech startups. According to Disrupt Africa, healthtech startups raised $189 million in funding in 2020. These startups are leveraging technology to provide innovative solutions such as telemedicine, e-pharmacy and health management platforms.
Agriculture is the backbone of many African economies, and agritech startups are using technology to address challenges in the sector. With a growing population and a need for sustainable food production, agritech presents lucrative investment opportunities. Examples of successful startups in this sector include Twiga Foods, a Kenyan startup that has raised over $50 million in funding to revolutionize food supply chains.
The education sector in Africa is rapidly evolving, with technology playing a significant role. The continent has the highest number of mobile-first users globally, making it an ideal market for edtech solutions. These startups are providing access to quality education through online learning platforms, virtual classrooms and personalized learning tools.
The transportation sector is another area experiencing significant growth in Africa, with the rise of ride-hailing services and delivery apps. The continent's growing urban population and increasing demand for efficient transport solutions make mobility a promising sector for investment. Examples of successful startups in this sector include Kobo360, a Nigerian logistics startup that raised $30 million in funding.
7. Renewable Energy
Africa has abundant renewable energy resources, and there is a growing need for clean and sustainable energy solutions. Startups in this sector are using technology to provide access to affordable and reliable energy, particularly in rural areas. M-Kopa Solar, a Kenyan startup, which provides solar-powered systems to off-grid households.
At Ajim Capital, we invest in the best startups in Africa. If you are considering investing in consider investing in Africa today, click here to get started on your journey to investing in the best startups in Africa.