African Startups Experience Varied Fortunes in 2024: Focus Shifts Towards Sustainable Development and Profitable Expansion

The African tech landscape has experienced a surge of innovation since 2020, particularly in the sectors of fintech, payments, and digital financial services. This growth can be attributed to the widespread adoption of mobile money and real-time payment systems across the continent.

One of the notable trends is the rise of alternative payments. Account-to-account (A2A) payments, digital wallets, QR code payments, and cryptocurrencies have seen significant growth. By mid-2024, 28 domestic instant payment systems operated in 20 African countries, with 31 more in development, enabling seamless real-time transactions.

The development of real-time payment infrastructure is driving fintech innovation, especially in Nigeria. Instant payment systems like NIBBS Instant Payment (NIP) accounted for over 82% of cashless transactions in 2023, with real-time payments expected to reach over 50% by 2028. Startups like Paystack, Kuda, and Moniepoint integrate these systems to enhance customer payments, savings, credit, and merchant services.

Notable African startups include Paystack, a pioneering payment gateway enabling instant transfers that was acquired by Stripe, contributing to fintech growth in Nigeria. Kuda, a neobank offering real-time P2P payments, banking, credit, and savings services using instant payment rails, and Moniepoint, which integrates real-time payments and QR code solutions for merchants and consumers, are strong contenders for soonicorn status given their rapid expansion and integration with national real-time payment infrastructure.

Other emerging startups include Bildup AI, advancing AI adoption in African education, Padi Protocol using NFTs and blockchain for legal evidence management, and RequestMechanic employing AI in Nigeria’s second-hand car market.

While full lists of African unicorns and soonicorns were not explicitly cited, the prominence of Paystack (now acquired by Stripe) aligns it with unicorn status historically, while Kuda and Moniepoint are strong candidates for soonicorns. Notable investments have been made in African startups by companies like Uber, Google, and Nubank, fueled by strong growth metrics and profitability.

The financial market activity, with growing IPOs and investments in tech-related sectors, especially telecoms and banking, exemplified by MTN Ghana and others, signals robust investor confidence strengthening the tech ecosystem across Africa.

However, not all startups have been successful. Well-funded startups like mobile commerce platform Copia and agri-focused data analytics firm Gro Intelligence have faced challenges, leading to high-profile closures. Startup failures in Africa are now occurring in growth-stage and late-stage startups, such as Ghanaian fintech Dash and Nigerian biotech 54gene in 2023.

Despite these challenges, the future of African tech remains promising. Last year, funding for African startups surpassed $2 billion, returning to pre-pandemic levels. Significant investments have been made in startups like Yoco, a South African fintech providing payment solutions and business tools for SMEs, MNT-Halan, an Egyptian financial super app offering digital lending, payments, e-commerce, and buy-now, pay-later solutions, and Moniepoint, a Nigerian fintech providing financial services such as digital banking and payments, credit, and business management tools.

In conclusion, key trends in African tech post-2020 are driven mainly by advancements in fintech payments through real-time systems, AI integration in education and automation, and blockchain for transparency. Leading startups include Paystack, Kuda, Moniepoint, and several AI-powered and blockchain innovators emerging rapidly across the continent.

African Startups Experience Varied Fortunes in 2024: Focus Shifts Towards Sustainable Development and Profitable Expansion