by Tech Talk | Jan 25, 2023 | Articles
African start-ups more than doubled the amount of debt they raised last year, a surge that may continue as an economic slowdown makes equity funding more expensive and unsustainable over the long term.
Companies on the continent raised US$1.55-billion (R26.8-billion) in 71 debt deals in 2022, suggesting it’s become a solid alternative source of capital for African technology start-ups, venture capital firm Partech Partners said in a report.
The surge helped the African technology sector become “one of the very few, if not the only, VC markets to boast net growth funding in 2022”, the Paris-based company said.
VC funding grew 8% to $6.5-billion in Africa, whereas globally it fell 35% last year, according to the firm’s annual survey of start-ups that have most of their operations in, or get the bulk of their revenue from the continent. Market intelligence company Briter Bridges’ data showed African start-ups raised a record $5.3-billion last year.
Fears of a global recession and slowing sales have led to a sell-off in the world’s largest technology companies, prompting some such as Google and Amazon.com to cut jobs. The slump has made private equity and venture capital firms reluctant to invest, increasing the cost of equity and forcing start-ups to look for alternative funding.
The number of active debt investors on the continent is growing 2.5 times year on year, with a good mix of local debt institutions, international lenders and development finance institutions, the report said.
Most of last year’s debt financing went into fintech and clean technology start-ups such as Moove.Africa and D.Light, the study found.
Editor@tech-talk.co.za
by Tech Talk | Nov 21, 2022 | Articles
Africa’s youth prefer using local innovations and believe that the next tech billionaire could come from the continent, according to the recently launched Africa – innovator or imitator? Exploring narratives around Africa’s technological capabilities report by Africa No Filter.
The research was done in Egypt, Morocco, Ghana, Ivory Coast, Nigeria, Kenya, Uganda, South Africa, and Zimbabwe. The report interviewed 4 500 people aged 18 to 35 to find out their perceptions of African-led innovation and if they are influenced by dominant narratives that promote the Global North as superior innovators.
While the image of Africa as an innovator appears to be overshadowed by stereotypes of a “backward” continent that’s largely a recipient of Global North innovations, the study found that young Africans (79%) believed it was possible for poor countries to produce great innovations that can influence the world.
Seventy two percent said it was possible for their own countries to produce tech billionaires. The majority of respondents (62%) believed in the power of African innovation and preferred using local innovations where they were available.
Technology and innovation have had a rapid impact in shaping the world, Africa included. Local innovations have transformed healthcare, how Africans do business, and how African governments interact with citizens. In 2021, Africa accounted for 70% of the total value of mobile money transactions globally and the continent appears to be leading the way in fintech. This year, 109 African fintech start-ups raised over $1-billion in growth funding.
“There have been a number of innovations and tech-solutions that show that Africa is an innovative continent,” says Moky Makura, executive director at Africa No Filter. “The youth’s positive attitude towards innovation across the continent and in their own countries shows that there’s a lot of potential for the sector; young people are interested in innovating and supporting local innovations.
“We commissioned the report because we wanted to understand how innovation resonates with young Africans,” Makura adds. “The report shows that while respondents value homegrown innovation and innovators, more can be done to remove barriers like lack of infrastructure.”
The report also highlighted the following:
The West is not necessarily best when it comes to innovation: 62% of respondents believed in the power of African innovation and preferred using local innovations where they were available.
The next greatest innovation could emerge from Africa: 48% of respondents saw no reason innovators could not come from Africa, and 24% said they already existed.
Africans trust local innovation: 62% of respondents said they trusted and would prioritise using local innovations over international ones. West Africans were the most positive (66%) regionally, while Kenyans (71%) were the most supportive country.
Innovation could come from anyone, but government is not seen as the most important driver of tech innovation: 50% of respondents believed that everyone should drive innovation, out of necessity and curiosity, but 44% of respondents felt that government restrictions were a barrier to innovation. Only 37% identified the government as being mainly responsible for innovation.
African youth are very aware of the tech innovations in their countries: 64% of respondents said they were aware of the different innovations existing in their countries. There was also a high level of awareness of innovation across the continent.
Depending on where you are, innovation is encouraged and supported: 59% of respondents felt that there was support for innovation and innovators, and that there was an enabling environment in their country. Respondents from Kenya (67%) and South Africa (65%) felt innovation and technology were encouraged. Only 39% of Nigerian respondents and 49% of Ghanaian respondents agreed.
Infrastructure deficiencies are the main barrier to digital technology and innovation: 53% of respondents cited infrastructure deficiencies as the main barrier to innovation. Regionally, 67% of East Africans are much more likely to identify this problem as a key barrier.
Editor@tech-talk.co.za
