Venture Funding In Africa Projected To Hit $7 Billion This Year

2022 is fast proving to be a very defining year in the African continents as it relates to the global investment landscape, with the continent closing the first half of 2022 at $3.5 billion, a 133% increase from the first half of year 2021.

A  report by the African Private Equity and Venture Capital Association (AVCA), a pan-African organisation promoting and enabling private investment in Africa, projects that if Africa to defy the global harsh microeconomics till the end of this year, it might end up closing the year at a staggering $7 billion.

Image source: AVCA

The continent had last year across 650 deals recorded $5.2 billion in funding and AVCA believes that to reach the projected $7 billion, the deal volume is expected to close at 900 by year-end, more than a third higher than that of 2021.

A 53% drop in funding occasioned by the harsh macroeconomics environment bedeviling the African continent in the third quarter of the year may appear like an albatross to the prediction but newly-found goodwill and incentives by various governments across the African continent is expected to rekindle the interest and zeal of investors’  in Africa.

According to Africa: The Big Deal, African funding at the moment has surpassed the $4 billion mark.  

The AVCA report further enumerated how the African continent was able to snag only a 1 percent of total VC investment globally, but unlike every other ecosystem, its resilience underscores the “depth of opportunity and its growth potential”. 

The report also highlighted how West Africa, with 33 percent got the largest piece of the funding with Nigeria leading the pack. Kenya had the second largest deal share, having a $330 million mark, in the process pushing East Africa ahead of both North and Southern Africa. 

Image source: AVCA

In the analysis by sector, fintech had the highest funding, with the volume standing at 32 percent and value at 44 percent. In the mainstream H1 2022, three sectors (healthcare: 50% growth), (education: 64% growth) and (utilities: 23% growth) are reported to have emerged.

The report also averred that the presence of an active domestic venture capital ecosystem also led to the record-breaking growth together with the positive awakening of some African governments friendly policies, like the Zanzibar and Zambia’s tax incentives and seamless work visa, which was credited as an effort that promoted “enabling entrepreneurship and investment to thrive”.