Report: Startups from Central Africa have raised less than 1% of funding in Africa since 2019

Central Africa startups in Cameroon, Central African Republic, Chad, Congo Republic – Brazzaville, Democratic Republic of Congo (DRC), Equatorial Guinea, Gabon, São Tomé & Principe raised only about $82 million since 2019 (2019-2022). This represents less than 0.8% of the total funding raised during the review period, according to a report by Africa: The Big Deal!

The largest country in the region in terms of both population (105 million+) and GDP (~$55 billion) raised $24 million in 2019.

Congo, with a population of 5.6 million+ and a GDP of $25.897 billion, tops the regional list. Yet the total amount in 2022 raised was raised by one single startup, Jambo. It successfully closed a $7.5 million seed round in February, and a $30 million Series A round in May.

Within the same period, startups from the Eastern Africa extraction raised $2.3 billion, just under a quarter of all the funding raised by African start-ups since 2019. Kenya, Africa’s current hot cake, raised $1.9 billion+ since 2019, 84% of the regional funding during the review period.

Countries in North Africa raised a total of $1.5 billion within the same period. This represents 15% of the total funding sum that flowed into Africa. Egypt dominated the region with a raise of $1.25 billion.

According to the report, startups from West Africa raised a total of 41% of all the start-up funding raised on the continent since 2019, with a total of $4.2 billion. Startups in Nigeria raised $3.6 billion (86%) of the total funding that came into the region during the period.

Southern Africa represents 17% of all the funding raised by start-ups in Africa since 2019. South Africa, with $1.7 billion+ raised since 2019, represents over 95% of the funding raised by start-ups in the region.

About Central Africa

Apart from attracting only 0.8% of the funding for African startups since 2019, Central Africa has no single startup that raised a significant number or attracted investors as much, except earlier mentioned Jambo, a Congo-based startup building Africa’s web3 user acquisition portal through “learn, play, earn” and democratising access to crypto-based income-generation opportunities.

According to James Zhang, its co-founder and CEO, Jambo wants to onboard millions of users to web3 in Africa through its applications. He founded the company with his sister — both Congo-born Chinese — in November 2021 after noticing the opportunity to duplicate the success of web3 projects in Southeast Asia across Africa.

Some of the raises in Central Africa:

• Waspito, a Cameroonian startup specialising in health technology, announced it raised an investment of 1.7 billion FCFA (USD$2.8m) in March 2022.
• Ejara, founded by Nelly Chatue-Diop, raised $2 million in October 2021 to pioneer the usage of crypto and investment services in the region.
• Diool announced in February 2021 that it raised US$3.5 million in from the Lundin family plus existing investors, taking its total secured investment to US$4.6 million.
• Maviance PLC, which owns digital payment platform Smobilpay, announced, in May 2021, the closure of its $3 million (close to XAF1.6 billion) seed investment round.

Interests/innovation in the region?

Cameroon’s fintech industry was reported to have gained some traction as of June 2021, a trend reflected by rising digital financial services adoption, considerable funding for paytech startups, and several product announcements.

The opportunities within central Africa are huge, and the demand has been massively accelerated in the last 12 months (before May 2021) with the advent of COVID-19, as businesses of all sizes adopt digital financial services. Moreover, the shift in the mindset of regulators towards progressive regulations as well as regulatory alignment, enables us to deliver seamless services across multiple geographies and customer segments.

Jerry Cheambe, founder of Maviance PLC.

But the Central African Republic ranked bottom of all countries in the latest Human Development Index as of 2018 and has limited internet access, which may seem an unlikely place for innovators to churn out solutions or for investors to take interest in.

Almost 70 per cent – in 2018 – of families lack essentials such as clean drinking water, over three-quarters of the population live in poverty, and close to one-fifth have fled their homes amid violence, according to the World Bank and the United Nations.

Gabon has a projected GDP growth of 3.3% in 2022 and 3.4% in 2023, based on non-oil sectors, including agriculture, wood, and mining, but not tech.

And as of May 2022, Equatorial Guinea lost one place and ranked 178th in the latest Doing Business report published by the World Bank, yet records an increase in FDI in the last five years. There is no data on investment in tech investments, as with most of Africa.

The economy of Equatorial Guinea has traditionally been dependent on commodities such as cocoa and coffee but is now heavily dependent on petroleum. Meanwhile, the country only exited the “Least Developed Country” status in 2017.

In Chad, as of 2019, with just 6.5 per cent of the population online, the landlocked Central African nation was reported to have the sixth-lowest internet usage rate in the world, according to World Bank figures.

Chad has almost no economy beyond oil exports.

Since oil production began in 2003, the petroleum sector has dominated economic activity and has been the largest foreign investment target.

Chad’s business and investment climate remain in the past. Private sector development is hindered by poor transport infrastructure, lack of skilled labour, minimal and unreliable electricity supply, weak contract enforcement, corruption, and high tax burdens on private enterprises.

Bottomline

Africa, being home to several economies largely based on the export of natural resources, has historically been the opposite of immune to global shocks.

Briter Bridges director, Dario Giuliani

African startups ended Q1 2022 well in terms of VC investment, both in dollars and deal volume – meanwhile venture funding was simultaneously declining in the U.S., Asia and Latin America.

The first quarter of 2022 has a total VC Funding in Africa standing at $1.8 billion. This represents a 150% increase compared to Q1 2021, which stood at $730 million.

The second quarter of 2022 saw a slowdown on the global front, but, it is projected that the African startup ecosystem is expected to remain resilient in the face of the global downturn.

Central Africa has been cut out of this picture.