Foreign investments in Nigerian startups witnessed a significant decline, falling by 65.83% year-on-year to $410 million in 2023, compared to $1.2 billion in 2022. This sharp drop in investments has led to Nigeria losing its top position in terms of total startup investments on the continent to Kenya.
According to an analysis conducted by the research firm ‘Africa: The Big Deal’ on African startup funding of $100,000 and above in 2023, Kenyan startups secured just under $800 million, claiming the top spot in Africa. Nigeria finished the year as the fourth-ranked country, losing out to Kenya, Egypt, and South Africa.
The Big Four countries (Kenya, Egypt, South Africa, and Nigeria) continued to dominate in 2023, attracting 87% of the total startup funding on the continent, marking their largest share since 2019. While Nigeria still boasted the highest number of startups raising $100,000 or more (146, constituting 29% of the continent), the total amount they raised saw a significant year-on-year decrease of 67%, dropping to $410 million from $1.2 billion in 2022 and $1.7 billion in 2021.
The research firm commented on this decline, stating, “Nigeria is the country where the most dramatic change happened in 2023. While the country still claimed the highest number of start-ups to raise $100k or more, the amount they raised was divided by 3 YoY (-67 per cent). As a result, its share of Western African funding continued to drop to reach 68 per cent, down from 85 per cent in 2021 and 77 per cent in 2022. This is the lowest regional share of any Big Four market since we started collecting the data in 2019.”
Despite a 25% year-on-year decline, Kenya managed to raise just under $800 million in 2023, securing the most funding at 28% of the continent’s total. Egypt, with 48 such ventures raising $100,000 or more, claimed the second spot on the continent, raising $640 million due to the overall decline in Kenya and Nigeria.
South Africa maintained its position with the highest share of regional funding at 97%. The country had 70 startups raising $100,000 or more, accumulating $600 million in funding, constituting 21% of the continent’s total. Interestingly, South Africa was the only one among the Big Four not to experience a decrease in total funding between 2022 and 2023, seeing an 8% year-on-year increase.
Overall, startup funding in Africa witnessed a decline of 39% to $2.9 billion in 2023.
