Moroccan startups wrapped up 2024 on a high note, securing $70 million in funding and further establishing the country as a burgeoning hub of innovation in Africa. The achievements reflect the growing prominence of Morocco within the African startup ecosystem, even as the continent experiences broader funding challenges.

Breaking Down the Rankings: Morocco and the African Investment Landscape

According to the annual report Africa: The Big Deal, Morocco ranked fifth among African nations in startup funding for 2024, trailing behind Kenya ($638 million), Nigeria ($410 million), Egypt ($400 million), and South Africa ($394 million). Together, these top four nations accounted for nearly 84% of the $2.2 billion raised across the continent last year. This figure represents a significant decrease from the $2.9 billion raised in 2023 and an even sharper decline from the $4.6 billion recorded in 2022.

While Morocco’s $70 million is a strong showing, it highlights the disparity between North Africa and other regions, particularly East and West Africa. Following Morocco in the rankings were Ghana ($68 million), Tanzania ($53 million), Benin ($50 million), Côte d’Ivoire ($33 million), and Senegal ($22 million).

East Africa Leads the Way

For the second consecutive year, East Africa emerged as the leader in startup investments, drawing $725 million in total funding. This amount accounted for one-third of all funds raised on the continent in 2024, solidifying the region’s status as a magnet for investors. Kenya played a pivotal role in this success, contributing 88% of East Africa’s total with $638 million. The country alone represented 29% of the continent’s overall funding, showcasing the strength of its entrepreneurial ecosystem.

Kenya’s dominance is driven by its thriving fintech and agritech sectors, which continue to attract significant interest from global and regional investors. Despite this success, East Africa’s total funding for 2024 marked an 18% decline compared to the previous year, reflecting the broader trend of reduced investments across the continent. Other notable contributors from the region include Tanzania, which raised $53 million, and Uganda, which secured $19 million.

West Africa: A Region on the Rise

West Africa ranked second in 2024, raising $587 million and capturing 27% of the continent’s total funding. This performance marks a notable improvement from its fourth-place position in 2023. The region’s resilience is particularly evident in its minor 3% year-on-year decline in funding, a stark contrast to the steeper drops experienced in other parts of Africa.

Nigeria led West Africa’s charge, contributing $410 million—one of the highest totals for any single country in 2024. The nation continues to dominate in sectors such as fintech, e-commerce, and healthtech. Ghana also made a significant contribution with $68 million, followed by Benin ($50 million), Côte d’Ivoire ($33 million), and Senegal ($22 million). These figures highlight the growing diversity within West Africa’s startup ecosystem, as more countries establish themselves as viable destinations for investment.

Challenges in North and Southern Africa

While Morocco’s performance in 2024 was commendable, the overall investment landscape in North Africa saw a sharp decline. Funding in the region dropped by 35% from 2023, totaling $478 million. Egypt, traditionally a powerhouse in North Africa, experienced the largest decline among the top four nations, with funding decreasing by 37%. The report attributes this to economic challenges and shifting investor priorities, which have impacted the region’s ability to attract capital.

Morocco’s relatively stable performance within this context is noteworthy but insufficient to counterbalance Egypt’s decline. The country’s startups have shown resilience, with sectors such as cleantech, logistics, and agri-tech emerging as key areas of growth.

Southern Africa also faced significant challenges, recording a 36% decline in funding to $397 million. South Africa, the region’s largest economy, accounted for 99.4% of this total, underscoring its outsized influence on regional figures. However, a 34% drop in South Africa’s funding heavily impacted Southern Africa’s overall performance, reflecting broader economic headwinds and investor caution.

Central Africa: Minimal Activity Amid Broader Declines

Central Africa recorded minimal activity in 2024, raising just $5 million—ten times lower than the amount secured in 2023. This represents the lowest levels of funding ever observed in the region, highlighting the significant disparities in investment activity across the continent. The limited funding in Central Africa underscores the need for targeted interventions to develop entrepreneurial ecosystems and attract investor interest in the region.

Concentration of Funding: A Spotlight on Top Players

The Africa: The Big Deal report emphasizes the concentration of funding across the continent. Half of the total funds raised in 2024 were directed towards just ten companies, illustrating the outsized influence of a select few players. Additionally, 188 startups secured investments of $1 million or more, highlighting the growing maturity of certain sectors and markets.

Key industries driving investment in Africa include fintech, healthtech, and agritech. Fintech, in particular, remains the continent’s most attractive sector, accounting for a significant share of total funding. The rise of digital payment platforms, mobile banking solutions, and financial inclusion initiatives continues to position fintech as a cornerstone of Africa’s startup ecosystem.

Broader Trends and Global Influences

The decline in startup funding across Africa in 2024 can be attributed to several global and regional factors. Rising interest rates in developed markets have made it more expensive for investors to deploy capital, leading to greater scrutiny of potential deals. Additionally, geopolitical tensions and economic uncertainty have contributed to a more cautious investment environment.

Despite these challenges, Africa remains a continent of immense opportunity. Its youthful population, rapid urbanization, and growing middle class present a compelling case for investment. Moreover, the increasing adoption of technology across various sectors positions African startups as key drivers of innovation and economic growth.

Morocco’s Role in Shaping the Future

Morocco’s ability to secure $70 million in funding amid a challenging investment climate speaks to the strength and potential of its startup ecosystem. The country’s strategic location, coupled with its efforts to foster innovation and entrepreneurship, has made it an attractive destination for investors. Government initiatives such as the creation of innovation hubs and startup-friendly policies have further contributed to Morocco’s growing reputation as a leader in North Africa.

Looking ahead, Moroccan startups have the opportunity to build on this momentum by leveraging their strengths in key sectors and exploring new markets. Collaboration with regional and global partners will be essential in driving growth and attracting additional investment.

Conclusion: A Year of Resilience and Opportunity

While 2024 was a challenging year for African startups, it also highlighted the resilience and potential of the continent’s entrepreneurial ecosystem. Countries like Morocco, Kenya, and Nigeria have demonstrated their ability to attract significant investment, even amid broader declines. As Africa continues to navigate economic headwinds and global uncertainties, the role of innovation and entrepreneurship will be more critical than ever in shaping its future.

For investors, the message is clear: Africa remains a continent of untapped potential, offering unique opportunities for growth and impact. By supporting startups and fostering an enabling environment, stakeholders can help unlock the full potential of Africa’s innovation ecosystem, paving the way for a more prosperous and sustainable future.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

20^th January, 2024