African Tech Startup M&A Activity Increases by 34% in 2024

In the current economic climate, African startups are facing challenges in securing funding, leading many to explore mergers and acquisitions (M&A) as a strategy for growth and sustainability. The TechCabal Insights report released on February 13 sheds light on this trend, revealing a 34% increase in M&A activity in Africa’s tech sector in 2024 compared to the previous year.

The report highlights that startups in Africa often encounter less difficulty in raising seed funding but struggle when it comes to scaling their operations to reach revenues ranging from $10 million to $50 million. With investors becoming more cautious and international funds redirecting their focus to domestic markets, many African startups are opting for M&A deals to combine forces and accelerate their growth trajectory. This strategic approach allows startups to streamline their operations, access new markets, and consolidate their position in the highly competitive tech landscape.

By region, Southern Africa witnessed the highest number of acquisitions, with 16 startups being absorbed by competitors, followed by West Africa, East Africa, and North Africa. Notably, two African startups based outside the continent also underwent acquisition. One of the noteworthy deals of 2024 involved the merger of Kenyan startup Wasoko with Egypt’s MaxAB, creating a significant player in Africa’s B2B e-commerce sector.

In terms of sectors, fintech led the M&A activities with 13 deals, followed by Software as a Service (SaaS) with 7 deals and e-commerce with 3. Apart from mergers and acquisitions, startups in Africa are also focusing on expanding their geographic footprint to tap into new markets and diversify their revenue streams. The report indicates that there were 38 instances of geographic expansion in 2024, more than double the figure recorded in the previous year.

Nigerian startups emerged as key players in international expansion, with 16 ventures venturing into new markets to counter economic challenges such as currency devaluation, inflation, and weakened purchasing power. East Africa emerged as a preferred destination for expansion, with Southern Africa, North Africa, and foreign markets also witnessing significant interest from African startups.

Despite the growth initiatives, African startups faced financial pressures in 2024, resulting in the loss of 1,819 jobs due to bankruptcies and cost-cutting measures. Additionally, funding for startups declined to $2.21 billion across 488 deals in 2024, down from $2.86 billion in the previous year. Notably, Nigeria, Kenya, Egypt, and South Africa accounted for the majority of the funding secured by African startups.

Looking ahead, TechCabal Insights anticipates a surge in M&A activity and international expansion in 2025, supported by a rebound in funding. However, the global economic uncertainty, particularly with the potential impact of changing political dynamics, could influence investment trends in the tech sector across Africa.