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How Africa’s promising startup landscape survives in a post-Covid-19 economy

A man leaves an M-PESA booth after a money transaction in Nairobi May 12, 2009. Teaming up with Kenya Commercial Bank to let phone users who do not have bank accounts send each other money, M-PESA, the virtual cash network, hit on a formula that has attracted 6.5 million customers, or one in six Kenyans, in just over two years. Picture taken May 12, 2009.
Reuters/Noor Khamis
Africa’s largest technology companies face trying times ahead.
  • Yomi Kazeem
By Yomi Kazeem

Africa reporter

If you take a look at reports tracking funding in African tech ecosystems this year, you wouldn’t be able to tell that a damaging pandemic has laid siege to economies globally.

In the first quarter of 2020, African startups raised 30% more capital year-on-year, data from research firm WeeTracker show. The top-line deals included big-ticket funding rounds like the $55 million raised by South African fintech company Jumo and the $40 million Series D round of Egyptian health-tech platform Vezeeta.

But, as the year progresses, a slowdown in funding is very likely in the cards, as the economic impact of the Covid-19 outbreak begins to manifest. Indeed, after half a decade of record-breaking fundraising, Africa’s tech ecosystems appear headed for a slump. Cape Town-based startup accelerator AfricArena estimates total funding in African startups this year could drop by as much as 40%. The report’s worst case scenario suggests the effects of the economic slowdown could last through 2021, with a full recovery only expected by 2022.

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