In 2024, Africa’s tech industry experienced a surge in mergers and acquisitions (M&A) as startups faced funding challenges, prompting them to consolidate for sustainability and expansion. A report by TechCabal Insights, published on February 13, revealed that 39 M&A deals occurred over the year, marking a 34% increase from 2023.

African startups often secure seed funding with relative ease, but scaling to revenue milestones between $10 million and $50 million demands more than just financial backing. As investors tightened their commitments and foreign capital shifted focus to domestic markets, many startups chose mergers as a strategic move to accelerate their path to sustainable growth.

Southern Africa led in acquisitions, with 16 startups being absorbed by competitors, followed by West Africa with 10, East Africa with 7, and North Africa with 4. Additionally, two African-founded startups operating outside the continent were acquired.

The most significant deal of 2024 took place in August when Kenyan startup Wasoko merged with Egypt’s MaxAB, forming a dominant force in Africa’s B2B e-commerce sector.

Fintech led the M&A activity with 13 deals, followed by Software-as-a-Service with 7 and e-commerce with 3.

In addition to mergers and acquisitions, startups broadened their reach across Africa and beyond. The report recorded 38 expansion moves in 2024, more than doubling the 16 seen in 2023. Nigerian startups spearheaded this trend, with 16 venturing into international markets to mitigate economic pressures like currency devaluation, inflation, and declining purchasing power.

East Africa emerged as the leading destination for expansion, with 13 startups entering the region, followed by Southern Africa with 5 and North Africa with 4. Additionally, nine African startups expanded beyond the continent, while three ventured into multiple regions within Africa.

Despite efforts to expand and merge, financial strain remained a challenge for African startups. In 2024, 1,819 employees were laid off due to bankruptcies and cost-cutting measures. The shutdown of 12 startups, including Kenya’s Copia Global—which alone accounted for 1,060 job losses—was a major contributor to these layoffs.

Investment in African startups also saw a downturn in 2024, with total funding dropping to $2.21 billion across 488 deals, down from $2.86 billion the previous year. Although startups in 25 African countries attracted investments, the majority—83.27%—went to Nigeria, Kenya, Egypt, and South Africa.

Looking forward, TechCabal Insights predicts an uptick in mergers, acquisitions, and international expansions in 2025, with a potential recovery in startup funding. However, global economic uncertainty—particularly the impact of Donald Trump’s return to the White House—may shape investment patterns across the continent.

SOURCE