Tech trends that will shape 2024, according to African investors

Six out of the seven predictions we tracked last year have come to fruition. It is a few days into 2024, and we have compiled the trends that could potentially impact the African tech ecosystem.

These predictions were made by African-focused tech investors, including Efayomi Carr, Principal at Flourish; Basil Moftah, General Partner at Nclude; and Zachariah George, Managing Partner at Launch Africa Ventures.

Increased cleantech financing

According to Carr, startups within the cleantech sector, especially those offering renewable energy will more funding. "The surge in climate finance is a noteworthy development, with substantial capital earmarked for deployment in the African energy sector. Sectors like renewables are expected to draw substantial investments, attracting innovation-driven funding," he said.

Several venture capital firms, including Echo VC, E3 Capital, and Novaster, introduced cleantech-focused initiatives last year, and a portion of this capital is expected to be deployed this year.

We will revisit this in December to provide an update on the outcomes.

Growing Adoption of AI in Africa

In 2024, Efayomi Carr, Principal at Flourish also predicts that the adoption of artificial intelligence will grow in the African market. He said, "Another influential trend is the expanding adoption of AI. While AI has already demonstrated its transformative impact on startups in established markets like the US, its influence is anticipated to grow significantly within the African context."

The path to profitability

In November 2022, the Pan-African e-commerce company Jumia underwent a significant leadership transition aimed at driving profitability. Since then, Jumia has undertaken measures to cut costs, including the discontinuation of certain products such as Jumia Foods, as part of its efforts to achieve profitability.

Basil Moftah, General Partner at Nclude, predicts that more African startups will follow a similar trajectory in 2024 and beyond. He emphasises that while businesses often require capital injections for growth, there is an increasing need for them to articulate a clear path to profitability. "Investors are likely to enforce more stringent criteria to ensure this trajectory. This reflects a growing emphasis on sustainable financial models," he said.

ESG will take the front row

As these startups seek funding while striving for profitability, Moftah suggests that environmental, social, and corporate governance (ESG) will be at the forefront. He notes, "The issues surrounding ESG will gain prominence, especially for startups. This encompasses aspects like governance, transparency, and responsible money management. The days of investors simply writing checks and hoping for the best are dwindling. Governance, in particular, has become a pivotal point of consideration for investors worldwide."

Last year, some attention-grabbing headlines within the ecosystem revolved around internal conflicts, financial misappropriation, fraud, and cyber hacks. Many commentators have asserted that these issues will impact investors' overall perception, prompting them to conduct more thorough assessments before making investments.

Partnership with corporations... and M&A

As the ecosystem continues to grow, Zachariah George, Managing Partner at Launch Africa Ventures, foresees an increased partnership between corporations and startups.

Additionally, George said that "M&A will significantly expand as [big startups]... [look to] increase their market share. This will be a great trend because more M&A means there are exit opportunities for investors."

Moftah also predicts increased consolidation. "This can manifest in two ways," he said. "Companies either closing their operations or being acquired by their competitors. This trend, particularly in the fintech sector, holds the promise of weeding out redundant ideas and driving greater scalability."

At the end of last year, over 26 announced M&A deals were announced in African tech. George and Moftah believe that these numbers will increase in 2024.

What do you think about these predictions? Do you have more? Share with us in the comments.