In an extended 2024 analysis of Africa’s start-up funding distribution, a report by Africa:The Big Deal, reveals significant disparities between the continent’s economic powerhouses and the countries attracting the most investment.
By comparing the share of start-up funding to each country’s relative weight in population and GDP, the analysis highlights how some nations, particularly Kenya, are outperforming expectations. In 2024, Kenya accounted for 29% of Africa’s start-up funding despite contributing only about 4% to the continent’s nominal GDP and population.
However, such an analysis has its limitations, as percentages shrink quickly when spread across Africa’s 54 nations. A comparison of relative positions, ranking each country based on funding, population, and GDP, provides further insight into these trends.
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The four leading countries in Africa’s start-up funding, popularly known as the “Big Four”, which include Nigeria, Kenya, South Africa, and Egypt, continue to dominate the ecosystem.
Having raised $4.6 billion in start-up funding since 2019, this saw Nigeria earn the top-ranked country in this category. While Nigeria is the most populous country in Africa, its economic ranking has slipped to fifth place, partly due to the naira’s depreciation and other economic challenges.
East African country, Kenya, follows closely in second place, securing $3.4 billion in funding since 2019. Despite ranking seventh in both population and GDP, Kenya has significantly outperformed its economic weight, reinforcing its reputation as a start-up hub.
South Africa and Egypt round up the top four, securing the third and fourth positions in start-up funding, respectively. South Africa holds the top spot in GDP and ranks sixth in population, making its strong performance unsurprising. Egypt, with the third-largest population and the second-largest GDP, maintains a solid presence in the start-up ecosystem.
Beyond the Big Four, other countries have emerged as key players in the funding landscape. Ghana and Senegal stand out, ranking fifth and sixth in start-up funding despite their lower rankings in population and GDP. Ghana is ranked 14th in population and 11th in GDP, while Senegal ranks 25th and 18th, respectively. Their ability to attract investment highlights their growing influence in the start-up space.
Tanzania and Uganda also perform well, ranking higher in start-up funding than in GDP. Tanzania, which is the fifth most populous country and has the 10th largest GDP, ranks seventh in start-up funding. Uganda follows a similar trend, placing 10th in funding while ranking ninth in population and 13th in GDP.
However, not all economically strong nations translate their financial power into start-up funding success. Morocco and Algeria, despite being among Africa’s top economies, rank lower in funding relative to their GDP positions. Morocco, with the sixth-largest GDP and 11th-largest population, ranks eighth in start-up funding. Algeria, which has Africa’s third-largest GDP and ranks 10th in population, places ninth in start-up funding, reflecting a relatively weaker performance in attracting investment.
Just outside the top 10 are Tunisia and Benin, two nations that significantly outperform their economic rankings in start-up funding. Tunisia, ranked 31st in population and 15th in GDP, holds the 11th position in start-up funding, while Benin, ranked 28th in population and 25th in GDP, secures the 12th spot.
The rankings reveal a complex landscape where economic size and population do not necessarily dictate start-up funding success.
While some countries, like Nigeria and South Africa, align closely with their economic rankings, others countries particularly Kenya, Ghana, Senegal, Tunisia, and Benin have proven that a thriving start-up ecosystem can emerge even in markets with smaller economies.
This evolving dynamic underscores the importance of factors beyond GDP and population, such as regulatory environments, investor confidence, and innovation ecosystems, in shaping Africa’s start-up funding distribution.