Investors Pick Kenya Over Nigeria As Startup Funding Falls To $2.2bn

In 2024, Kenya emerged as the top destination for startup funding in Africa, surpassing Nigeria for the second consecutive year. East Africa raised $725 million in total, with Kenya responsible for 88% of the region’s funds. Across the continent, startups secured $2.2 billion in equity, grants, and exits, a 25% decline from 2023 and a 53% drop from 2022, according to data from ‘Africa: The Big Deal.’ Despite this overall decrease, the second half of the year saw a rebound, driven by high-profile deals such as Moniepoint and Tyme Group, which reached unicorn status.

Nigeria, traditionally a leader in African startup funding, only attracted $410 million in 2024, significantly trailing behind Kenya and contributing to a broader slump in West Africa’s funding, which totaled $587 million. The decline is attributed to global economic factors like rising interest rates and tighter venture capital markets. Industry experts also pointed to Nigeria’s structural and economic challenges, such as a difficult business environment, currency depreciation, and regulatory instability, which may have deterred foreign investment.

In contrast, Kenya and South Africa have become more favorable investment destinations. Kenya surpassed Nigeria in attracting private equity deals in 2023, and both countries were major players in the private market during the third quarter of 2024. Experts emphasize the need for Nigeria to address its economic and regulatory issues to regain its position as a leading startup hub in Africa.