Tech Investments in Africa: Toward the New African Valley
– The world’s major tech companies are ready to grow in the highly promising African market. Many African countries are emerging as new local tech champions, opening up to tech innovation, training, and research by attracting increasing amounts of capital and capitalizing on the growing demand for digital services.
However, these new African tech companies face challenges such as still-insufficient ICT infrastructure, a narrow supplier base, and an uncontrolled brain drain.
Financial services, healthcare, real estate, and agriculture offer the best opportunities for technology companies in many African economies. COVID-19 has boosted confidence in and "normalized" remote work, further benefiting proximity and outsourcing of IT services.
Connectivity and very high mobile penetration rates continue to drive the growth of tech services, digital transformation, and socio-economic development in Africa. Africa remains the fastest-growing mobile economy today. A third of all Africans were connected to the internet by the end of 2023, and this share is expected to reach nearly 44% by 2025, with the number of 5G connections estimated to reach 40 million[1]. According to the GSM Association, "5G is expected to contribute $11 billion to Sub-Saharan Africa’s economy by 2030, accounting for more than 6% of the overall economic impact of mobile telephony"[2].
According to UNCTAD[3], in its annual report on Africa’s economic development, the continent has a historic opportunity to enter global tech supply chains – whether in the automotive, telephony, or photovoltaic sectors. In the coming years, Africa will also become a vital source of raw materials for high-tech industries like lithium, which is essential for producing electric vehicle batteries. As a result, Africa will become both a force in the global supply chain and a provider of mass technology services. Venture capital funding has risen from $2 billion in 2019 to $5 billion in 2022, according to BPI France.
Despite a significant drop in 2023, Partech Africa reports that African tech startups raised a total of $3.5 billion in combined equity and debt financing.
Forbes Africa, based on the Global Innovation Index (GII)[4], analyzes the resources each country has to innovate based on 80 indicators, including innovation, education, and political environment. It ranks Switzerland, Sweden, the United States, the United Kingdom, and Singapore in the top five globally. Meanwhile, the African continent stands out in another category: relative innovation efficiency, which ranks countries based on their ability to transform the resources they have into innovation.
Among the 21 African economies analyzed, the top five are Morocco, Mauritius, South Africa, Tunisia, and Botswana, just ahead of Senegal, Egypt, and Rwanda.
- Focus on the top three African countries:
| Morocco | South Africa | Mauritius |
|---|---|---|
| Partech reports that young Moroccan startups (excluding well-established companies) raised $93M across 17 deals by the end of 2023. Morocco has established itself as one of Africa's leaders in innovation, supported by a well-educated population in new technologies (500,000 developers), backing from several major international groups (Amazon, Microsoft, Orange...), and also local giants like OCP[5], as well as a thriving ecosystem of successful startups (Terraa, Sowit, Chari, Hmizate, etc.). At the forefront of this tech revolution is UM6P[6], a private Moroccan higher education institution focused on applied research and innovation, which is already positioning itself as a pioneer of AI in Africa (AI Movement). More broadly, since the early 2000s, Morocco has made significant investments in renewable energy, dedicated industrial zones, and the establishment of technoparks – structures that support innovation, multiplying across the country based on the "Technopark" model, which is a successful public-private partnership and a notable case study. This formula pays off: year after year, Morocco is among the few countries to "over-perform" in innovation compared to its level of development. | South Africa positions itself as an innovation hub on the continent. It relies on renowned universities (University of Cape Town, University of the Witwatersrand...) and an advanced research infrastructure, such as the Biovac laboratory, which has been producing Africa's first mRNA vaccine since 2022. Investor interest in the South African tech sector is not new and represents immense potential for the country’s development, poverty reduction, and job creation. The government has created a favorable regulatory framework with financial incentives, combined with the emergence of a flourishing tech entrepreneurship ecosystem. The IT services landscape in South Africa is highly competitive and covers a wide range of actors. IT spending is increasing, with the market expected to exceed $28 billion, while telecommunications will surpass $11 billion, with 5% growth[7]. The Mineworkers Investment Company (MIC)[8] highlights the growing importance of cybersecurity solutions, such as cloud-based security platforms and AI-powered threat detection systems. In the health tech sector, telemedicine is expected to grow exponentially, supported by AI with strong visibility on the international tech scene. | Mauritius did not remain stuck in its historical monoculture of sugarcane for long and has successfully invested in education and research to establish itself in the manufacturing and financial sectors, which are now the country’s main export and income hubs. Rwanda’s political will and economic ambitions aim to make the country a high-middle-income economy based on innovation, self-reliance, and prioritizing the development of new technologies. Kigali is already a pioneer city in deploying the concept of a smart and connected city to improve the lifestyle and social sustainability of its citizens. As early as 2011, without waiting for the COVID pandemic, a magnetic card payment system known as Twende[9] had already been implemented. Tech centers and startups are emerging across the country and play a key role in the tech ecosystem. The "African Singapore" is among the forerunners of technological innovation in Africa regarding science, technology, and innovation, thanks to government measures that stimulate business creation and a long-established investment policy in digital infrastructure. |
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