Climate tech is rapidly emerging as the preferred destination for venture funding in Africa, surpassing financial technology. According to 2024 funding data, African climate tech startups have collectively raised $325 million, marking a significant milestone reported by Africa the Big Deal, an analytics company specializing in African tech startups.
This amount constitutes 45 percent of the total $721 million raised by tech startups on the continent so far this year, marking an all-time high for the climate tech sector. In contrast, the financial technology sector attracted only $158 million, representing just 22 percent of the total.
The report from Africa the Big Deal highlights that Climate Tech encompasses a diverse range of use cases rather than a singular sector, thus requiring additional layers of investment tracking.
Despite the less favorable funding environment for climate tech during the boom years of 2021 and 2022, the sector has demonstrated consistent growth over the years, in contrast to financial technology, which has seen declining numbers since 2023. Funding for climate tech increased from $340 million in 2019 to $1.1 billion in 2023.
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“The investment boom in 2021 and 2022 did not benefit this space as much as others (such as Fintech), resulting in a drop in its share of total investments: from 25% in 2019 and 32% in 2020 to 14% in 2021 and 21% in 2022. This share started to pick up again in 2023 (36%) and seems on track to grow again in 2024 to 45% so far,” the report states.
Despite achieving an all-time high in its contribution to total funding on the continent, Climate tech is poised to experience its first funding decline in five years, as surpassing last year’s $1.1 billion investment seems unlikely. This trend is reflective of the overall decline in funding across the African tech space.
The decline in fintech funding has also had broader implications, with Logistics and Transport surpassing it to become the second-largest contributor with a 29 percent share ($215 million). This downturn has significantly impacted general tech funding in 2024.
“In 2024 so far, startup funding in Africa has not been as robust as in previous years, reflecting a global context that remains uncertain. One of the key reasons is the significant drop in investments in the Fintech space, which only represents 22 percent ($158m) of the funding raised this year in Africa, compared to more than half of the total last year ($852 million out of $1.7 billion),” noted the report.
While the outlook may seem uncertain, major investments are still occurring. For instance, Nigerian vehicle financing company Moove secured $110 million in funding, while Tyme Bank plans an IPO aiming to raise $150 million, potentially bolstering funding prospects for fintech and the broader tech sector in Africa.
