Will Africa tech start-up funding crunch linger in 2024?

The African tech start-up ecosystem faced a significant decline in venture capital funding in 2023, driven partly by rising interest rates and global geopolitical tensions that impacted investor confidence. The decrease in start-up funding has raised uncertainties about the outlook for 2024. Collins Onuegbu, Founder of Signal Alliance Technology Holding, joined CNBC Africa to share insights on the expectations for the coming year. Onuegbu highlighted the challenges faced across different segments of the tech industry, from early-stage start-ups seeking seed round funding to growth stage companies seeking larger investments. He emphasized that successful start-ups are now looking for bigger amounts of funding, which presents challenges in the current economic climate. Angel investors, who often fund early-stage start-ups, are also facing difficulties due to economic uncertainties, impacting investment decisions. The instability in the economy has made investors more cautious, with some start-ups even experiencing down rounds, affecting market sentiments and funding prospects. Looking at the broader African tech landscape, Onuegbu noted that several African countries, including South Africa, Kenya, Egypt, and Nigeria, have faced similar economic challenges, affecting funding flows across the continent. He mentioned that even in the US, some start-ups have struggled, leading to a cautious approach from investors. Onuegbu discussed the impact of the Startup Act in formalizing the tech ecosystem and protecting investors and start-ups. While only a few states have adopted the Act, he stressed the importance of critical mass, particularly in states like Lagos where a significant number of start-ups operate. The conversation shifted to regulatory initiatives like the CBN's sandbox, highlighting the importance of market acceptance and testing for policy effectiveness. Onuegbu addressed the disruptive force of AI in the tech industry, mentioning how AI has changed the dynamics and created new skills requirements. Despite concerns about job displacement, he expressed confidence in the adaptability of the workforce to acquire new skills in response to technological shifts. Overall, navigating the funding challenges and embracing technological disruptions remain key themes in the African tech start-up ecosystem in 2024.