(Agence Ecofin) – While funds raised in equity by African start-ups fell by 6% in 2022, debt financing obtained by these technology companies has, on the contrary, increased in volume and number. Fintechs and cleantechs were the most debt-funded startups according to Partech Africa’s 2022 report.
Very often, when we talk about funds raised by African start-ups, we talk about equity or equity financing, while start-ups also obtain funds in the form of debt. Thus, debt financing mobilized by African start-ups has almost doubled by 2022.
They reached a record amount of USD 1.5 billion, compared to USD 767 million in debt obtained by African start-ups in 2021. Alongside this, the number of debt transactions also increased by 65% to reach 71 deals in 2022, compared to 43 deals in 2021.
In its 2022 report titled “Africa Tech Venture Capital” and published on Tuesday, January 24, Partech Africa indicates that debt has been a solid alternative capital source for African startups in 2022.” Last year we saw an increased appetite for debt financing from startups that needed to fuel their growth and scale […] Debt accounted for 24% of the total funds raised by African start-ups. And despite macroeconomic challenges and currency instability, volume and debt transactions have grown on the continent », explains the venture capital fund dedicated to start-ups in Africa.
While debt financing has increased significantly among African startups, Partech points out that equity financing has conversely declined in 2022. Equity fundraising by all startups fell 6% to $4.9 billion.
Speaking of countries, debt financing was concentrated in four economies, namely Kenya, Nigeria, Egypt and South Africa. These four countries alone accounted for 83% of total debt financing in Africa. They also account for 69% of all debt financing deals on the continent with 49 deals.
Kenya was the first African country to attract the most debt financing in 2022. This country raised $608 million in debt through 15 operations. Egypt is in second place with $350 million collected in 10 rounds. Nigeria comes in third with $252 million earned in 16 rounds. South Africa is in fourth place with $77 million raised in 8 rounds.
According to the sectors of activity, we note that investors have concentrated their financing in the form of debt in fintechs and cleantechs in Africa. Fintechs raised $691 million, or 45% of the total amount of debt financing on the continent. These exercises were carried out through 32 appointments, representing 45% of the total number of operations. Cleantechs secured $605 million in debt financing through 16 deals.
Chamberlain MOKO
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