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The Most Promising Sectors in Africa: Beyond Fintech

Jon Lubwama

Startups & Venture Capital  Oct 27, 2023
The Most Promising Sectors in Africa: Beyond Fintech

Africa, the world's second-largest and second-most populous continent, is a land of immense potential and opportunities. The continent is experiencing a significant economic transformation, driven by rapid technological advancements and a burgeoning startup ecosystem. While fintech has been the dominant sector, attracting the lion's share of startup funding, several other sectors are showing promising growth and potential. This article aims to analyze the most promising sectors in Africa outside fintech.


First things first, let's delve into how fintechs dominate startup funding in Africa. According to the African Tech Startups Funding Report 2020 by Disrupt Africa, fintech accounted for 31.4% of the total funding raised by African startups in 2020. The report further revealed that fintech startups raised a total of $160 million, a significant increase from the previous year. This trend is not surprising given the continent's large unbanked population and the increasing penetration of mobile phones and internet connectivity.


However, while fintech continues to dominate, other sectors are gradually gaining traction and attracting significant investments. These sectors, which include agriculture, health, education, e-commerce, and renewable energy, among others, are showing promising potential for growth and profitability.


Agriculture


Agriculture is a critical sector in Africa, employing a large percentage of the continent's population. According to the World Bank, agriculture accounts for about 23% of Africa's GDP. Despite its importance, the sector faces numerous challenges, including low productivity, lack of access to markets, and climate change.


However, these challenges present opportunities for innovation and investment. Startups are leveraging technology to address these issues, creating solutions that improve productivity, market access, and resilience to climate change. According to the African Agtech Market Map 2020, agtech startups raised over $60 million in funding in 2020, a 110% increase from the previous year. This data indicates the growing interest in the sector and its potential for growth.


Health


The health sector in Africa is another promising area for investment. The COVID-19 pandemic has highlighted the need for robust and resilient health systems in Africa. Startups are leveraging technology to address the continent's health challenges, including access to quality healthcare, disease surveillance, and health financing.


According to the Africa Healthtech Landscape 2020 report by Briter Bridges, healthtech startups raised over $189 million in funding in 2020, a 57.8% increase from the previous year. The report further revealed that there are over 180 healthtech startups operating in Africa, indicating the sector's vibrancy and potential.


Education


Education is a critical sector for Africa's development. However, the sector faces numerous challenges, including access to quality education, high dropout rates, and inadequate infrastructure. Startups are leveraging technology to address these challenges, creating solutions that improve access to education, enhance learning outcomes, and facilitate skills development.


According to the Edtech Funding Report 2020 by HolonIQ, edtech startups in Africa raised over $40 million in funding in 2020. The report further revealed that the number of edtech startups in Africa has grown by over 50% in the last five years, indicating the sector's growth potential.


E-commerce


E-commerce is another promising sector in Africa. The sector is driven by the increasing penetration of internet and mobile phones, a growing middle class, and changing consumer behavior. Startups are leveraging technology to facilitate online shopping, delivery, and payments, creating a vibrant e-commerce ecosystem.


According to the Africa E-commerce Landscape 2020 report by UNCTAD, e-commerce startups in Africa raised over $700 million in funding in 2020. The report further revealed that the number of online shoppers in Africa has grown by over 18% annually since 2014, indicating the sector's growth potential.


Renewable Energy


Renewable energy is a promising sector in Africa, given the continent's abundant renewable energy resources and the need for reliable and sustainable energy. Startups are leveraging technology to facilitate access to clean energy, improve energy efficiency, and promote sustainable practices.


According to the Africa Renewable Energy Landscape 2020 report by Briter Bridges, renewable energy startups in Africa raised over $350 million in funding in 2020. The report further revealed that there are over 400 renewable energy startups operating in Africa, indicating the sector's vibrancy and potential.


In conclusion, while fintech continues to dominate startup funding in Africa, other sectors are showing promising growth and potential. These sectors, which include agriculture, health, education, e-commerce, and renewable energy, are leveraging technology to address Africa's challenges and create opportunities for growth and profitability. As these sectors continue to grow and attract investment, they will play a critical role in Africa's economic transformation and development.


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