Nigeria, other W’African countries attract $843m venture capital inflow in 2022

•Investors are bullish on regional outlook

Despite uncertainty in the global financial market, investors are confident in the outlook of the continent even as West Africa pooled a total of $843 million in venture capital inflow last year.

These are contained in the 2022 Venture Capital in Africa Report compiled by the African Private Capital Association (AVCA) and released yesterday.

The report, which captures venture capital performance in Africa by deals, volumes, value, and investment stage, indicates the industry’s resilience despite global uncertainty.

According to the report, of the 786 venture capital deals, 235 were in West Africa, again recording the highest volume of deals across the continent, followed by North Africa (178) and East Africa (168).

With $1.1 billion, North Africa led deal values across the continent, as East Africa attracted $899 million, while West Africa secured inflows of $843 million.

Powerhouse economies – Nigeria, Egypt, South Africa and Kenya – remain the most attractive locations for venture capital investment, accounting for 64 per cent of deal volume and 51 per cent of deal value combined.

The new report is a comprehensive overview of Africa’s innovation ecosystem, providing critical insights into sub-regions, countries and sectors that have cemented Africa’s rising position in venture capital activity and the increasing importance of early-stage investment on the continent.

The report stated that in the wake of the COVID-19 pandemic and the resulting capital injection, central banks responded to loose monetary policy while interest rates climbed throughout the year as efforts to rein in inflation intensified.

Owing to the restrictive environment, it said, the global venture funding landscape shrunk by 32 per cent, from $681 million invested in 2021.

The report noted that despite the cautious capital deployment around the globe, commitments in Africa remained strong.

By comparison, Africa’s 21 per cent year-on-year growth in deal volume was three times the growth recorded in Asia (seven per cent), the only other region to record positive year-on-year growth in deal volume.

According to the report, Africa’s venture funding market was valued at $6.5 billion across 853 deals, including $1.3 billion of venture debt. Deal volume in Africa last year experienced an industry record, highlighting a near-decade of continuous growth and a compound yearly growth rate (CAGR) of 31 per cent between 2014 and 2022.

Commenting on the report, Chief Executive Officer of AVCA, Abi Mustapha-Maduakor, said: “Resistance against rippling effects of COVID-19 and global economic headwinds is a reminder of the high-quality investment opportunities on the continent.

Despite lower participation by impact investors last year, as experienced globally, the impact continues to be achieved in Africa through a more connected marketplace that drives tech-enabled solutions from healthcare to education.”