(Ecofin Agency) - The report highlights that, in today’s climate of a cooling venture capital market and economic challenges across the continent, mergers and acquisitions, along with geographic expansion, have become key strategies for African startups to sustain their growth and remain viable.

Africa’s tech sector saw a wave of mergers and acquisitions (M&A) in 2024 as startups struggled to secure funding, pushing them to join forces for survival and growth. A report by TechCabal Insights, released on February 13, highlights this trend, showing that 39 M&A deals took place last year—a 34% jump from 2023.

Startups in Africa often find it easier to raise seed funding, but scaling—reaching revenues of $10 million to $50 million—requires more than just capital. With investors pulling back and foreign funds focusing on their home markets, many African startups opted to merge, shortening the path to sustainable growth.

By region, Southern Africa saw the highest number of acquisitions, with 16 startups absorbed by competitors, followed by West Africa (10), East Africa (7), and North Africa (4). Two African startups based outside the continent were also acquired.

The biggest deal of the year was finalized in August 2024, when Kenyan startup Wasoko merged with Egypt’s MaxAB, creating a major player in Africa’s B2B e-commerce market.

Sector-wise, fintech dominated with 13 M&A deals, followed by Software as a Service (SaaS) with 7, and e-commerce with 3.

Beyond M&A, startups also expanded their footprint across Africa and beyond. The report recorded 38 geographic expansion moves in 2024, more than double the 16 seen in 2023. Nigerian startups led this trend, with 16 expanding internationally to counter economic challenges such as currency devaluation, inflation, and weakened purchasing power.

East Africa was the top target for expansion (13 moves), followed by Southern Africa (5) and North Africa (4). Nine African startups expanded beyond the continent, while three entered multiple African regions.

Despite these growth efforts, African startups faced financial pressure. In 2024, 1,819 employees lost their jobs due to bankruptcies or cost-cutting measures. The closure of 12 startups, including Kenya’s Copia Global (which alone laid off 1,060 workers), accounted for most of these job losses.

Funding also declined. African startups raised $2.21 billion across 488 deals in 2024, down from $2.86 billion in 2023. While startups in 25 African countries secured investments, Nigeria, Kenya, Egypt, and South Africa accounted for 83.27% of total funding.

Looking ahead, TechCabal Insights expects M&A activity and international expansion to accelerate in 2025, alongside a rebound in funding. However, global economic uncertainty—especially with Donald Trump’s return to the White House—could influence investment trends.