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Kenya is becoming a pioneer in obtaining funding for its food and agricultural technology firms. 60% of the funding for African companies still originates from outside the country, mostly from the United States and the UK. South Africa, Nigeria, and Kenya are the top three countries on the continent in terms of funding climate and food solutions.On the African continent, Kenya is becoming a pioneer in obtaining funding for its food and agricultural technology firms. Approximately 60% of the funding for African companies still originates from outside the country, mostly from the United States and the United Kingdom.
However, the majority of investors on the continent are concentrated in South Africa, Nigeria, and Kenya, where funding and innovation are most prevalent. Large-scale investments in precision agriculture and solar energy solutions are two factors contributing to Kenya’s dominance in the field.
The three nations continued to hold the top spots in terms of both volume and total investment levels, according to Katapult Africa’s Evolution of Investment in Food and Climate Tech in Africa report. Since 2014, more than 800 investors have made at least one investment in climate and food innovators throughout Africa. According to the research, a single trade frequently involves a number of investors.
As a result, South Africa, Nigeria, and Kenya are the top three countries on the continent in terms of funding climate and food solutions. Venture capital firms, or VCs, are the primary source of funding for startups, making roughly 29% of all transactions. According to research, venture debt is quickly emerging as a vital source of capital, particularly for climate tech companies that have little access to conventional equity financing.
The rising need for flexible financing options within Africa’s innovation-driven climate tech sector is reflected in the fact that African companies raised over $1.1 billion (Sh142 billion) in venture loans in 2023, double from the year before. Impact investments, which made up 11% of the deals, and corporate investments, which made up 10% of the deals, are other strategies that investors are employing to fund local entrepreneurs. The least popular ways to fund companies are through governments, banks, and private equity.
According to the report, new funding sources and growing demand for sustainable solutions are driving changes in the investment environment for African food and climate technology. “Emerging technologies and innovation hubs around the continent will propel the significant growth of African food and climate technology in the future. The research states, in part, that innovation hubs such as Silicon Cape in South Africa and iHub in Kenya are cultivating entrepreneurial ecosystems that offer access to capital, mentorship, and cooperative networks.
Nairobi lies at the heart of the developing entrepreneurial ecosystems that define Eastern Africa. With the help of incubators and accelerators like iHub and Nairobi Garage, the city has emerged as a major hub for fintech and agritech firms. In the last ten years, 540 rounds of fundraising for food and climate businesses in the Eastern African region have raised more than $2.5 billion (Sh322.8 billion).
Southern Africa came in third place with $230 million (Sh29.6 billion) raised in 80 rounds, while Western Africa came in second with almost $1 billion (Sh129 billion) raised in 300 rounds. According to the paper, by 2025, the African green bond market is expected to grow to $5 billion (Sh645.6 billion), which would provide crucial capital for clean energy, sustainable agriculture, and other climate-related initiatives.
Over the next five years, impact investing—which places equal emphasis on financial returns and social and environmental outcomes—is also anticipated to increase by 25% yearly. “African climate tech startups are appealing targets for impact capital as global investors place a greater emphasis on sustainability.”
By 2026, the market for artificial intelligence (AI) in agriculture is anticipated to rise to a value of $2.4 billion. AI is already improving resource management, pest control, and crop yield forecasting, which boosts productivity and food security throughout Africa. According to the poll, investments in energy and digital infrastructure are crucial to sustaining this growth. Over the next ten years, an estimated $100 billion (Sh12.9 trillion) will be needed to improve rural connectivity, energy grids, and digital infrastructure, opening the door for the wider use of new technology.
