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Africa’s share of global blockchain funding expands despite worldwide squeeze – Africa’s regulatory push paves the way for funding rebound.
The third CV VC African Blockchain Report in partnership with Absa Group affirms the growing impact of blockchain technology on Africa’s resilience during global macroeconomic and sociopolitical shifts. According to the IMF World Economic Outlook, nine of the top twenty fastest-growing economies in 2024 are African nations. This report underscores blockchain’s contribution to driving African economies forward. The technology’s impact in Africa spans transparency, sustainability, data accountability, new service and creator economies, and financial inclusion.
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“Africa’s vast natural asset, its people, coupled with the growing recognition of Africans’ technological ability, resilience, and spirit, positions blockchain as a pivotal tool to support economic advancement,” said Mathias Ruch, CEO of CV VC.
The African Blockchain Report, published in partnership with Absa Group, assesses venture funding activity worldwide and presents a specific assessment lens on Africa. Africa’s growing importance within the global venture ecosystem is shown by its proportion of all global ventures reaching an all-time high of 0.62%. The report gives a detailed analysis of African funding, the companies and verticals involved, a deeply researched overview of regulatory factors by NODO, and perspectives from pioneers.
African Blockchain Funding 2023 & H1 2024 Facts
Blockchain businesses globally raised $10.6b in 1,306 deals. Despite a global downturn in blockchain funding by 64% in 2023, H1 2024 saw only a 9% year-over-year decline, indicating a potential rebound. Likewise, Africa has begun to feel the warming funding trajectory.
Global Share Growth: Africa’s share of global blockchain venture deals grew from 1.3% in 2023 to an all-time high of 1.8% in H1 2024.
Africa’s Blockchain Venture Funding Outpaces Global Averages in H1 2024
In H1 2024, blockchain technology accounted for 6.4% of Africa’s total venture funding and 12.5% of all deals, outpacing the global averages of 3.5% for funding and 5.9% for deals. This highlights Africa’s stronger focus on blockchain solutions.
Early-stage: Early-stage VC funding rounds dominated in 2023, accounting for 35% of deals, rising to 50% in H1 2024.
Average Deal Size: Africa’s average blockchain deal size is 13% higher than the all-sector average deal size in the region. This points to the technology’s vitality and utility.
Funding and Deal Contraction: In line with global dynamics, there was a contraction in funding and deal count, yet Africa raised $135.4m from 17 blockchain venture deals in 2023.
Rebound in Deals, H1 2024: African blockchain businesses raised $34.7m across 12 deals. This represents a 9% increase in the number of deals compared to H1 2023.
African Blockchain Investment Trends: Companies & Sector Focus
Despite historically following global markets, Africa experienced a record-breaking 2022, yet faced a recalibration in 2023 due to insufficient capital amidst broader global macroeconomic influences. Factors such as the strong dollar and high US interest rates led to capital outflows, exacerbating the impact of global VC pullback. Nevertheless, Africa’s determination and long-term growth potential is palpable. Over the recent quarters, the region has sustained a reboot, as existing companies and investors benefit from a less heated landscape, allowing for strategic positioning and value reassessment.
2024 is witnessing investment deals flowing toward DeFi (42%). This focused investment highlights Africa’s emerging role as a hub for financial tech transformation. Concurrently, there is a continued focus on Data Management, verification & analytics (16.7%) alongside the gaming and NFT sphere.
Some notable raises included Beldex, known for its privacy blockchain; Zone, focusing on payments; Bidget, an exchange platform; Seedify and Carry 1st, both within the gaming sector; Shamba Records, specializing in data; and Scroll, focusing on scalability
Regulatory Drives
NODO, the report research partner conducted a deep assessment of the pan-African regulatory landscape which witnessed a substantial shift, expected to drive innovation with assuredness for both pioneers and investors. Previously, crypto was implicitly banned in 36 countries, now reduced to 8 indicating evolving stances but leading to increased uncertainty.
Limited progress was seen in fully legalizing crypto due to concerns about fiscal control, prompting exploration of central bank digital currencies, though launches and traction remain limited. African currencies’ devaluation in 2023 posed the most challenges to crypto legalization, with many governments fearing competition with local currencies. Over 36 African countries are now categorized as uncertain crypto markets, reflecting ongoing progress in regulation despite uncertainties.
Pioneers’ Perspectives for 2024
The African Blockchain Report gives perspectives from the many pioneers and companies building a better future for Africa on blockchain technology’s catalytic rails.
Mathias Ruch, CEO of CV VC, in launching the 3rd edition of the CV VC African Blockchain Report, passionately emphasized Africa’s fervent embrace of blockchain as a catalytic technology. He noted, “Africans are already accustomed to financial transformation through experiences with mobile money services. This existing digital bedrock provides a foundation to enhance digital value exchange and financial services across the continent.
“With 1.4 billion people, comprising nearly 18% of the global population, and just five out of 54 countries contributing 50% of the continent’s GDP, there’s an urgent need to rebalance and distribute resources. Africa’s vast natural asset, its people, coupled with the growing recognition of Africans’ technological ability, resilience, and spirit, positions blockchain as a pivotal tool to support socio-economic advancement, not just for Africa but as a solution to many of the ill winds blowing globally.”
Rob Downes, Head of Digital Assets, CIB Africa, Absa Group, added, “As a Pan-African bank, Absa is committed to driving digital transformation in the financial sector, focusing on delivering customer-centric solutions that are convenient, secure, and affordable. One of the key areas of innovation that Absa has been leveraging is blockchain technology, which has the potential to revolutionize various aspects of the financial industry, such as payments, remittances, trade finance, identity verification, and asset tokenization, by offering faster, cheaper, and more transparent transactions, as well as enhanced security and trust.
“We believe that blockchain is an important technology for Absa, and we predict that it will continue to grow in significance as we drive our ambition to be a digitally powered business. We expect to see blockchain-enabled use cases grow as regulations become clearer and awareness of the benefits grows among our customer base. The regulatory landscape is critical to our expanded participation, and there’s a great overview of it in this report, which we are very proud to co-publish with CV VC.”
Shogo Ishida, Co-Founder and CEO of NODO said “The CV VC Africa Blockchain Report is a crucial resource for understanding the evolving blockchain landscape in Africa. Our team at NODO is proud to contribute to this report, providing a detailed analysis of the regulatory landscape and showcasing the advancements in cryptocurrency regulations. This report is an invaluable resource for understanding the current state and future potential of blockchain in Africa.”
The CV VC African Report features insights from many other pioneers on the ground across Africa including Lisk, The Hashgraph Association, VALR, Moore Johannesburg, Tether, Emurgo, Mzansi Web, Luno, Zarp, and Bybit.
The 2023 African Blockchain Report delineates a year of strategic realignment and resilience within the African blockchain ecosystem amidst broader global economic shifts. While venture funding has seen a general downturn, the sustained interest and investment in blockchain ventures across Africa are irrefutable and poised to foster innovation and drive growth. The report stands as a pivotal resource for navigating the intricacies of the blockchain funding ecosystem in Africa, offering nuanced insights into the evolving dynamics of the sector.
Some select graphics from the report can be downloaded from here.
A quick link to the full report is available here.
