Rapid Ascent of African Tech Startups Focused on Climate Change Gains Momentum in Financing Frenzy
The climate tech sector in Africa is experiencing a surge in funding, with the sector garnering $325 million so far in 2024. This significant growth over the past five years is evident, with Climate Tech funding growing from $340 million in 2019 to $1.1 billion in 2023.
Deep tech climate solutions and the Logistics & Transport sub-sector have been major contributors to this growth. In 2024, these sectors have secured 29% and 29% of the total funding respectively, amounting to $215 million and $95 million respectively. The Energy & Water sub-sector has also seen a substantial increase, securing 18% or $132 million in funding.
One of the most notable developments in the Logistics & Transport sector is the partnership between Chinese EV manufacturer BYD and Kigali-based EV line Ampersand. This partnership aims to establish the production of over 40,000 electric motorcycles in Kigali by the end of 2026. Josh Whale, CEO of Ampersand, has stated that this partnership is a significant milestone for Ampersand, as they remain at the forefront of delivering sustainable, cost-effective, mass-market EV solutions. The partnership also involves enhancing the quality of electric motorcycles, including the introduction of more affordable high-quality battery solutions.
However, the fintech sector has seen a noticeable decline in funding. At this point last year, fintech funding stood at $852 million, accounting for more than 50% of the total funding then. In 2024, fintech startups have only raised $158 million, making up a mere 22% of the total funding. The Big Deal report points to this decline as the primary reason for the slowdown in overall startup funding.
The increased funding in Africa's climate tech sector brings hope to the future of climate transition and action in Africa, enabling innovations such as battery-swapping technology solutions to grow increasingly across the continent. African climate tech startups have surpassed fintech startups in terms of funding, securing nearly half of all funding accumulated by tech startups in Africa to date in 2024.
Despite the overall investment in the climate tech sector showing a notable increase in May, it has been declining compared to previous years. Tech startups in agriculture and food innovations within Africa's climate tech sector have received $68 million in 2024. It appears that while the climate tech sector appears poised for continued growth in 2024, surpassing last year's $1.1 billion investment in Climate Tech seems unlikely at this point.
In an exciting development, Intent Technologies plans to establish the production of over 40,000 electric motorcycles in Kigali by partnering with the EV brand Ampersand. This move is expected to boost the electric vehicle market in Africa and contribute to the continent's ongoing efforts towards sustainable development.
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