In Africa, the concentration of venture capital and private equity has mirrored the evolution of accelerators such that the support for innovation and entrepreneurship has grown, as reflected by the number of African startups and their increasing acceptance into accelerators and incubators around the world.

Today, Africa has nearly 650 tech hubs that include accelerators and incubators, and the countries with the greatest number of accelerators are also those with the greatest share of venture capital financing, according to a new report by AfDB.

The report titled ‘Entrepreneurship and Free Trade Volume II – Towards a New Narrative of Building Resilience’ examined the state of African entrepreneurship within a global lens while highlighting developments and suggesting future directions for entrepreneurship in Africa.

In the report, Egypt, Nigeria, Kenya and South Africa were mentioned as the top African countries that accounted for more than a third of the incubators and accelerators and 80 per cent of investment in Africa.

According to the report, Egypt, Nigeria, Kenya, and South Africa account for more than a third of financing in Africa, reflecting a measure of concentration. The report further stated that “All regions and populations have differing degrees of entrepreneurship, which is true in Africa and elsewhere.”

The report added that “Although this is not the only measure of entrepreneurship, there are reasons to explain why some countries push ahead faster with startups, ecosystem development, and commercialisation. In the cases of these four countries, their economies and populations are larger than most African countries,” the report stated.

Another critical insight from the report showed that Nigeria, Egypt and South Africa were among the top three countries that attracted the highest foreign direct investment in the past 10 years.

According to the report, Egypt attracted FDI of about $56.2 billion between 2011-2020, followed by Nigeria with about $45.1 billion and South Africa with about $41.3 billion in the same period. 

The report further stated that “These countries dominate the African portfolio investment market as countries that show the greatest investment in startups generally have higher FDI and are among the few countries able to access the limited portfolio investment on the continent.”

“In fact, Egypt, Nigeria and South Africa ranked as the top three countries on the continent in terms of attracting FDI over the past decade. They also tend to dominate the African portfolio investment market.”

The report advised that there should be a restructuring and commercialisation of state-owned enterprises, adding that certain countries, including Nigeria, needed to note this advice.