Morocco has made a big leap in terms of fundraising for tech startups in the 2023 Partech ranking which is a benchmark, managing to place itself in the antechamber of the historic “Big Four” which are South Africa, Nigeria, Egypt and Kenya . Coming 5th, can the Kingdom break the supremacy of this African tech quartet?
South Africa, Nigeria, Egypt and Kenya will still remain the main investment destinations in Africa in 2023, capturing 79% of financing. South Africa has emerged as a leader in the African technology financing landscape by securing $549 million in equity, despite a 34% year-on-year decline. Nigeria, second and having lost its first place, saw a significant drop of 59% in total investment, reaching $469 million in 2023, but remained at the top in the number of operations carried out on this type of financing.
Egypt, with $433 million, suffered the largest impact among the top four countries, with a 58% drop in the number of equity financing transactions, accounting for 60 transactions out of ‘year. Kenya, for its part, captured $335 million. “This quartet has been in the lead for years for three reasons. Concerning Nigeria and Egypt, they benefit from the size of their market. They in fact have markets of more than 100 million inhabitants. In addition to benefiting from the size of their market, these two countries are (compared to other countries) lagging behind in certain sectors, such as low banking rates, health and even energy.
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Which opens up huge opportunities for startups and investment funds. As for South Africa and Kenya, they operate well-integrated regional markets: the first via its historic hinterland, and the second through the East African market. The second reason is that these Big Four have Anglo-Saxon legislation and culture unlike French-speaking countries where laws and circulars already take time to come out. The third reason is that these countries also have a diaspora in English-speaking countries, particularly in the United States and England, which establish connections between large investors and startups established in their country of origin,” explains Omar El Hyani, Investment Director at MITC Capital (Maroc Numeric Fund), who has made several investments in Moroccan technology startups operating in Fintech, EdTech, RegTech and Artificial Intelligence.
But apart from the leading pack which has been leading the way for several years in terms of fundraising for technology startups, Morocco and Ghana are the only other countries to exceed the threshold of $50 million in equity financing. Rising from 15th to 5th place at the African level in terms of fundraising for tech startups, the Kingdom, which captured 93 million dollars, has never been in the antechamber of these historic “Big Four” . However, can Morocco be part of the African “Big Four”? “Morocco made up a lot of ground over these countries last year. The $93 million raised by Moroccan technology startups certainly includes the $62 million raised by Cash Plus, but even without this operation, Morocco would be in the Top 10, which has never been the case. Until then, the best rank in the Kingdom is 13th position in this Partech ranking,” rejoices Omar El Hyani.
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But for the Director of Investments at MITC Capital (Maroc Numeric Fund), “it will be complicated for Morocco to enter the historic Big Four” in Africa in terms of tech fundraising. “The investment criteria of funds capable of investing hundreds of millions of dollars, which moreover are often foreigners, are not in favor of our startups. Not only is the Moroccan market small, but it cannot rely on the UMA market either. Additionally, we have a relatively conservative economy. The sectors are locked. The financial market, for example, remains dominated by banks, with a very conservative regulator who leaves no room for new innovative outsiders. But on the continent, it is fintech which attracts the most funds,” argues Omar El Hyani.
Despite everything, many initiatives that have enabled the Moroccan startup ecosystem to make progress have started since 2018, according to the Director of Investments at MITC Capital. “The State is increasingly carrying out initiatives to finance innovative startups. TAMWILCOM’s Innov Invest program is a success, and other public programs such as the Mohammed VI fund should provide even more funding. There are many challenges for Morocco to overcome before entering the historic “Big Four” but this will be our challenge for the next 5 years,” concludes Omar El Hyani.
