Kenya is the second hotspot for African venture capital(VC) investment having raised $305 million in 2020, according to a new report by AfricArena .
According to the report dubbed the state of tech in Africa 2021, most of Kenya's VC financing is derived from foreign investors due to the high number of expatriates in the country.
The report also attributes Kenya's perfomance to having a high number of coding schools and being a forerunner in the African fintech space.
Nigeria took top spot in Africa having raised $307 million in 2020, Egypt came third with $269 million of funding recorded last year while South Africa had $259 million.
Rwanda has also positioned itself as a hub for East Africa and it enjoyed great success with $126 million raised in 2019.
Unfortunately the pandemic halted its impressive progress and that figure tumbled 91 percent to just $11.6 million in 2020.
The agritech sector grew phenomenally in 2020, with Kenya leading the way, mainly because of massive deals such as the $85million raised by GRO Intelligence, and other big deals in Twiga Foods and Apollo Agriculture.
Kenya received the $305million in 52 deals in 2020 averaging $5.9million per deal (second behind Ghana for the highest average deal value).
The value of deals in the Kenyan market declined by 46 per cent while the number of deals stayed constant at 52 (with the average also dropping 46%).
Venture capital investment into Kenya as a proportion of GDP is the highest in Africa at 0.32 per cent of GDP which is higher than the same ratio for Asia (0.27%) and Europe (0.16%) but behind North America (0.57%) and the US (0.61%).
In the report, the Kenyan market ranked in 56th position in the ease of doing business score, the third highest African country noting that this could influence the amount of capital invested in the country in proportion to its GDP.
While the pandemic resulted in major setbacks in 2020 with growth declining 29 percent global statistics firm,Statista expects major improvements in the years to come.
In 2022, VC investment is expected to climb sharply to between $3.8 billion and $4.7 billion while the upper range is expected to be $6.8 billion by 2023.
By 2025, VC investment in Africa is forecast to exceed $10 billion.