Investment Capital Providers Demonstrate Growing Desire Towards African-Based Climate Technology Businesses
Africa's tech sector is poised for a bright future, particularly in the climate tech domain, according to Christophe Viarnaud, founder and CEO of AfricArena. This sector, which includes startups focused on agriculture, disaster management, and climate mitigation and adaptation solutions, has seen significant growth in recent years.
One such startup is Rhea, established in 2022 by Priscillah Wakerera and Soinato Leboo in Kenya. Rhea offers soil testing services to smallholder farmers, providing them with valuable insights to improve crop yields and farming practices. In recognition of their innovative work, Rhea was awarded the accolade for the best climate tech startup at the AfricaArena climate summit in Nairobi.
The Kenya Climate Innovation Centre (KCIC) has played a crucial role in this growth. Since 2022, the centre has secured over $150 million in funding for small enterprises. With support from the Moot Foundation, KCIC is implementing a solar energy program in horticulture, dairy, and aquaculture across Kenya, Uganda, and Tanzania.
More than 3,000 small businesses in KCIC's network are benefiting from increased funding for solutions in solar energy, waste management, and reforestation. This funding surge has been a trend in the African climate sector. Funding in this sector surged from $340 million in 2019 to $959 million in 2022, reaching $1.1 billion in 2023.
Climate Venture Capitalists (VCs) are focusing on solutions like clean energy, circular economy, predictive infrastructure, and sustainable agriculture. In 2023, climate sub-sectors that have attracted more funding include logistics and transport with $215 million and energy and water with $132 million.
However, it's not all smooth sailing. Securing funding from investors for climate tech startups can still be challenging. This was the case for Rhea in 2022. Nevertheless, Josh Romisher, CEO and co-founder of Holcene, remains optimistic. He believes that investments in climate sectors will continue to expand in the upcoming years, and Africa is on the verge of significant growth in the global discussion on climate issues.
Romisher emphasises the enormous innovation opportunities in Africa that can be tapped into today. He believes that Africa's potential in the climate sector is being increasingly recognised by Climate VCs, who are broadening their focus to include food production and disaster management.
In the first half of 2024, this sector accounted for 45% of the $325 million raised by African startups. As Africa continues to innovate and invest in climate tech, it's clear that this sector holds significant promise for the future of African tech.
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