M&A Surge: How Consolidation is Reshaping African Tech

Growing M&A activity helps investors see African startups as not just high-risk ventures but as businesses with potential for strong exits.

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2024 was a year of profound change for African tech. Startups across the continent faced a significant funding crunch as global venture capital (VC) investment continued to decline. With rising interest rates, geopolitical tensions, and a tightening of purse strings by investors worldwide, the amount of money flowing into African startups dropped considerably. As the VC landscape shifted, the ripple effects forced startups to adapt. Some chose to pivot, others shut down, and an increasing number turned to mergers and acquisitions (M&A) as a way forward.

M&A activity surged across Africa, not just as a survival mechanism but as a signal of a maturing ecosystem. For startups, acquisitions offered a viable exit strategy at a time when initial public offerings (IPOs) remained elusive. For buyers, it represented an opportunity to consolidate resources, scale operations, and secure a competitive edge. The rise in M&A deals tells a story of resilience and adaptation as the African tech ecosystem navigates challenging times.

VC Downturn Fuels Consolidation

African tech startups have been operating in a harsher funding environment since 2023, and 2024 continued the trend. Global VC investment dropped due to macroeconomic pressures, with Africa seeing its fair share of the decline. Early-stage funding, once a lifeline for many startups, became harder to secure. Investors were more selective, demanding proven revenue models and reduced burn rates before committing their capital.

This funding scarcity left startups with limited options. Many could not sustain their operations with reduced cash reserves, leading to layoffs, shutdowns, or pivots. In this environment, mergers and acquisitions became a natural alternative for startups struggling to stay afloat. Rather than shuttering completely, merging with a competitor or being acquired by a larger firm provided a way to salvage operations, retain employees, and continue creating value.

Take South African fintech Adumo’s acquisition by Lesaka in a deal worth $85.9 million. Adumo had been on an acquisition spree of its own in prior years, snapping up companies like SwitchPay and iKhokha. By becoming part of Lesaka, it could consolidate its offerings and remain a leading player in payment processing while navigating a challenging funding landscape. Two of Africa’s largest B2B e-commerce platforms, Kenya-based Wasoko and Egypt-based MaxAB, also finalized their merger in August to digitize Africa’s challenging $600 billion informal retail market.

Similarly, the acquisition of QuickBus by Kenyan mobility startup BuuPass showcased how consolidation can fuel strategic growth. QuickBus brought expertise in aggregating long-distance bus tickets, complementing BuuPass’s marketplace model. Together, the combined entity scaled operations into key markets like South Africa and Nigeria, expanding routes and partnerships in an industry ripe for disruption.

A Maturing Ecosystem

For years, African tech was criticized for its lack of exit opportunities, which dampened investor confidence. M&A deals in 2024 served to address this gap, showing that startups can generate returns not just through scaling operations but also through strategic acquisitions. These exits provide liquidity to investors and founders, reinjecting capital into the ecosystem and encouraging future investments.

The acquisitions of PaySpace by Deel and Operativa by Peach Payments underscore the growing appetite for African tech talent and solutions by international firms. Deel, a global payroll giant, saw the PaySpace acquisition as a way to strengthen its presence across Africa and tap into PaySpace’s robust customer base spanning over 40 countries. Peach Payments, backed by Apis Growth Fund II, acquired Operativa to accelerate product development and expand its footprint in new markets like Kenya and Mauritius.

This growing M&A activity signals a turning point. Investors are now seeing African startups as not just high-risk ventures but as businesses with potential for strong exits. The maturation of the ecosystem is evident in how startups and acquirers are strategically aligning for mutual benefit. For instance, Tendo’s acquisition of Shopa in Ghana illustrated how consolidating supply chain solutions could revolutionize informal retail, creating a more efficient system for retailers and suppliers alike.

The Broader Impact

Beyond offering survival pathways and exits, M&A deals are reshaping industries. In fintech, acquisitions are consolidating fragmented markets, leading to more robust service offerings for consumers. In e-commerce and mobility, mergers are creating scale and reducing inefficiencies in distribution and logistics. Across sectors, the focus is shifting from growth-at-all-costs to operational efficiency and profitability.

Deals like Yassir’s acquisition of KooL in Tunisia demonstrate how M&A can extend a company’s reach into new markets while creating economies of scale. Yassir, already a leader in mobility and delivery services in North Africa, used the acquisition to bolster its meal delivery services in Tunisia, leveraging KooL’s local expertise and partnerships.

Similarly, the energy sector saw notable consolidation with the acquisition of Nigeria’s Shyft Power Solutions by UK-based SteamaCo. This merger combined Shyft’s innovative energy monitoring solutions with SteamaCo’s expertise in revenue management, promising to revolutionize how energy is delivered to communities in emerging markets.

More Consolidation on the Horizon

As African tech moves into 2025, the signs point to even more consolidation across industries. While some startups will continue to thrive and secure fresh funding, the broader ecosystem is likely to remain cautious, with investors prioritizing profitability and scalability over-aggressive expansion. This environment will drive further M&A activity as startups seek ways to stay competitive or avoid shutting down entirely.

The rising number of acquisitions also reflects a changing mindset among founders. Many now view M&A as a viable endgame rather than a fallback option. This shift is crucial for the long-term sustainability of the ecosystem. By embracing acquisitions as an integral part of the startup lifecycle, African tech can attract more international players, creating opportunities for cross-border collaboration and investment.

While challenges remain, including regulatory hurdles and market volatility, the increasing pace of consolidation suggests a maturing ecosystem ready to weather adversity. The coming year is expected to bring not just more deals but also more strategic partnerships that can drive innovation and efficiency across sectors.

In many ways, 2024 set the stage for this new era of African tech. The lessons learned from a tough funding environment have pushed startups to think creatively about survival and growth. With M&A becoming a cornerstone of the ecosystem, the future of African tech looks more interconnected and resilient than ever.