Africa’s blockchain landscape, once a promising beacon for tech innovation, has seen a notable decline in venture capital funding in 2024, plummeting by 74% in the first half of the year. This downturn aligns with a global slump in blockchain venture capital, which also fell by 64% during the same period. Despite this, Africa remains a region of unique opportunity, especially in decentralized finance (DeFi) and crypto startups, even though the general investment climate has been challenging​.
Comparison to Global Trends
Globally, blockchain investment represented only 3.5% of total venture capital funding in 2024, but in Africa, it made up 6.4% of total venture funding, reflecting a greater focus on blockchain solutions for local challenges​.
This higher regional emphasis on blockchain, despite the funding decline, is driven by Africa’s need for more transparent, efficient financial systems, which can benefit from decentralized technologies. Europe and Asia continue to lead in crypto startup growth, with Europe surpassing the U.S., and Asia holding a 26.8% share of new startups​.
Investor Biases
Investors in African blockchain startups often exhibit caution due to regulatory uncertainties and currency devaluation concerns. Many countries in Africa are still in regulatory limbo, with 36 nations initially having bans on crypto, now reduced to eight​.
This regulatory uncertainty creates perceived risks, especially compared to more stable environments in the U.S. or Europe, where regulatory frameworks are clearer. Moreover, the volatility of local African currencies adds another layer of risk, further driving away potential investors.
How to Attract More Investment
Regulatory Clarity: African governments need to work toward clearer, more supportive regulatory frameworks for blockchain technologies. As seen in countries where crypto is now legalized or explicitly regulated, investor confidence grows when they understand the legal environment​.
Public-Private Partnerships: Encouraging collaborations between governments, local businesses, and international investors can increase trust and create more structured opportunities for investment.
Focus on Financial Inclusion: Blockchain technology in Africa has the potential to solve unique challenges, such as providing financial services to the unbanked. Highlighting success stories, like mobile money services, can show investors how blockchain can build on existing digital infrastructure​.
Education and Advocacy: Local startups and blockchain advocates need to continue educating policymakers and the general public about the benefits of blockchain. The more awareness and understanding there is, the easier it will be to attract both local and international investments.
Despite the challenges, Africa continues to outperform global averages in terms of blockchain’s contribution to its venture funding landscape, indicating its future potential. However, addressing investor biases and regulatory hurdles is essential to capitalizing on this promise.
Sources: cointelegraph, ITEDGENEWS, Tradingview
