African Blockchain Finance Rises 429%

African blockchain startups raised $474 million in 2022, a 429% increase in one year, according to the African Blockchain Report 2022, published by blockchain venture capital firm CV VC in partnership with Standard Bank.

The total number of deals on the continent grew by 12%, with deals in the areas of infrastructure, personal identification, record keeping and access to financial independence. African venture funding grew by 34% to $3.14 billion, with blockchain accounting for a 15% share of all venture funds in Africa.

“Combining the sharp increase in blockchain funding with the fact that Africa had the smallest global increase in the number of blockchain deals, but the only region globally showing increases in all deal sizes, indicates that African blockchain startups are raising bigger checks and investors are gaining confidence. This is against the backdrop of that Africa’s share of all global financing has increased more than any other region by a significant margin”, write the report’s authors.

Recent months have seen the emergence of Africa’s first blockchain “unicorns” – privately held start-ups with a current valuation of $1 billion or more – according to the report. Seychelles-based crypto exchange Kucoin reached its value in the third quarter of 2022, while Scroll.io, which describes itself as a scaling solution for Ethereum, recorded its valuation in the first quarter of this year.

Geographic concentration

Despite the rapid growth recorded in Africa’s blockchain industry, Africa’s share of global blockchain finance remains modest, increasing from 0.3% in 2021 to 1.8% in 2022.

Deal value was also geographically concentrated, with Seychelles (43.9%) and South Africa (37.3%) accounting for 81% of African blockchain funding. Nigeria was the leading country in terms of the number of deals (13), but their value was $24.7 million, compared to $208 million for the Seychelles (six deals) and $176.6 million for South Africa (six deals). Liberia was ranked in value with two deals, largely as a result of a $37.5 million fundraising round by Jambo, a software development house, while Kenyan firms raised $25.78 million across four deals.

More education is needed

In his introduction to the report, Gideon Greaves, CEO of CV VC Africa, calls for more corporate education on the benefits of blockchain technology. “Despite the rapid growth and progress made, a significant knowledge gap still needs to be addressed. Having had the opportunity to engage with legacy companies across the continent, it is clear to me that most C-level employees do not know what blockchain does or why they should pay attention to it. This lack of knowledge and understanding hinders the potential for further growth and progress. It is important that we bridge this gap and educate those in positions of power and influence on the potential of blockchain technology.”