According to the latest CVVC Africa Blockchain funding report, businesses in Africa raised $474 million in 2022, a significant increase of 429% from the previous year. The report is based on some 29 deals, approximately four more than the 25 deals that were sealed in 2021. The data indicates that South Africa and Seychelles received more than 80% of the total funding, with the former making up 37.3% while the latter accounted for 43.9% of the funds raised.
Nigeria, which had previously recorded the second-highest share, had nine deals with a total value of nearly $16 million, which is only 3.4% of the total funding. The report shows that except for Egypt and Nigeria, which recorded a decrease in the value of funds raised, the rest of the tracked African countries had a significant increase in funding. For instance, Liberia, which had zero funding in 2021, became the third-highest ranked country in 2022 with 7.9% of the total funding.
The report also sheds light on the sectors that performed well. Custody and exchanges were the best-performing category, raising $250 million, constituting more than 50% of the total funding. The report noted that the substantial increase in funding for this sector demonstrated the growing demand for cryptocurrency trading in Africa, as well as the recognition of the importance of secure storage solutions.
Fintech recorded the second-highest share with 24.3%, followed by infrastructure and development at 14.3%. Apart from the non-fungible token (NFT) market, gaming, and metaverse category, which accounted for nearly 7% of the funding, the rest of the categories had a share of under 1% of the total funding.
Africa has demonstrated a growing interest in blockchain technology and digital currencies, with several blockchain companies emerging in different parts of the continent. The significant increase in funding is an indication that African blockchain industries are maturing and attracting more investments from both local and foreign investors.
However, despite the numerous opportunities that come with blockchain technology, the regulatory environment remains a significant challenge in many African countries. The slow pace of adopting favorable regulatory frameworks for blockchain and cryptocurrency markets hinders the growth of the industry in Africa.
It is promising to see that blockchain companies are attracting funds from a wide range of industries, suggesting that businesses across the continent are increasingly incorporating blockchain in their operations. This indicates that there is a growing awareness of the potential offered by blockchain technology and a willingness to explore its capabilities.
On the part of investors, the growing interest in African blockchain businesses points to the immense potential of blockchain-powered solutions in solving key problems in the business environment. As such, investors are likely to make more investments in blockchain companies, resulting in more innovation to enhance top and bottom-line growth.
In conclusion, African blockchain businesses demonstrated impressive growth in funding in 2022, with the custody and exchanges sector being the best performer. South Africa and Seychelles accounted for more than 80% of the funds raised, with the latter recording a higher growth rate. The African blockchain industry is expanding and maturing, attracting investments from different sectors. However, regulatory challenges remain a significant hurdle to overcome for the industry to realize its full potential.