State of Tech in Africa H1 2026 recap: Is consolidation the new growth story?

Investors and founders were candid about why early-stage capital for African founders has dried up, what African venture capital owes the ecosystem, and where the next wave of growth is actually coming from at the launch of TechCabal Insights’ State of Tech in Africa (SOTIA) H1 2026 report. On Friday, July 17, 2026, TechCabal Insights, a digital economy consultancy, launched the State of Tech in Africa (SOTIA) H1 2026 report in Lagos, with support from sponsor and partner Fido, a fintech that provides instant, unsecured digital loans and financial services. 

Joseph Oloyede, an analyst at TechCabal Insights and lead author of the report, opened with the numbers. Since 2019, Africa’s tech ecosystem has raised $21 billion. Funding in H1 2026 grew a modest 1.4% year-on-year, to $1.44 billion, up from $1.42 billion in H1 2025, but the number of deals fell sharply, from 252 to 174.

Debt captured 41% of all funding, while early-stage startups received just $9 million, down from $25 million in H1 2025. Mergers and acquisitions rose 91% year-on-year, and layoffs climbed 236%, with restructuring and, in other instances, AI adoption cited as the leading causes. 

Only 7% of the capital raised came from African investors, compared with 60% from international sources. Taken in context, the data shows funding for Africa’s tech ecosystem is no longer growing the industry by creating new startups. Instead, it is allocating more capital into fewer, larger and more mature companies.

This type of insight is why SOTIA was created, according to BigCabal Media CEO Tomiwa Aladekomo, who traced the report’s origins back to a single 2019 question about Nigerian health tech that nobody could answer with data. In the past seven years, SOTIA has had the same instinct applied continent-wide: a regular snapshot of what is happening, who is doing what, and what it means for the people building, funding, and regulating Africa’s digital economy.

“The question now is, is consolidation the new growth story for African technology?” the host, Gertrude Umeh, asked, framing the panel that followed.

Muktar Oladunmade, a senior reporter at TechCabal, opened the panel as moderator by asking the panel what was behind the decline in early-stage funding. Fiyin Ogunlesi, founder of RegalStone Capital, an African investment and advisory firm, argued that with capital now more disciplined, founders must do more upfront work to prove their products can travel across markets and regulatory regimes before raising capital. 

“There’s no capital to explore to say we will take a chance,” she said, adding that founders need to “already oversell” their readiness to expand.

Oluwatosin Emmanuel-Olubake, the chief investment officer at Catalyst Fund, an early-stage venture capital fund, took a more macro view. He pointed to the US Federal Reserve’s rate cuts pulling capital back toward safety, a retreat in US and European development funding as governments redirect spending toward defence, and a widespread reluctance among limited partners (LPs) to back first-time fund managers, who typically write the earliest checks. 

The result, he said, is a materially higher bar even for pre-seed founders. Still, he noted that graduation rates from pre-seed to seed have merely dipped rather than collapsed and that many funds have learnt to structure as multi-round vehicles that can double down on conviction bets.

The conversation sharpened when Adetola Onayemi, the CEO of Norebase, a trade tech startup, offered what he called “a bit controversial” take: that the funding slowdown is less about macro conditions and more a failure of nerve. 

“I think that what we’re seeing happen in the space is a function of cowardice,” he said, arguing that African founders have been trained to “scale down their visions to the capital that they can get” and build to survive rather than to grow. “If you cannot do venture capital, don’t do venture capital. Be a private equity fund,” he said. “If you say you’re a venture capital fund, it is literally venture capital. Put your money at risk.”

He extended the critique to tech journalism itself, arguing that reporting which fixates on how much a startup raised, rather than what it attempted and learnt before failing, has made founders and investors alike afraid of failure stories. 

“We need conviction in investors and in reporters,” he said, pointing to Konga as an example of a company that failed commercially but changed the shape of e-commerce on the continent regardless.

Emmanuel-Olubake pushed back on the comparison to the US, noting the vast difference in the size of the capital pool available to absorb risk, and drew a parallel to comparing a promising young sprinter to Usain Bolt at the same age. 

“You also have to think about stage,” he said, arguing that Silicon Valley’s own risk appetite evolved as its asset classes matured and that African venture is simply earlier in that curve.

Asked what metrics of success he wants to see next, Onayemi argued that the ecosystem cannot demand unicorns on an American scale while simultaneously telling founders to right-size their ambitions. He called instead for more companies valued between $100 million and $500 million, businesses small enough to be acquired by a bank or a larger player and large enough to matter. 

“What we have now is a crash of companies all trying to be unicorns, a few companies in between, and a lot of debts,” he said. He also flagged a persistent gap in B2B enterprise sales, noting the continent has produced few large B2B successes and, as a result, lacks a deep talent pool for enterprise sales roles.

Looking ahead, Onayemi listed four trends he sees strengthening the ecosystem: founders moving faster into frontier AI work and selling into global markets; a rise in genuine B2B activity; growing use of alternative funding sources, such as debt and private capital, that financed Moove rather than pure VC; and more data-driven investment decisions. He also pointed to founders increasingly protecting IP and trademarks earlier in their expansion across markets, citing the Zap-Paystack dispute as a driver for this trend.

Ogunlesi steered part of the conversation toward the creative economy, which she described as an underbuilt but increasingly mainstream tech sector. She called for infrastructure tailored to royalty aggregation, intellectual property financing, and rights management, noting that different creative verticals—film, music, fashion, and gaming—need distinct capital structures rather than a one-size-fits-all equity model. 

“It’s a space where you have to create the structures to invest per vertical,” she said, predicting the rise of vertical-specific funds over the next few years. She also pointed to a growing, if constrained, interest from domestic pension capital in exploring fund-of-funds structures as an entry point into venture.

Onayemi added that the tech sector needs deeper engagement with policymakers and regulators, pointing to the Startup Bill as a starting point rather than an endpoint, and argued for more startups willing to build in heavily regulated spaces such as healthcare and energy, rather than defaulting to asset-light models.

After the panel, Philip Twum, Head of Business Development at Fido, presented the company’s decade-long push to close Africa’s credit gap using alternative data rather than paper trails or collateral. Fido has served over 2 million borrowers, disbursed $1 billion, and raised $74 million to date, operating across Ghana, Uganda, Zambia, and South Africa. 

Twum detailed the company’s AI-driven credit-scoring model, the Fido Score, and its partnerships with Access Bank on a savings product and with Bolt and Uber to extend credit to gig-economy drivers. His closing takeaway: build the underwriting layer for underserved borrowers properly, and the customers will show up at scale.

The full State of Tech in Africa H1 2026 report has the complete data behind these conversations, from funding and deal trends to layoffs, M&A, and expansion patterns across the continent. View the interactive report and download it here.