Remita: Africa's tech FDI down 35% y/y

Amidst the backdrop of a 35% year-on-year drop in foreign investment in the African tech ecosystem, data from Remita reveals a challenging year for tech funding in Nigeria. Deremi Atanda, the Managing Director at Remita, recently joined CNBC Africa to discuss the implications of this decline and shed light on the outlook for the African tech sector in 2024. The conversation addressed the reasons behind the dip in investment flows, highlighted the potential opportunities presented by local funding, and explored strategies to boost participation from local investors. Atanda also emphasized the need for government support, infrastructure development, and policy initiatives to drive innovation and economic inclusion in the tech space. Let's delve deeper into the key insights from the interview. The Current Scenario: The downturn in foreign investment in 2023 can be attributed to various factors, including global disruptions, uncertainties surrounding elections in Nigeria, and currency devaluation. These challenges have led investors to tread cautiously, impacting the tech funding landscape. However, Atanda remains optimistic, viewing this dip as a temporary setback rather than a long-term trend. He emphasized the resilience of the fintech sector and the growing interest from local investors, indicating a shift towards domestic funding as a viable alternative. The Youthful Demographic and Digital Solutions: Nigeria's youthful population and the rapid adoption of digital solutions present significant opportunities for the tech sector. With a burgeoning tech-savvy demographic, there is potential for innovation and growth in the fintech space. Atanda underscored the importance of driving infrastructure development to support digital solutions and enhance financial inclusion. He highlighted the role of financing in catalyzing the sector's growth, emphasizing the need for both local and foreign investment to fuel innovation and expansion. Leveraging Local Funding and Capital Markets: Atanda discussed the importance of localizing capital raise efforts, suggesting avenues such as crowdfunding and capital market exploration. He commended initiatives like the NGX tech board for raising awareness among local investors about tech opportunities. Atanda stressed the significance of educating startups about local funding options and preparing them for investment opportunities. He advocated for increased collaboration between mature fintech players and emerging startups to deepen industry expertise and attract funding. Government Support and Policy Frameworks: Addressing the crucial role of government support, Atanda applauded the efforts of Nigeria's Ministry of Communication, Innovation, and Digital Economy in fostering a conducive tech environment. He highlighted the need for private sector engagement in infrastructure development and financial institution recapitalization to drive economic inclusion. Atanda called for accountability and collaboration between the public and private sectors to realize the nation's tech potential. Looking Ahead to 2024: As the tech landscape continues to evolve, Atanda outlined key focus areas for the year ahead. He emphasized the importance of internet penetration, financial literacy, and digital channel optimization in driving tech growth. He underscored the significance of open banking, API collaboration, and merchant digitization in shaping the future of payment systems. Atanda concluded by urging stakeholders to leverage policy frameworks, engage local investors, and prioritize digital innovation for a transformative tech ecosystem. In conclusion, while the decline in tech FDI presents short-term challenges, it also underscores the resilience and potential for growth within the African tech sector. By harnessing local funding, strengthening infrastructure, and fostering government-industry partnerships, Africa can position itself as a hub for tech innovation and economic empowerment.