African start-ups funding at risk in 2020 [Morning Call]

The global economy is on the cusp of a recession brought about by the coronavirus pandemic. Nearly all sectors or industries are affected badly by the impact of this pandemic and the jobs and livelihoods of millions if not billions of peoples are considered to be at grave risk according to reports from several finance corporations.

Over the last five years in Africa, the dominant trend across the continent’s largest tech ecosystems has been a record-breaking investment boom. From payments and e-commerce to health and renewable energy, several fledgling startups convinced backers of their long-term potential for growth. Last year alone, startups on the continent reached new heights, crossing the $2 billion mark according to the state of tech innovation africarena 2020 report. Most forecasts suggested a continued uptick in funding. All of this upward trend, until Covid-19 struck.

Startup accelerator AfricArena estimates total funding in African startups this year could drop by as much as $800 million or 40%, with a severe slowdown expected to become more visible in the next two quarters of the year. The report’s worst case scenario also suggests the effects of the economic slowdown could last through 2021 with recovery only expected to come full circle by 2022.

To put all of this data simply, people would be affected. Who are they? How exactly might they be impacted and what can be done to mitigate this?

@jerrybambi1