Debt Financing Dominates Funding Landscape for African Startups
In the first quarter of 2026, debt financing emerged as the predominant source of funding for African startups, contributing $305 million out of a total of $600 million raised. This development marks a significant shift in the continent’s technology investment scene, as many early-stage companies face increasing pressure due to plummeting small funding rounds.
The data from Africa: The Big Deal indicates a trajectory toward non-dilutive financing. In stark contrast to just $50 million in debt financing during the same period in 2025, the 2026 figures suggest a fundamental change in how startups are approaching funding as rising interest rates heighten investor caution.
This trend has been building over recent years. According to Partech’s 2025 Annual Report released in January 2026, debt financing within Africa’s startup ecosystem surged from $1.01 billion at the end of 2024 to $1.64 billion at the close of 2025, reflecting a remarkable 63% increase year-on-year.
The number of debt transactions mirrored this upward trend, with record highs reaching 108 deals across the continent in 2025—a 40% increase over the previous year. In terms of total capital invested in African startups, debt financing constituted 41% in 2025, up from 31% in 2024 and just 17% in 2019.
Partech noted in its report that this shift towards debt financing represents a crucial structural change for African startups. The investment firm highlighted that while debt financing was previously marginal, it has now become a central pillar within the technology financing landscape on the continent. This change is attributed to a growing number of startups demonstrating adequate cash flow, operational scale, and robust governance, enabling them to pursue structured and non-dilutive financing options.
Recent funding rounds exemplify this trend. In April 2026, Togolese mobility startup Gozem successfully raised $24.5 million in debt financing from the International Finance Corporation (IFC) to expand its vehicle fleet. Similarly, Kenyan agritech enterprise Victory Farms secured $15 million through AgDevCo.
Nevertheless, while the numbers appear encouraging, the significant decline in equity financing and the reduction in small funding rounds signal a challenging environment for seed-stage startups, as pointed out by Max Cuvellier Giacomelli, co-founder of Africa: The Big Deal.
Geographic data further highlights disparities across African markets. In 2025, Kenya led in debt financing with $498 million raised, accounting for 48% of total capital deployed in the country. Egypt followed with $246 million, reflecting a 73% year-on-year increase, while Nigeria raised $160 million, marking a substantial 132% growth. Other contributors included Senegal with $139 million and South Africa at $72 million, representing a 45% decline.
Importantly, the rapid increase in debt financing has coincided with a notable downturn in overall trading activity. The total number of startup funding deals plummeted by 34% from 140 in the first quarter of 2025 to just 92 in the same quarter of 2026. Small funding rounds, typically ranging from $100,000 to $500,000, fell sharply from 73 deals to 32 during this period.
This environment has led to the exclusion of many early-stage startups from parts of the financing market, particularly those unable to meet the scale or revenue growth requirements for debt financing.
This article was originally published in French by Adoni Conrad Quenum. English translation by Ange J.A. de Berry Quenam.
