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In the last 30 months, from January 2023 to mid-2025, approximately 33 startups in Africa ceased operations, signifying a necessary market adjustment.
In the first half of 2025 alone, six startups shut down (four in Q1 and two in Q2), marking a 33% decline from the nine shutdowns recorded in H1 2024.
This trend suggests that the post-boom market correction might be easing, hinting at a shift towards a more stable and durable ecosystem where startups are focusing on creating sustainable business models right from the start.
A recent TechCabal Insight report highlighted that the first half of 2025 saw a positive turnaround for the African tech scene. Following a correction phase, the market demonstrated renewed vigor, garnering over $1.42 billion in funding through 243 deals.
This revival was largely driven by a preference for quality investments, particularly in sectors like Fintech, which attracted nearly 45% of total funding, amounting to $638.8 million.
The report indicated that Nigeria accounted for five of the shutdowns while Kenya had one. These closures underscored the fierce competition and significant operational challenges that startups face in Africa's most developed and competitive markets amidst difficult local economic conditions.
Specifically, five Nigerian startups shut down in H1 2025 despite securing considerable funding, including Joovlin with $100,000, Bento Africa with $3.1 million, Edukoya with $3.5 million, Heroshe, and Okra with $16.5 million. In Kenya, Lipa Later raised $1.66 million before closing down.
Publicly available information noted that at least 765 employees were laid off across African startups in the first half of 2025. This trend of workforce adjustments has been ongoing since 2023, although it's likely that the actual number of layoffs is higher due to many not being publicly disclosed.
The data pointed to a significant evolution in how companies are managing operational costs and growth aspirations, shifting from rapid hiring to more sustainable team structures.
In H1 2025, there were 366 layoffs in Q1 and 399 in Q2, indicating a marked improvement compared to the same timeframe the previous year.
The 765 layoffs in H1 2025 reflected a substantial 56% decrease from the 1,730 layoffs reported in H1 2024. This notable slowdown indicates that the most challenging phase of workforce corrections might be concluding, as the ecosystem stabilizes.
Since 2023, workforce cuts have predominantly affected the 'Big Four' markets. Kenya experienced the highest number of layoffs at 2,258, followed by Nigeria with 1,581.
This signals that the larger and better-funded ecosystems underwent the most considerable adjustments as startups recalibrated operations after a period of aggressive growth and hiring. In H1 2025, Nigeria (416) and Kenya (328) saw the most layoffs.
The Insight report also noted a consistent rise in merger and acquisition (M&A) activity in Africa's tech ecosystem since 2019, indicating a maturing market where companies are increasingly collaborating.
In the first half of 2025, 29 M&A deals were recorded, the highest for any H1 period, reflecting a 45% increase over the 20 deals noted in H1 2024 and a 53% rise compared to H1 2023.
This significant increase illustrates that strategic acquisitions are becoming a vital growth strategy for established firms looking to enhance their market share, technology, and talent.
The uptick in M&A activity is particularly notable when comparing H1 2025 to the same period last year, showcasing a remarkable growth from 20 deals in H1 2024 to 29 in H1 2025, representing the most substantial year-over-year increase in recent history.
This trend implies that as the funding landscape normalizes, companies with adequate capital are more aggressively seeking acquisitions as a key avenue for growth and market dominance.
