As 2024 draws to a close, we reflect on the remarkable, turbulent, and sometimes surprising events that shaped Africa’s startup ecosystem. This article is part two of our 2024 recap series. If you missed the first instalment, you can check it out here.
It has been a year of dramatic pivots, tough decisions, and relentless challenges, with each story revealing the tenacity and creativity driving the continent’s innovation space.
The End of Copia Global: A Decade-Long Journey Ends in Liquidation
The collapse of Copia Global was one of the most striking stories of the year. It marked the end of a decade-long attempt to revolutionize e-commerce in Kenya.
What began in 2013 as an ambitious mission to serve rural and peri-urban communities with household essentials through a digital platform ended in July 2024 with the liquidation of its assets and the dissolution of the company.
It all started with a sobering announcement from Copia, which unveiled a significant restructuring effort. The company, long seen as a trailblazer in e-commerce for Kenya’s mass market, faced the harsh realities of a shrinking funding landscape and even failed to meet payroll obligations.
With KPMG’s administrators brought in to oversee a restructuring effort to keep the business operational, Copia laid off 1,060 employees and implemented cost-cutting measures to attract new investment.
Yet, even these drastic measures could not halt the downward spiral and the financial challenges proved insurmountable. Attempts to secure fresh investment faltered, and the company’s administrators concluded that a turnaround was no longer viable.
By July, Copia abandoned its plans to revive the business and began liquidating its assets and paying creditors.
Nigeria and Binance: A Crypto Standoff
As Copia met its Waterloo in 2024, the year saw a high-stakes standoff brewing in Nigeria between the government and Binance, the world’s largest cryptocurrency exchange.
It all began in February when Nigerian authorities demanded data on Binance’s users and transactions. They cited concerns over tax revenue losses from unregistered crypto exchanges and illicit financial flows totalling a staggering USD 26 B.
Matters escalated dramatically when two Binance executives were detained during negotiations, spotlighting the tense intersection of crypto regulation and diplomacy. By June, Binance had halted all its services in the country.
While Nigerian authorities claimed cryptocurrency exchanges were devaluing the naira, critics argued that the government was using crypto as a scapegoat for long-standing economic challenges.
While one of the detained executives escaped, the detention of the other – Tigran Gambaryan, which started in February, dragged on for months, prompting interventions from U.S. lawmakers and sparking global scrutiny.
Finally, charges against him were dismissed in October, and Binance emerged cautiously optimistic about Nigeria’s blockchain potential. While the saga ended with a release, the events left a lasting mark on Nigeria’s crypto landscape, showing just how fraught the path to digital finance regulation can be.
South Africa’s E-Commerce Standoff
Meanwhile, in South Africa, the e-commerce space was buzzing with activity in 2024 as global giants moved in to claim a slice of the market.
The drama began in January, when Chinese retailer Temu made its debut, followed by Amazon’s soft launch of its dedicated South African platform, Amazon.co.za, in May. The moves represented a seismic shift in the local market, which players like Takealot and Naspers-owned Superbalist had long dominated.
While Chinese retailer Temu and its compatriot Shein employed affordable pricing but a slower delivery model, American powerhouse Amazon relied on building local inventories for faster delivery. This combination left rivals scrambling to adapt.
The pressure became unbearable for local platforms like Naspers’ e-commerce giant Takealot. In September, it sold its fashion retailer, Superbalist to a consortium of private equity investors, signalling an exit from fashion to refocus on its core e-commerce and food delivery platforms.
Even Africa’s largest e-commerce player, Jumia, wasn’t spared. By October, it had announced plans to exit South Africa and Tunusia entirely, choosing to refocus on more promising markets like Nigeria and Kenya. Yet, Jumia wasn’t safe on its home turf either.
Just as Jumia recalibrated, Temu expanded its footprint into Nigeria—its biggest market—launching an aggressive marketing campaign that made one thing clear—it had no intention of giving Jumia breathing room. The move signalled Temu’s intention to challenge Jumia on its home turf, leveraging its factory-direct pricing model to attract price-sensitive consumers.
With global players disrupting local markets, South Africa’s e-commerce sector has been forever changed.
South Africa’s Declining Startup Scene Spurs Reform Calls
As these market dynamics played out, South Africa faced a deeper reckoning about its startup ecosystem.
Once a leader in Africa’s tech scene, South Africa has seen a sharp decline in funding and startup activity. With venture funding dropping 41% year-on-year in 2023, the country has fallen behind its peers, including Nigeria, Egypt, and rising stars like Tunisia.
For years, industry leaders have pushed for a Startup Act, a legislative framework designed to support entrepreneurs and attract investment to reverse this decline. But despite progress in countries like Tunisia and Senegal—where similar laws have spurred significant growth—South Africa’s government has been slow to act.
The calls for reform are growing louder. Entrepreneurs point to restrictive visa policies, burdensome exchange controls, and a regulatory environment that stifles innovation.
While there has been some progress—such as ongoing talks with the Deputy Minister of Finance—no legislation has been finalized. Without bold action, South Africa risks losing its position among Africa’s leading tech ecosystems to emerging contenders like Ghana and Tunisia, which are building more startup-friendly environments.
New Tax Rules Create Headaches for Nigerian Startups
And as if the year hadn’t been challenging enough, November brought a new headache for Nigerian startups.
The tax story added an extra layer of complexity for startups in Nigeria. Quietly unveiled this month, new tax regulations are set to take effect in January 2025, requiring businesses to deduct taxes at the point of payment.
Known as the “Deduction of Tax at Source Regulations, 2024,” the rules cover various income streams, including capital gains and corporate income, and have strict remittance deadlines.
Businesses are required to submit detailed returns for each deduction, including the payer’s name, address, and TIN. Receipts for deducted taxes must also be issued, and any misstep in this meticulous process could invite penalties.
While the move is intended to streamline tax compliance and curb evasion, startups say it adds yet another administrative burden to an already challenging environment.
The government included some exemptions to soften the blow, including payments related to Real Estate Investment Trusts, securities lending, and compensation payments. Yet, many in the tech community remain sceptical, arguing that these measures are another hurdle in a space already fraught with funding cuts and operational challenges.
Whether the government’s intent to align with global standards will outweigh the potential downsides for startups remains to be seen – in 2025.
So, as the year ends, Africa’s startup ecosystem stands at a crossroads. From Copia’s restructuring to Binance’s diplomatic entanglements and from e-commerce wars to calls for overdue reforms, the stories of 2024 tell a tale of resilience and reinvention.
This article is part of our Yearly Round-Up Series, highlighting the biggest stories that shaped Africa’s innovation landscape. Stay tuned for next week’s next edition as we continue unpacking the lessons and opportunities that defined the year.