In recent years, Africa’s startup ecosystem has gained increasing attention for its growth potential and innovation. From digital finance in Nigeria to agritech in Kenya, a new generation of entrepreneurs is addressing complex challenges across the continent. For UK-based investors—angel networks, EIS funds, or VCs—Africa offers a frontier market worth evaluating, not just for returns but for long-term strategic engagement. 

Evolving UK-Africa Relations 

The UK government has signaled a shift in how it engages with Africa, moving from traditional aid to broader economic partnerships. A 2025 consultation process led by the Foreign, Commonwealth & Development Office emphasised the importance of mutual respect and collaboration, advocating for a “think with Africa, not do for Africa” approach. The consultation feedback also stressed the importance of co-creating initiatives with African partners and embedding local knowledge, rather than applying one-size-fits-all solutions. (1) 

This repositioning is reflected in the activities of British International Investment (BII), the UK’s development finance institution. In 2024, BII deployed £1.3 billion across emerging markets, with Africa receiving a significant share focused on sectors like clean energy, health, and financial services. These investments aim to support commercially viable businesses that align with development goals, rather than aid-dependent models. (2) 

Notable Start-up Sectors: 

Fintech: Expanding Financial Inclusion 

Despite the VC slowdown since 2022, fintech continues to dominate startup funding—accounting for over 60% of Africa’s disclosed deals in recent years. Platforms like M-Pesa and Moniepoint have redefined access to financial services for millions. In countries where formal banking is still limited, digital wallets, payment gateways, and lending apps remain essential infrastructure. (3) 

Agritech: Supporting Food Security and Efficiency 

Agriculture remains central to African economies, contributing roughly 35% of GDP and employing over half the workforce.(4)Yet despite its importance, the sector faces persistent challenges, including low productivity, limited access to markets, and vulnerability to climate change. Agritech startups are stepping in to address these gaps—offering solutions such as digital platforms for market access, precision farming tools, weather forecasting services, and mobile-based financial products tailored for farmers. Startups like Twiga Foods and Releaf are using digital platforms and AI to modernise fragmented supply chains and improve

yields. Given the region’s vulnerability to climate shocks, innovation in this sector is increasingly viewed as both commercially and socially relevant. 

Greentech: Advancing Energy Access 

The continent could play a transformative role in solving the climate crisis. Yet, despite this promise, Africa currently receives less than 2% of global clean energy investment.(5) This stark mismatch is not due to a lack of opportunity, but a chronic underinvestment that stifles innovation and infrastructure development. UK-backed ventures like Ampersand in Rwanda are pioneering electric mobility, and recent investments by British International Investment in Kenya reflect growing momentum in distributed solar and clean transport. But these efforts remain the exception, not the norm. Unlocking Africa’s green energy potential requires international financial support and strategic partnerships on a dramatically larger scale. 

Impact Investing: Growing But Still Evolving 

Impact investing—investments made with the intention to generate positive, measurable social and environmental outcomes alongside financial returns—is gaining momentum globally. Africa is frequently described as a high-potential region for this approach. As Frank Aswani of the African Venture Philanthropy Alliance noted, Africa offers a unique environment for testing scalable, impact-driven business models. Still, there are systemic barriers—limited access to financing, policy inconsistency, and insufficient local capacity—that need to be addressed for impact capital to achieve sustained outcomes (6) 

Development finance institutions (DFIs) like BII have been encouraged to take a more catalytic role, enabling rather than just funding ventures. Building local investment ecosystems, promoting educational initiatives in impact finance, and offering non-financial support are all seen as important strategies to unlock this potential. 

African Businesses and the UK Enterprise Investment Schemes

African companies cannot directly avail of the UK’s Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS). These are UK tax relief schemes designed to encourage investment into qualifying early-stage UK companies by offering tax incentives to UK investors. However, African businesses can potentially benefit indirectly if structured appropriately, if their business plans have a UK market focus.  It is important to remember that substance over form matters to HMRC—using a UK shell without real operations or control will invalidate tax relief.  Legal structuring advice and tax counsel are highly recommended before setting up a UK-African structure.

Risks and Constraints 

Despite its promise, investing in African startups carries notable risks. These include: 

• Regulatory uncertainty: Policy shifts can impact market access and exit strategies. 
• Currency volatility: Fluctuations in exchange rates may affect foreign-denominated returns. 
• Infrastructure challenges: Limited internet and transport networks can impede scaling. 
• Startup maturity: Many businesses are pre-profit and rely on external capital for growth.
• Operational complexity: Diverse legal systems, governance issues, and occasional instability in some regions require enhanced due diligence (7) 

Due diligence, local partnerships, and co-investment frameworks—particularly alongside DFIs like BII—can help mitigate these risks. 

Engagement Opportunities in 2025 

For UK investors considering greater involvement in Africa, several events offer networking and insight: 

• Africa Investment Summit – 19 June, London: Organised by the African Business Chamber, with sessions on infrastructure and digital finance: https://african-chamber.com/africa-investment-summit

• The Africa Debate – 2 July, London: Run by Invest Africa, with a focus on sustainability and innovation:  https://theafricadebate.com/london

• UK-Africa Business Summit – 12 September, London: Covers sector-specific tracks in fintech, agri-tech, green-tech, and health-tech:  https://ukafricabusinesssummit.uk/

• The Cambridge-Africa Forum brings together researchers, policymakers, and investors to explore collaboration between the UK and African institutions. It's a key space for discussions on innovation, investment, and sustainable partnerships: https://www.cambridge-africa.cam.ac.uk/ 

Africa’s startup sector is dynamic, diverse and full of ambition, but navigating it requires more than capital. For UK investors, this is not just an emerging market; it’s a proving ground for long-term strategies that blend commercial viability with social relevance. The UK’s repositioning—from aid to partnership, from “doing for” to “thinking with” Africa—creates a timely opportunity to align investment with impact, guided by local knowledge and mutual respect. Success will hinge on patience, partnership, and proximity: patient capital that recognises Africa’s long growth arcs and partnerships grounded in trust and co-creation. 

SOURCES: 

(1) Foreign, Commonwealth & Development Office (2025) The UK’s new approach to Africa: summary of consultation, June 2025. Available at: 

https://www.gov.uk/government/publications/the-uks-new-approach-to-africa-summar y-of-consultation 

(2) British International Investment (2024) Annual Review 2023: Creating Impact Together. Available at: 

https://www.bii.co.uk/en/annual-review-2023-creating-impact-together (3) International Finance Corporation (IFC). (2025) Venture capital and the rise of Africa’s tech startups. May 2025. Available at: https://www.ifc.org

(4) White & Case. (2023) 'Africa’s agricultural revolution: From self-sufficiency to global food powerhouse', White & Case LLP. Available at: 

https://www.whitecase.com/insight-our-thinking/africa-focus-summer-2023-africas-ag ricultural-revolution 

(5) International Energy Agency (2022) Africa Energy Outlook 2022. Paris: IEA. Available at: https://www.iea.org/reports/africa-energy-outlook-2022 (6) British International Investment. (n.d.) The future of impact-led investing in Africa. Available at: 

https://www.bii.co.uk/en/news-insight/insight/articles/the-future-of-impact-led-investi ng-in-africa/ 

(7) Ocorian. (2018) A land of opportunity: Why is the UK investing in Africa? 9 October. Available at: 

https://www.ocorian.com/insights-news-press-releases/land-opportunity-why-uk-inves ting-africa

Sapphire Capital Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN: 565716). This communication is a financial promotion and is directed at professional clients and eligible counterparties only. It is not intended for retail investors. The content is provided for informational purposes only and does not constitute investment advice or a recommendation to invest.