Africa’s Most Overlooked Investment Sectors: Education

8 min readOct 8, 2022

Till date, fintech is still the most funded sector in Africa accounting for 53% of venture capital investments in 2021 ($2.3 billion). Beyond fintech, energy and logistics/transportation sectors have been competing in the top 3 with fintech since 2019, according to The Big Deal.

While these startups continue to lead in the investment space, it is time to uncover the most overlooked industries investors can tap into for significant future returns. For this reason, I am exploring Africa’s EdTech Industry, as one of “Africa’s Most Overlooked Investment Sectors”. This article will explore the education technology opportunities in the continent, why it is overlooked, market size and projected growth, market signals and top players in the African education technology space.

Why is EdTech Overlooked in Africa?

The education industry in Africa represents one of the most significant untapped investment opportunities. There is no doubt that the educational sector needs a makeover. Africa needs more schools, but it also needs better learning settings for students and improved working circumstances for instructors. Startups are developing innovative strategies to improve the educational experiences of both teachers and students. Edtech has been overlooked by investors because of the following reasons:

Many education solutions are often seen as charity for non-profit organizations.
Investment in education is a long term game. Many investors need to make returns in 3–5 years, however, the results of quality education is often not realized for over 10+ years.
Africa’s poor infrastructure makes it difficult to deploy edtech solutions.

Africa’s EdTech Overview

Education is the leading instrument for promoting economic growth across the globe. Investing in education is an investment in human capital and the future of Africa. It is the bedrock of social and economic development and yields tremendous benefits at many levels and spheres. Investing in education in Africa can decrease knowledge gaps and help reduce poverty in the region. Since 2019, edtech has received $469.4 million in venture capital funding and 72% of the startups funded were female founded or gender diverse founding teams.

Africa’s EdTech Market Size & Opportunity

Currently, Africa has the highest rates of educational exclusion in the world. Over one-fifth of children between the ages of 6 and 11 and one-third between the ages of 12 and 14 are out of school. The education market size is $2.47 Billion in Africa and globally $3.2 trillion with CAGR of 10.7% The Africa e-learning market attained a value of around USD 1536 million in 2020. The industry is expected to grow at a CAGR of 36.5% between 2021 and 2026 to reach a value of about USD 10,917 million by 2026.

Market Challenges & Risks

Factors like a very young African population (~19 years old), highest rate of educational exclusion in the world and rapidly expanding population creates a lot of opportunities to invest in this space. Given these factors, why isn’t education getting the investment and attention it needs? Despite the unquestionably enormous addressable market, two major systemic problems plague edtech startups: internet access, affordability and determining the right revenue model.

Hurdle #1: Internet Access, Affordability and Connectivity

Distance learning initiatives in African nations are destined to failure before they ever get off the ground unless they have dependable internet connectivity. The U.N. Broadband Commission reports that Sub-Saharan Africa has the greatest number of nations with the worst internet access in the world (affecting 80% of nations in the region). Burundi, Ethiopia, Eritrea, Guinea, Niger, Sierra Leone, Somalia, and South Sudan are among these nations. Less than 2% of the population in each of these locations has internet access.

Rural and remote communities suffer the most currently since providing internet connectivity to all areas would be too expensive for African governments. Internet connectivity in these locations is either nonexistent or very intermittent. When we examine other nations where eLearning has thrived, we see that they enjoy above-average levels of internet connectivity and investment from both domestic and foreign sources.

Kenya boasts the most bandwidth per person and the finest connectivity in all of Africa. Additionally, expenses are among the lowest and speeds are quick. Additionally, internet behemoths like Microsoft, Google, and IBM have bases in Kenya and have made investments in the country’s online education. Unfortunately, not all African nations are as fortunate as Kenya, and this is seriously impeding the development of eLearning throughout Sub-Saharan Africa.

Hurdle #2: Determining the Right Revenue Model

Globally, many education technology companies struggle to find a sustainable revenue model for their business. In Africa, this is particularly an issue because of Africa’s small middle class, very tight school budgets, and challenges/uncertainties with working with government. This typically leaves entrepreneurs with limited business model options with higher upfront cost on the consumer.

Market Signals and Trends VCs Cannot Ignore

Despite the challenges and risks, some market trends signal that there is a bright future of edtech in Africa:

Growing Middle Class

In addition, the growing middle class is quite promising. The number of middle-class Africans has tripled over the last 30 years to 313 million people, or more than 34% of the continent’s population, according to a new report from the African Development Bank (AfDB). This means that more people would have more income to afford internet and data to gain access to more education technologies, expanding the reach of learning. Ultimately, these growing population trends, especially in West and East Africa, are promising and indicate that technology solution will only positively impact more people across the continent.

Africa’s Increasing Internet Penetration

Although below the national internet penetration average of 66%, Africa has increased its internet penetration by 6 times since 2010. Currently, only 4 out of 10 people (565 million) in Africa have access to the internet but projected to increase to 700 million in the next 3 years.

Many EdTech Solutions are Digital Content & STEAM Related

The majority of edtech businesses in the past year concentrated on digital content and STEAM, demonstrating how crucial access to educational content is across the continent, especially in the K–12 environment. Online, offline, and low bandwidth solutions are all included in the mix. While organizations like The Gradient Boost and Africa Skills Hub concentrate on workforce learning, offline eBooks and educational resources, Africlearn, online math lessons (Watobe), and textbooks on mobile devices (Kytabu) serve children.

Africa’s Growing Young Population & High Demand

Africa’s population is estimated to be 1.4 billion and predicted to increase to 2.5 billion by 2050. For the next twenty years, between 15 and 20 million young people are expected to enter the labor force in Africa. More over a quarter of the Africa’s growing young population world’s population under the age of 25 will reside in Africa by 2030, making up 60% of the continent’s overall population. In 2020, the continent had around 1.34 billion inhabitants, with Nigeria, Ethiopia, and Egypt as the most populous countries. In the coming years, Africa would experience significant population growth and would nearly reach the Asian population by 2100.

Africa’s EdTech Industry Mapping

Currently, there are over 200 startups addressing various education and learning problems across the continent. The edtech space can we classified by target audience, deployment model or application.

Going Forward

Based on the current market trends and signals, going forward, to identify winners in Africa’s education market, VC investors should invest in companies focused on 1. providing accessible and affordable educational content and 2. startups who have the best revenue model to solve the given problem.

Companies Currently Positioned to Win

Andela — Nigeria

Andela is a global talent network that connects companies with engineering talent in emerging markets.

Funding: Series E of $200 million

Business Model: B2B; revenue streams include provisional agreements with technology companies per each developer and percentage cut of salary paid by the company to the developer.

Competitive Advantage/Value Proposition:

Sustainable Revenue Model: Andela takes a percentage cut of salary paid by the company to the developer.
Problem Solution Fit: Quality tech talent is in huge demand across top tech companies like Microsoft and Africa has high potential technology talent and software engineers.

FoodaMate — South Africa

FoondaMate is enabling access to online learning for students previously unable to study online — through low data and chat first applications that are available in multiple languages.

Funding: Seed Raise $2 million in May 2022

Business Model: Foondamate adopts a B2B model and earns money through partnerships with financial institutions and post-secondary educational institutions.

Competitive Advantage

Low Cost & Highly Accessible — Foondamate allows its users to save time, reduce data usage and achieve learning goals. Users are able to access study materials instantly via Whatsapp and Facebook Messenger.
Advantaged Technology — FoondaMate is an AI robot that you can chat to on WhatsApp, and Facebook messenger. It gets you answers for school related questions as fast as possible. It can help you answer questions, do homework or study. It can also explain maths questions to you by going through them step by step.
Ease of Adoption — Approximately 95.4 percent of internet users in South Africa reported using WhatsApp every month, making it easy for any learner to get help with their learning needs.

Kibo School — Nigeria

Kibo is an online school that is set to offer several STEM degree programs targeted at students in Africa.

Funding: $2 million pre-seed in 2022

Business Model: B2C charging tuition of $2,000 for a diploma and $6,000 for a bachelor’s degree. In addition, they provide scholarships for students who have demonstrated financial difficulty. In addition, Kibo school offers flexible payment methods to ensure finances does not get in the way of quality education.