Merger and acquisition (M&A) activity among African startups recorded a significant surge in 2025, highlighting a notable shift in the continent’s tech ecosystem toward consolidation and strategic growth.
According to the State of Tech in Africa (SOTIA) report by TechCabal, startups across Africa completed 67 M&A deals in 2025, representing a 72 % increase from the 39 deals recorded in 2024 — the highest annual total ever seen on the continent.
📈 Growing M&A Activity Signals Ecosystem MaturationIndustry analysts say the sharp rise in acquisitions reflects a transition in the African startup landscape from rapid, early-stage expansion to consolidation and sustainable scale-building.
For much of the last decade, African startups expanded rapidly through venture capital funding, often prioritising user growth and market share.
However, by 2025, investors began demanding stronger unit economics, operational resilience, and regulatory compliance driving founders and backers to pursue acquisitions as a vehicle for growth rather than solely relying on fundraising.
Key Drivers Behind the M&A Surge1. Consolidation Across Markets and SectorsStartups increasingly used acquisitions to gain scale, enter new geographies, and secure regulatory footholds. For example:Paystack, a Nigerian payments firm, acquired Ladder Microfinance Bank, allowing it to transition from a payments processor into a regulated financial services provider.
Twiga Foods, a Kenyan food-tech platform, expanded its distribution network by acquiring multiple logistics partners.
Chowdeck integrated with Mira to enhance its point-of-sale capabilities and strengthen its relationship with vendor partners.
These transactions demonstrated a trend in which acquiring existing operations rather than building from scratch became a strategic path to rapid scale and market penetration.
Regulatory and Competitive AdvantagesMany startups pursued acquisitions to overcome regulatory barriers that often slowed expansion in fragmented African markets.
Securing licences and compliance through M&A became a pragmatic alternative to long, capital-intensive organic growth.
Buying a regulated entity enabled some fintech companies to accept deposits and offer lending services without waiting years to secure separate approvals.
Changing Funding LandscapeWhile overall funding rebounded in 2025, raising roughly $3.4 billion across numerous transactions, capital was increasingly concentrated among more established players.
This trend made it harder for emerging startups to secure early-stage funding, prompting many to seek strategic exits or partnerships through acquisition instead.
📊 What This Means for African TechExperts believe the surge in M&A reflects a turning point for the African tech ecosystem, moving from growth driven by funding rounds to one characterised by strategic consolidation and long-term sustainability.
Consolidation has several implications:Stronger market leaders emerge with broader capabilities and geographic reach.
Regulatory compliance and operational efficiency increasingly shape investment decisions.
Smaller startups may either specialise in niche sectors or position themselves as acquisition targets to survive in a capital-constrained environment.
However, the trend also raises questions about competition and innovation, as fewer large entities begin to dominate key segments of the tech ecosystem.
The 72 % increase in mergers and acquisitions among African startups in 2025 marks a significant shift in the continent’s innovation landscape.
What was once a market driven by a fragmented funding model is now evolving toward strategic consolidation, where growth and sustainability increasingly hinge on thoughtful acquisitions, regulatory insight, and operational defensibility.
As the ecosystem matures, 2026 is expected to build on this momentum, with startups, investors, and regulators navigating a more structured, opportunity-rich environment.
Image Credit: Nairametrics
Source: Nairametrics
