Next Wave: The coming consolidation wave in African startups

There’s a lot to write about Africa’s startup ecosystem at the moment, and for once, much of it is good. The signals suggest the market is entering a more deliberate growth phase, with the first few weeks of 2026 hinting at an active year. That doesn’t mean the sail will be smooth. But for founders, investors, and operators paying attention to the numbers, there are reasons to be cautiously optimistic.

One of the clearest signals is consolidation. According to TechCabal Insights’ State of Tech in Africa 2025, mergers and acquisitions across the continent’s startup ecosystem rose by 72%, with an estimated 67 deals, up from 39 the previous year. That momentum is likely to carry into 2026 and beyond, as founders take a more disciplined and sustainable approach to building on the continent.

2025 taught us that success is no longer measured by just rapid user growth or market share. And that investors are now keen on unit economics, regulatory compliance, and operational defensibility. Therefore, buying scale and regulatory approvals across markets is proving to be a more efficient route to growth than building from scratch.

Jumping regulation hurdles

Regulation, one of the biggest hurdles for most African founders and investors, is fast becoming a strategic asset. Paystack’s acquisition of Ladder Microfinance Bank in Nigeria illustrates this shift. The deal will allow the company to move beyond processing payments into regulated banking, giving it the capacity to take deposits and lend.

Moniepoint’s proposed purchase of Kenya’s Sumac Microfinance Bank will give the Nigerian fintech a similar shortcut, granting it regulatory approval to operate in the country’s banking industry. In South Africa, Stitch strengthened its competitive edge after acquiring Efficacy Payments and securing a card-acquiring licence. These transactions demonstrate that in African markets, licences and regulatory compliance are as valuable, if not more, than customer acquisition alone.

When you look at it closely, the thinking of buying scale extends beyond regulation. In a continent like Africa, expanding into new markets can be expensive and time-consuming even for the most capitalised companies. Building teams, establishing partnerships, and navigating local regulations can cost millions of dollars and take years. For example, the merger of Wasoko and MaxAB in 2024 created one of Africa’s largest B2B e-commerce platforms for informal retail, consolidating merchant networks and logistics infrastructure in North and East Africa.

Legacy companies like banks and telcos face a similar math. Mauritian AXIAN Telecom’s $63 million acquisition of Wananchi Group in 2025 immediately expanded its footprint in East Africa, bypassing years of capital investment to develop network and capacity. South Africa’s Nedbank’s proposed acquisition of Kenya’s NCBA will give it one of the largest networks of retail and corporate banking in East Africa—something that would have taken years to build from scratch. These transactions present a pragmatic approach. Acquiring existing operations can accelerate scale and reduce execution risk in a capital-constrained environment.

Total control

M&As also give more control of the value chain, shifting it from third-party partners to internal operations, which can be critical when wrestling with high costs. Take Twiga Foods, for instance, its absorption of Raisons, Sojpar, and Jumra will enable the company to simplify distribution while maintaining operational oversight, moving toward an asset-light model without surrendering control over logistics.

Chowdeck’s integration with Mira strengthened its vendor relationships and improved data capture through its proprietary point-of-sale tools. In fintech, Flutterwave’s acquisition of Mono reinforces its pivot toward being a core infrastructure provider—doubling down on open banking rails, identity verification, and recurring payments—rather than competing in front-end consumer applications. Healthtech, too, is following this pattern: hearX’s $100 million merger with US-based Eargo signalled that African startups can use consolidation to achieve global scale.

Taken together, these deals suggest that the ecosystem is becoming more layered and industrial. Fintech companies are moving beyond transaction-based revenue into regulated, balance-sheet-driven businesses. What’s changing is where value is built. Most startups in e-commerce and logistics are taking control of distribution to defend their margins, while telecom and infrastructure companies are expanding to grow regional footprints.

The real leverage in the market now sits in operations, compliance, and infrastructure—far from the consumer interface. Fewer companies are expected to dominate these layers, while smaller startups will either specialize in niches or become acquisition targets.

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Killing competition?

This new wave of consolidation could come with risks. Greater concentration can weaken competition, push up prices, and dull innovation, particularly in fintech and commerce. Inside firms, the strain of integration can sap morale, while startups built primarily to be acquired may neglect long-term product development.

Yet the alternative has often been worse. Before consolidation became deliberate, many undercapitalised startups simply collapsed. They disappeared quietly, leaving employees unpaid and customers unsupported. By contrast, well-executed acquisitions tend to preserve operations, safeguard assets, and, in some cases, provide the stability needed for product improvements.

The data explains why consolidation now looks rational. Funding for African tech has fallen by more than 40% from its 2021 peak, forcing founders to abandon growth-at-all-costs strategies. Entering a large market like Nigeria, South Africa, Kenya, and Egypt organically can cost
Adonijah Ndege

Senior Reporter, TechCabal

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