The prolonged slowdown in venture capital funding is increasing mergers and acquisitions across Africa’s technology ecosystem, as startups choose consolidation over raising fresh capital in a selective investment market.
According to the State of Tech in Africa H1 2026 report, mergers and acquisitions are becoming a defining feature of the continent’s startup space as founders seek scale, profitability and longer financial runways amid persistent capital constraints.
The report noted that while investor sentiment has improved compared with the lows of 2024 and 2025, funding remains concentrated in fewer companies, forcing smaller startups to explore acquisitions, strategic mergers and acqui-hires as alternatives to fundraising.
Rather than pursuing aggressive expansion, startups are prioritising sustainable growth, operational efficiency and market consolidation trends that have made M&A activity more attractive to both founders and investors.
The report also highlighted several transactions completed during the first half of the year which signals that acquisitions are reshaping Africa’s innovation ecosystem.
Among the notable deals was Raenest, a Nigerian fintech, acquisition of Egyptian payroll platform TelyPay, expanding the company’s footprint into North Africa while strengthening its cross-border financial services offering.
Another significant transaction is Stitch, a <a href="https://absafricatv.com/mcgill-and-partners-chooses-local-partner-for-south-african-renewable-facility/” title=”McGill and Partners chooses local partner for South African renewable facility”>South African fintech who acquired Efficacy Payments thereby enabling the payments company to deepen its enterprise payment infrastructure and broaden its product suite.
The report also cited South African startup Peach Payments’ acquisition of Senegal-based PayDunya, a deal that significantly expanded Peach Payments’ presence into Francophone West Africa and reveals growing regional consolidation within the continent’s payments sector.
These transactions reflect a broader shift in investor priorities because rather than backing multiple companies competing in the same markets, investors are encouraging portfolio companies to combine reportunities
The report noted that acquisitions are no longer viewed as distress exits alone but are becoming strategic growth tools for companies seeking new customers, technology capabilities and regulatory licences across African markets.
The trend comes as Africa’s technology sector continues to mature. Startups are being evaluated on revenue growth, profitability and execution rather than rapid customer acquisition alone, making strategic acquisitions a faster path to scale than organic expansion
The consolidation wave could produce stronger regional champions capable of competing globally, although it may also reduce the number of venture-backed startups entering later funding rounds.
As funding conditions gradually recover, the report suggests mergers and acquisitions are likely to remain a central feature of Africa’s technology ecosystem with strategic buyers expected to play a larger role alongside traditional venture capital investors.
Join BusinessDay whatsapp Channel, to stay up to date
