When Flend, an Egyptian fintech targeting small businesses, closed its seed round earlier this year, the investor list told an unusual story. Among the backers were not just venture capitalists but also MSMEDA — Egypt’s state enterprise development agency — alongside Banque Misr, the country’s second-largest state-owned bank.
This was not an outlier. Egypt’s government entities have participated in at least seven disclosed early-stage startup investments in 2025, according to an analysis of funding data across the continent by Launch Base Africa. Kenya’s count stands at zero. Nigeria’s at one (even if this comes with a caveat).
The divergence is striking. Kenya and Nigeria have long been considered Africa’s leading tech hubs, home to more venture capital activity, larger startup valuations, and deeper entrepreneurial ecosystems than Egypt. Yet when it comes to direct government investment in early-stage companies, Cairo is outpacing Nairobi and Lagos combined.
The Egyptian Model: A Tiered Intervention
Egypt’s approach operates through multiple state entities with overlapping but distinct mandates.
MSMEDA, backed by $1bn World Bank funding through a Fund of Funds programme, has deployed $7.5m across three venture capital funds, including $2m to P1 Ventures, a pan-African early-stage investor. The agency has also made direct investments in startups including Flend, which received backing in two separate seed rounds totalling $3.6m.
Beyond MSMEDA, Banque Misr signed a EGP 300m contract in January 2025 enabling financing for approximately 3,000 micro-enterprises. The state-owned Suez Canal Bank provided credit facilities to fintech Olive Finance. Egypt Ventures, a government-affiliated fund, participated in rounds for semiconductor startup InfiniLink and fintech infrastructure deals.
The 2025/2026 state budget earmarks EGP 5bn ($100.8m) specifically for micro, small and medium-sized enterprise support, representing what Finance Minister Ahmed Kouchouk described as the largest economic support package for SMEs in a single budget.
Amr Al-Abd, advisor to the prime minister for entrepreneurship, told local media that the programme’s expansion is designed to enhance Egypt’s startup ecosystem and extend its influence into African and Arab markets.
The strategy appears coordinated. Different state entities handle different stages: MSMEDA provides early seed capital in the $600,000 to $3m range, state banks offer growth-stage debt and equity, and Egypt Ventures backs infrastructure plays including semiconductors and AI.
Kenya’s “Private Primacy”
Kenya’s absence from direct startup investing stands in sharp contrast to its reputation.
The country hosts some of Africa’s most prominent tech success stories and attracts more venture capital per capita than most African nations. In 2024, Kenyan startups secured $638m in funding, representing nearly 29% of total capital raised across the continent.
Yet none of that capital came directly from the Kenyan government at the seed stage.
Kenya does maintain several programmes aimed at entrepreneurs. The Youth Enterprise Development Fund provides loans and grants to those aged 18–35, while the Uwezo Fund offers interest-free loans to women, youth and persons with disabilities. But these are credit programmes, not equity investments, and they focus primarily on traditional small businesses rather than venture-scale technology companies.
The largest government-adjacent initiative remains Safaricom’s Spark Fund, a corporate venture arm of the partly state-owned telecoms operator. But Safaricom operates commercially, and the Spark Fund functions as corporate venture capital rather than state investment.
Multiple Kenyan startup founders and investors interviewed for this article — most speaking off the record— described a government that views its role as creating enabling conditions rather than deploying capital directly.
A report launched in September 2025 by the Kenya-UK Tech Hub noted that Kenyan corporates could become critical investors in scaling the country’s innovation economy, citing a $194bn annual funding shortfall across Africa’s early-stage businesses. The report’s implicit message: that gap will not be filled by government.
Nigeria: The Gap Between Rhetoric and Deal Flow
Nigeria presents a third model: acknowledgment of the problem followed by slow movement toward action.
In March 2025, the government announced plans to establish a $40m fund investing in early-stage technology startups, with half coming from the Japan International Cooperation Agency and the remainder from the Nigeria Sovereign Investment Authority. Kashifu Inuwa Abdullahi, head of the National Information Technology Development Agency, said at the time that authorities planned to sign a final agreement within a month.
Eight months later, the fund has not launched.
In November 2025, Nigeria’s Investment in Digital and Creative Enterprises programme made its first venture investment, participating in Ventures Platform’s $64m Fund II. The iDICE programme, launched in 2023 with $617.7m in backing from the federal government, the African Development Bank, Agence Française de Développement and the Islamic Development Bank, marked this as a “first deployment into a private venture fund”.
Dr Olasupo Olusi, managing director of the Bank of Industry which implements iDICE, described the move as “deepening the Federal Government’s objective of upscaling the Nigerian technology and creative sectors”.
But one investment in a VC fund — rather than direct startup backing — suggests tentative engagement rather than systematic strategy. Nigeria’s public funding has historically avoided venture-style risk-taking, even though the 2022 Nigeria Startup Act provides for a government-backed seed fund of up to N10bn ($6.95m).
Vice President Kashim Shettima announced in November that iDICE would launch two additional funds in 2026: a creative sector fund and a fund of funds targeting technology and creative startups. Whether these materialise remains to be seen.
Why the difference matters
The divergence reflects fundamentally different philosophies about government’s role in innovation economies.
Egypt’s approach assumes the state should actively deploy capital where private investors might hesitate — early-stage companies in sectors or geographies considered too risky for purely commercial returns. The model follows patterns established in Chile, where the CORFO programme has long seeded that country’s startup ecosystem, or Singapore, where Temasek and government-linked companies routinely invest in technology ventures.
Kenya and Nigeria have historically embraced a philosophy closer to the Anglo-American model: governments create conditions — rule of law, infrastructure, regulatory frameworks — while private capital makes allocation decisions.
That worked reasonably well when foreign venture capital flowed freely into African tech. It works less well when that capital becomes scarce.
African startups raised $2.2bn in 2024, down from $6.5bn in 2022, according to data from Africa: The Big Deal. Early-stage funding has proven particularly vulnerable, with seed rounds often taking six months or longer to close.
In this context, Egyptian founders have access to capital sources unavailable to their Kenyan and Nigerian counterparts. MSMEDA can write cheques that bridge the gap between angel investors and institutional VCs. State banks can provide debt financing to startups with revenue traction, allowing them to avoid excessive dilution.
The data suggests this translates into real advantage. Egypt recorded among the highest number of disclosed seed deals in 2025 despite having a smaller overall tech ecosystem than Kenya or Nigeria by most measures.
Morocco’s middle path
Morocco presents a fourth approach worth noting. CDG Invest, the investment arm of Morocco’s sovereign wealth fund, has participated in at least four startup deals in 2025, including cross-border investments in Tunisian cybersecurity firm Nucleon Security and Moroccan-Spanish telemedicine platform Docline.
Unlike MSMEDA’s multi-entity model, Morocco operates primarily through this single sovereign vehicle, making selective strategic bets rather than systematic early-stage deployment.
The Moroccan approach offers potentially better governance — one entity with clear mandates and professional investment teams — but reaches fewer startups than Egypt’s broader approach. This appears to be the model the Ivorian government is implementing as well. CDC-CI Capital, established under the country’s recently passed Startup Act, has already made four key investments this year and is sending startup founders to Paris for intensive business mentorship programs.
What the data shows
Analysis of the disclosed seed and early-stage rounds across Africa in 2025 reveals:
- Egyptian state entities participated in seven deals across fintech, deep tech, and climate sectors
- Morocco’s government-backed entities participated in four deals
- Côte d’Ivoire’s state-backed CDC-CI Capital sealed at least four startup investment deals.
- South Africa recorded two state investments, both sector-specific (climate tech and B-BBEE compliance)
- Tunisia, Rwanda and Nigeria each recorded one state investment
Egypt’s $7.5m in direct state VC investment exceeds the combined total of all other African countries’ seed-stage state deployment.
For context, development finance institutions from outside Africa — BII, Norfund, FMO, IFC — deployed substantially more capital into African startups than African governments combined. European state entities, particularly France’s Bpifrance and Digital Africa, invested more in Francophone African startups than those countries’ own governments.
The bottom line
The Egyptian model appears to be producing results, at least by volume metrics. Whether those investments generate returns — both financial and developmental — remains to be demonstrated.
Nigeria’s tentative moves suggest possible convergence. If the promised 2026 funds materialise, Africa’s largest economy might begin catching up to Cairo’s head start.
Kenya’s approach represents either admirable restraint or a missed opportunity, depending on perspective.
What seems clear is that African governments have made divergent bets on their role in fostering innovation. The next few years will reveal which philosophy produces better outcomes: more successful startups, more job creation, more economic transformation. For now, Egyptian founders have options their regional counterparts lack.
Whether that advantage proves temporary or structural may determine the shape of African tech for the next decade.