In 2021, African fintech startups accounted for 61% of the $2.7 billion in venture capital funding deployed on the continent, new research shows. While this represents just over 1% of global fintech funding, the continent’s fintech sector is nonetheless experiencing one of the highest year-over-year growth rates in the world.
record number of transactions closed”
according to the results of a new Mastercard surveyAfrican fintech startups (whose number grew from 311 in 2019 to 564 in 2021) accounted for “61% of the US$2.7 billion deployed across Africa in 2021.” The study also shows that fintech’s share “in the record number of transactions concluded” that year was 27%.
Compared to the US$131.5 billion raised globally, Africa’s fintech share remains very low, at just over 1% of the total in 2021. However, in terms of funding growth, the continent, and particularly the Sub-Saharan Africa region, has one of the highest year-over-year growth rates in the world, the research report notes. The research report explains.
In the Sub-Saharan Africa (SSA) region, fintech startups recorded 894% year-over-year funding in 2021, the second highest in the Middle East, Africa, and Pakistan region during the period and the highest annual growth rate in the past five years. million in funding, the highest in the region by a wide margin.
In terms of funds raised by fintech startups by country, the findings show that Nigeria, home to some of the continent’s fintech unicorns, had in fact emerged as a major fintech hub not only in Africa but in the entire Middle East and Pakistan … According to the findings, the West African country’s fintech alone “accounted for one-third of all funds invested in fintech in 2021.” In the same country, fintech accounted for more than 71% of all venture capital raised during the same period.
The Fintech-Financial Exclusion Gap
The study, titled “The Future of Fintech in Africa,” explains why the fintech sector continues to gain a disproportionate share of funding, the continent’s longstanding financial exclusion gap and that fintech is “building inclusion from the ground up.”
Many of the sector’s past and future success predictions are also tied to increasing smartphone penetration: as shown in the 2022 GSMA report, the number of smartphone connections is expected to increase; the 2022 As shown in the GSMA report for the year, the number of smartphone connections is expected to grow from 6.2 billion in 2021 to 7.5 billion in 2025.
Meanwhile, the report suggests that Nigeria, along with South Africa and Kenya, will continue to drive growth in this sector. However, the report suggested that the growth rate of the fintech sector will depend on whether regulators and policymakers continue to prioritize “affordable Internet and mobile penetration.”
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