African fintech startups increase by 81% in 3 years

African fintech startups increase by 81% in 3 years

Over a period of three years, the number of financial technology (fintech) start-ups in Africa has almost doubled, a BusinessDay analysis shows.

According to a recent report by Mastercard, a global pioneer in payments innovation and technology, the number of fintech startups on the continent grew by 81.4 percent to 564 in 2021 from 311 in 2019, with South Africa, Nigeria and Kenya as key hubs. .

“The sector accounted for 27 percent of the record number of closed deals and 61 percent of the $2.7 billion distributed across Africa in 2021. The area was characterized by mega deals of more than $100 million each,” the report says.

It further stated that the fast-growing sector comprises sub-segments of special interest, including digital payments, e-money, international money transfers, peer-to-peer (P2P) lending and equity financing.

Ngozi Megwa, senior vice president, digital partners and enablers, Eastern Europe, Middle East and Africa at Mastercard, said in the report that fintech companies have become an increasingly important segment for people.

“They are channels for innovation and growth, as well as partners for co-creation. They come in different shapes and forms. Some fintech companies engage in issuance and procurement activities and are therefore our direct clients, Megwa further said.

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She also added that others are enablers who help their customers digitize and innovate, often specializing in segments or flows that are not yet served. “They preview innovation and give us the opportunity to explore new applications.”

The report also revealed that sub-Saharan Fintech startups recorded an 894 percent year-on-year growth in funding for 2021, the second highest in the Middle East, Africa and Pakistan region.

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“Nigeria emerged as a leading fintech hub across the Middle East, Africa and Pakistan as startups there accounted for a third of all funding distributed to fintech in 2021.”

It highlighted that smartphones are the most important tool for fintech adoption in Africa.

Of the nearly 400 million new mobile subscribers expected to sign up globally by 2025, the majority will come from frontier markets such as Africa. With efforts to remove the affordability barrier, smartphone adoption is likely to grow to 75 percent by 2025.

The Mastercard report recommends that for fintech companies to succeed, partnerships must transform into multilateral collaborations to innovate, facilitate, accelerate, scale and regulate.

“All stakeholders come together to work on solutions that meet actual needs. Proactive regulators are working together to create pan-regional frameworks, which protect the consumer while developing an ecosystem where entrepreneurs can thrive and succeed,” it added.

Megamillions

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