Fintech becomes Africa’s fastest growing sector reports Mastercard
“Fintech accounted for 27 percent of the record number of deals closed across Africa in 2021, a Mastercard study of the sector found.
MasterCard‘s white paper’The Future of Fintech: Rapid Growth Attracts Smart Capital‘ focuses on the fintech sector across Africa. The report describes Africa’s success in the fintech industry and how the continent has positioned itself at the forefront of payment innovation.
The report describes how the fintech sector accounted for 61 percent of the $2.7 billion distributed across Africa in 2021. Major deals worth more than $100 million each have characterized the industry in the region.
Nigeria emerged as a leading fintech hub in the Middle East, Africa and Pakistan as startups there accounted for a third of all funding distributed to fintech in 2021. Within Nigeria, the fintech sector accounted for 71 percent of all venture capital.
How has Africa managed to position itself here?
As the significant growth of fintech in Africa becomes clearer and clearer, it becomes an obvious question to ask how the continent has positioned itself ahead of other world-leading continents.
The report describes how fintech innovation in Africa has been driven by the need to solve problems. It finds a strong focus on increasing economic and digital inclusion. South Africa, Nigeria and Kenya are also leading the transition to digital payments. Infrastructure and policy frameworks are in place to enable this growth.
The report explains that during the COVID-19 pandemic, a number of regulators across Africa accelerated regulatory innovation. The supporting regulations enabled the increase in entrepreneurial activity.
Africa does not have pan-regional regulations like the US and European markets. Despite this, it is able to ease payment restrictions. the’Pan African Payment and Settlement System‘ development of African Continental Free Trade Area makes it easier to navigate in 50 countries and 40 currencies.
Continues growth
The growth in the number of fintech companies in Africa highlights the growth of global fintech funding. Funding jumped to a record $131.5 billion in 2021. The number of fintech unicorns reached 235 with 34 born in Q4-2021 alone. Fintech companies now represent more than 20 percent of total tech unicorn value. In the previous year, fintech firms represented only 15 percent of the unicorn value.
This growth in the fintech sector in Africa can be seen in a number of reports released this year. Crypto markets have also been shown to grow fastest in North Africa and the Middle East.
Ngozi Megwa, senior vice president of digital partnerships, Middle East and Africa at Mastercard spoke about the report’s findings. She said: “It is encouraging to witness the growth of the fintech landscape across the region, creating more opportunities for start-ups, scale-ups, enablers and micro, small and medium enterprises to bring more people into the digital fold.
“At Mastercard, we help drive fintech acceleration by offering access to our expertise, network and technology. We offer a portfolio of technology solutions, APIs, developer tools, partner networks, startup programs and a community experience for all fintech companies and payments developers, helping to turn their bold ideas into reality.”
