Fintech startups grow by 81% in Africa

Fintech startups in Nigeria and other African countries grew by 81 percent in 2021, according to a new study from Mastercard.

The study, Future of Fintech: Rapid Growth Attracts Smart Capital, revealed that South Africa, Nigeria and Kenya emerged as key hubs on the continent. It further revealed that the fintech sector accounted for 27 percent of the record number of closed deals and 61 percent of the $2.7 billion raised in Africa in 2021.

It said fintech innovation in Africa has been driven by the need to address multiple pain points, with a focus on increasing financial and digital inclusion with South Africa, Nigeria and Kenya leading the continent’s transition to digital payments.

Senior Vice President, Digital Partners and Enablers, Eastern Europe, Middle East and Africa, Mastercard, Ngozi Megwa, said: “It is encouraging to witness the growth of the fintech landscape across the region, creating more opportunities for start-ups, scale – ups, enable 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.”

The study also revealed that on the demand side, the role of MSMEs has been crucial to fintech’s growth. According to it, MSMEs use fintech and e-commerce solutions to scale, source and reach. It stated that the growth of alternative payment rails and new platforms is shaping the commercial landscape.

It said: “Driven by demand, fintech has seen products based on multifaceted innovation in emerging and mature economies. By providing scalable financial services using the internet, blockchain and algorithms, fintech companies have expanded the reach of financial services traditionally offered by banks , including loans, payments, investments or asset management.”

It added, “Regulators across different countries in Africa have adopted a collaborative approach to enable the introduction of new solutions by fintech companies. Africa has proactive regulators that promote innovation for financial, digital and economic inclusion.

“45 percent of the population in Africa does not have an official identity, making eKYC a seamless entry point for fintech. Nigeria is one of the first regulators in Africa to mandate open banking frameworks, along with data protection rules for financial services.”