- MasterCard has released a new study indicating that fintech startups in Africa grew 81 percent in 2021, with South Africa, Nigeriaand Kenya emerge as central hubs on the continent
- The report also found that the fintech sector accounted for 27 percent of the record number of closed deals and 61 percent of 2.7 billion dollars deployed across Africa in 2021
- The three countries were also seen as among the countries leading the transition to digital payments, with infrastructure and policy frameworks enabling this growth well in place
MasterCard has released a new study indicating that fintech startups in Africa grew 81 percent in 2021, with South Africa, Nigeriaand Kenya emerge as central hubs on the continent. The white paper sought to determine the state of fintech in African markets.
Entitled ‘The Future of Fintech: Rapid growth attracts smart capital‘, the report also found that the fintech sector accounted for 27 percent of the record number of closed deals and 61 percent of 2.7 billion dollars deployed across Africa in 2021. The space was further characterized by mega deals of more than 100 million dollars Each.
Further, MasterCard also found that fintech innovation i Africa has been driven by the need to solve several pain points, with a focus on increasing financial and digital inclusion. South Africa, Nigeria and Kenya was also seen as among the countries leading the transition to digital payments, with infrastructure and policy frameworks enabling this growth well in place.
Commenting on the finding, Ngozi Megwa from MasterCard said it was 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 (MSMEs) to bring more people into the digital fold.
“On MasterCard, we help drive fintech acceleration by offering access to our expertise, network and technology. We provide a portfolio of technology solutions, APIs, developer tools, partner networks, startup programs and a community experience for all fintech companies and payment developers, helping turn their bold ideas into reality,” said Megwa.
The Storting report also observed that the growth in the number of fintech companies in Africa reflecting global fintech funding, which jumped to a new record of 131.5 billion dollars in 2021. The number of fintech unicorns reached 235 with 34 alone born in Q4-2021. Fintech companies now represent more than 20% of the total tech unicorn value, compared to 15% the previous year.
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The study showed that on the demand side, the role of MSMEs has been decisive for fintech’s growth. MSMEs are using fintech and e-commerce solutions to scale, source and reach.
The growth in alternative payment rails and new platforms is shaping the commercial landscape. Driven by demand, fintech has seen products based on multifaceted innovation in emerging and mature economies.
By offering 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 wealth management.
The white paper also explored the African fintech landscape in terms of ecosystem, funding and regulation, with the following findings included in the study:
The fintech ecosystem i Africa uses new technologies to deliver financial services. Governments, regulators, financial institutions, payment and technology companies, financiers and entrepreneurs are collaborating to be at the forefront of financial innovation, developing use cases such as mobile money and using fintech as a means of financial inclusion.
Further, MasterCard noted that recent years have seen a faster pace of digitization, which has driven the use of neobanks and digital payments. Cryptocurrency, non-fungible tokens (NFT) and blockchain-backed technologies have entered the mainstream, often supported by dynamic regulation that supports the growth of more affordable financial services.
In terms of funding, the study showed that Africa’s fintech startups recorded 894% year-on-year growth in funding in 2021, the second highest in Middle East and Africa region.
Nigeria emerged as a leading fintech hub across Middle East and Africa as start-ups accounted for a third of all funding distributed to fintech in 2021.
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