Nigeria, Kenya and SA lead fintech surge in Africa

According to recent research from Mastercard, the number of fintech companies in Africa increased by 81% in 2021, with South Africa, Nigeria, and Kenya emerging as the continent’s major centres. The goal of the white paper was to assess the state of fintech in African markets.

The analysis, titled “The Future of Fintech: Rapid Growth Attracts Smart Capital,” also discovered that the fintech industry would be responsible for 61% of the US$2.7 billion that was invested in Africa in 2021 and 27% of the record-breaking number of agreements that would be closed. The market saw mega deals worth more than $100 million each.

Furthermore, the research revealed that the desire to address a number of pain problems, with an emphasis on boosting financial and digital inclusivity, has encouraged fintech innovation in Africa. With infrastructural and regulatory frameworks that support this expansion firmly in place, South Africa, Nigeria, and Kenya were also considered to be among the nations spearheading the shift to digital payments.

The expansion of fintech businesses in Africa is consistent with an increase in global fintech funding, which reached a new high of US$131.5 billion in 2021. There were 235 fintech unicorns, 34 of which were founded in the fourth quarter of 2021. Compared to the previous year, fintech startups now account for over 20% of the value of all tech unicorns.

The study demonstrated how important MSMEs have been to the rise of fintech on the demand side. Fintech and e-commerce technologies are used by MSMEs to scale, source, and reach.

The development of alternative payment systems and new platforms is influencing the commercial environment. Fintech has seen products built on multifaceted innovation in emerging and developed economies, buoyed by demand.

According to the survey, funding for African fintech companies increased by 894 percent year over year in 2021, ranking second in the Middle East and Africa area. Nigeria became the top fintech hotspot in the Middle East and Africa in 2021 as start-ups there received one-third of all fintech funding.