Fintech Landscape in Africa

Africa is solely and increasingly recognized as a land of opportunities when it comes to the Fintech Sector. According to a report from the International Finance Corporation IFC, over $50 billion has been invested in a decade in almost 2,500 Fintech companies worldwide. A somewhat similar trend was observed in Sub-Saharan Africa, where investments in this segment are on the rise in spite of a general slowdown in merger and acquisition activities in the region.

HOW FERTILE IS THE FINTECH ORGANIZATION IN AFRICA?

Africa is a fertile ground for new fintech services which are leveraging the power of communities and social media to make financial services more relevant, while using data to deliver more meaningful financial services on an ongoing basis. In my role as head of Operations with Superforex Nigeria, a Brokerage company for fintech entrepreneurs, I meet these motivated and innovative entrepreneurs daily, who make something out of the services. They recreate and rebrand to make sure they deliver great services to the populace. Many reports show how the rapid development of African fintech, which exploded in the years following the 2008 global meltdown, is threatening established players in the mainstream financial services sector.

While infrastructure development, internet penetration and access to finance remain real barriers to economic opportunities in many parts of the African continent, the continent has overall experienced strong economic growth and made major inroads into poverty. An improvement in the quality of economic governance has also played a role. The costs of starting a business have fallen, as have the delays in starting a business.

THE COVID-19 EFFECT

During the Covid-19 Outbreak, there was addition to the rising numbers the report shows insight on and acquisition strategies favoured by startups, and the popularity of embedded finance models. However, there remain shortfalls in demographic representation and the average size of seed deals on the continent.

LAYING OF FOUNDATIONS / MILESTONES

There have been some huge milestones that have occurred recently. Jumia Technologies (JMIA) one of the largest e-commerce startups in Africa, listed on the New York Stock Exchange in 2019. In doing so, it became the first African startup to list on a major global exchange and opened the world’s eyes to what can be achieved by a company that is, by its own admission, ‘100% Africa’. Events like this on the global stage bring a lot of attention to the region. It was a huge news in the Fintech space when Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled’s firm Chipper Cash received further investment. The company offers mobile-based, no fee, P2P payment services in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya and raised a $30 million Series-B funding round led by Ribbit Capital with the participation of Bezos Expeditions — the personal Venture Capitalist (VC) fund of Amazon CEO Jeff Bezos. In my opinion, this is just scratching the surface of the investment coming to Africa. Global VC firms are already very interested in countries like Nigeria, Kenya and Egypt. We will see the interest from foreign investors widen much further in 2022, with other countries such as Rwanda and Ghana showing great promise.