Fintech startups across Africa’s dynamic market have successfully raised over $2.7 billion in venture capital (VC) funding over the past two years, according to a recently released report.
The biennial report, titled “Finnovating for Africa,” by Disrupt Africa reveals that the number of fintech startups in the region has grown by an impressive 17.7% within the last two years, totaling 678.
Remarkably, funding growth has outpaced even this significant startup expansion. In the 2021 report, 277 startups had collectively attracted $875 million in VC funding. In the subsequent two years, the number of funded startups has nearly doubled, while the accumulated funding has surged to an impressive $2.7 billion.
Unveiling an aggregated funding figure of $3.6 billion since 2015, the fintech sector’s total funding in Africa is nearly three times greater than that of any other industry in the region.
However, the report also anticipates a potential decline in fintech funding for 2023. This adjustment comes as the market responds to the global scarcity of capital.
In terms of geographical distribution, four countries—Nigeria, Egypt, Kenya, and South Africa—dominate the fintech market, contributing to a significant 91.2% of total funding. Among these four, Nigeria stands out, having attracted over $1.5 billion since 2015.
Payments/remittances and lending/financing are the leading sectors driving fintech funding trends, representing a combined 81.2% of total funding between 2021 and 2023.
Notably, while this demonstrates an increase from the 77% share between 2019 and 2021, there has been a noteworthy shift in funding allocation, with lending securing a larger slice at 38%, compared to the previous 15% of VC funding.
Co-founder of Disrupt Africa, Gabriella Mulligan, affirmed, “It is clear that African fintech is thriving, spearheading financial inclusion and fueling the ongoing commercial transformation across the continent. Investors share this sentiment.”
The African fintech landscape continues to evolve and attract substantial investments, fostering technological innovation that drives financial accessibility and economic growth across the continent.