In 2021, African fintech startups accounted for 61% of the $2.7 billion in enterprise capital funding that was deployed on the continent, a brand new examine has discovered. Whereas its share of worldwide fintech funding is simply over one p.c, the continent’s fintech sector nonetheless recorded one of many highest year-on-year development charges globally.

‘File-Excessive Variety of Offers Closed’

In accordance with the findings of a brand new Mastercard examine, African fintech startups — whose quantity grew from 311 in 2019 to 564 in 2021 — accounted for “61% of the USD 2.7 billion deployed throughout Africa in 2021.” The findings additionally present that fintechs’ share “of the record-high variety of offers closed” in that yr was 27%.

In comparison with the $131.5 billion that was raised globally, African fintech’s share of the full stays very low — simply over 1% of the 2021 complete. Nonetheless, in phrases of the funding development fee, the examine famous that the continent — the Sub-Saharan Africa area in explicit — had one of many highest year-on-year development charges globally. The examine report defined:

Within the Sub-Saharan Africa (SSA) area, fintech startups recorded 894% year-on-year development in funding in 2021 – the second highest in the Center East, Africa, and Pakistan area in the course of the interval, and the very best yearly development fee over the previous 5 years. SSA acquired USD 1.56 billion in funding, the very best in the area by a large margin.

In regards to the funds raised by fintech startups per nation, the examine findings present that Nigeria, which is residence to a number of the continent’s fintech unicorns, had in truth emerged as a number one fintech hub not simply in Africa however throughout the Center East and Pakistan. In accordance with the examine’s findings, the West African nation’s fintechs alone “accounted for a 3rd of all funding deployed into fintech in 2021.” Inside the nation, fintechs’ share of all enterprise capital raised throughout the identical interval topped 71%.

Fintechs and the Monetary Exclusion Hole

Relating to why the fintech sector continues to get a disproportionate share of the funding, the examine, titled the “Way forward for Fintech in Africa,” factors to the continent’s longstanding monetary exclusion hole and the way fintechs are “constructing inclusion from the bottom up.”

A lot of the sector’s previous and projected success in the longer term can be tied to improved smartphone penetration. As proven in the 2022 GSMA report, there may be an expectation that the variety of smartphone connections will develop from the 6.2 billion seen in 2021 to 7.5 billion by 2025.

In the meantime, the report prompt that Nigeria, together with South Africa and Kenya, will proceed to drive the sector development. Nonetheless, the examine prompt that the fintech sector development fee will depend upon regulators’ and policymakers’ continued prioritization of “reasonably priced web and cellular penetration.”

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