BLOG
FINANCIAL TECHNOLOGIES
Fintech’s exciting journey in Africa will continue during 2020
23 August 20222019 was a great year for the fintech industry in Africa. The sector remained one of the hottest tech verticals (if not the hottest one) in Africa, innovation culture continued to deepen on the continent and the sector expanded to services beyond payments, such as digital lending.
As a result, investments on fintech companies hit a record high in the previous year. Only in November we saw almost $400 million invested in various Nigerian-focused payment ventures, equivalent to roughly one-third of all the startup VC raised for the entire continent in 2018.
Africa (especially Sub-Saharan Africa) has shown no signs of slowing down. The continent has proven a fertile ground for fintech services and millions more people now have access to financial systems thanks to cashless systems using digital technology, and more and more people are seeing the benefits of mobile banking. The industry has grown exponentially and there are no signs of the market decreasing in value.
Although predicting the future may be a skill best left to those able to read a crystal ball, we believe that fintech’s exciting journey will continue this year and the industry will continue to boom.
All signs show that the future is bright despite some significant hurdles and challenges, including diverse regulatory stances or the significant gender gap. Recent report from Mastercard “Five Global Trends to Watch” describes a very positive outlook for the industry in Africa. “Looking ahead, mobile devices will continue to drive fintech innovation in the region. With more investment — and supportive regulators — Africa’s population should increasingly move online and into the global financial system” the report concluded.
On the other hand, a recent research from pan-African banking group Ecobank is even more positive. “Africa will experience a financial technology revolution, and can expect its fintech industry to be worth more than $3 billion by 2020” was the main conclusion of this report. Other analysts suggest the number is much higher.
Optimist predictions that reflect the significant opportunities for the fintech industry in Africa due to its unbanked and underserved population. For instance, Africa’s three most populated countries, Nigeria, Ethiopia and Egypt (home to a combined adult population of over 242 million) have low rates of financial inclusion (below 40{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e}). Last year GSMA estimated that only from these three counties could be unlocked over 110 million new mobile money accounts in the next five years. On the other hand, many funding deals of 2019 have fueled several fintech firms with the necessary capital to continue both their geographic expansion and the enrichment of the services they provide.
