A recent study by Mastercard has revealed that the fintech industry in Africa is gradually emerging as the continent’s most vibrant sector. Africa has no doubt been at the forefront of financial innovation, developing use cases such as mobile money and using fintech as a vehicle for financial inclusion.
These Fintechs have become major players in the African financial services sector with some rivaling traditional banks in terms of size and value. Between 2020 and 2021, the number of tech start-ups in Africa tripled to around 5,200 companies with half of them as fintechs.
In 2020, Fintechs in Africa made an estimated revenue of around $4 billion to $6 billion, as experts disclose that the African region is experiencing a ‘fintech eruption’ which has caught the attention of both local and foreign investors.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
In the Sub-Saharan Africa (SSA) region, fintech startups recorded 894% year-on-year growth in funding in 2021 – the second highest in the Middle East, Africa, and Pakistan region during the period, and the highest yearly growth rate over the past five years.
Africa’s most populous nation Nigeria emerged as a leading fintech hub across the Middle East, Africa, and Pakistan as startups in the country accounted for a third of all funding deployed into fintech in 2021. Within Nigeria, fintech accounted for 71% of all venture capital5.
In 2019, Fintech startups in Africa grew from 311 to 564 in 2021, with South Africa, Nigeria, and Kenya emerging as key hubs. The sector accounted for 27% of the record-high number of deals closed and 61% of the USD 2.7 billion deployed across Africa in 2021. The space was characterized by mega deals of more than USD 100 million each.
The rapidly growing sector comprises sub-segments of particular interest, including digital payments, e-money, international remittances, peer-to-peer (P2P) lending, and equity crowdfunding7.
Fintechs in Africa has made the region a hotbed for investment, with average deal sizes growing and the proportion of fintech funding increasing over the past years, which has led to the creation of jobs and enhanced African economies.
Despite a slowdown in funding in line with global trends, it has been predicted by experts that Africa will witness significant growth and value creation for the fintech industry.
Although, despite the influx of fintechs in the region, cash is still used in around 90 percent of transactions in Africa, which implies that fintech revenues have huge potential to grow.
An analysis by McKinsey estimates that Africa’s financial-services market could grow at about 10 percent per annum, reaching about $230 billion in revenues by 2025 ($150 billion excluding South Africa, which is the largest and most mature market on the continent).
As the fastest-growing start-up industry in Africa, the success of fintech in Africa has been attributed to so many factors such as; an increase in smartphone ownership, reduced internet costs, expanded broadband network coverage, as well as a young, fast-growing, and rapidly urbanizing population.
While fintechs have made significant inroads in Africa—notably in wallets, payments, and distribution, there is still plenty of room for expansion. As the market matures, unique white spaces are identifiable in almost all areas of financial services.
Despite the surge of Fintechs in Africa, experts disclose that the sector has not even scratched the surface, as there are still challenges of less developed financial infrastructure and a large percentage of the population still unbanked.
The challenge of financial inclusion is still rife with a great deal of innovation and technology needed to ensure that more Africans have access to financial services that can drive economic growth.