‘Fintech accounted for 27 per cent of the record-high number of deals closed across Africa in 2021, found a Mastercard study of the sector.
Mastercard‘s white paper ‘The Future of Fintech: Rapid Growth Attracts Smart Capital‘ focuses on the fintech sector throughout Africa. The report details Africa’s success in the fintech industry and how the continent has put itself at the forefront of payment innovation.
The report details how the fintech sector made up 61 per cent of the $2.7billion deployed across Africa in 2021. Large deals worth more than $100million each have characterised the industry in the region.
Nigeria emerged as a leading fintech hub across the Middle East, Africa, and Pakistan as startups there accounted for a third of all funding deployed into fintech in 2021. Within Nigeria, the fintech sector accounted for 71 per cent of all venture capital.
How has Africa been able to position itself here?
As the significant growth of fintech in Africa becomes clearer and clearer, it becomes an obvious question to ask how the continent has positioned itself ahead of other world-leading continents.
The report details how fintech innovation in Africa has been driven by the need to resolve issues. It finds a strong focus on increasing financial and digital inclusion. South Africa, Nigeria and Kenya are also leading the transition to digital payments. Infrastructure and policy frameworks are in place to enable this growth.
The report explains that during the COVID-19 pandemic, a number of regulators across Africa accelerated regulatory innovation. The supportive regulatory framework enabled the increase of entrepreneurial activity.
Africa does not have pan-regional regulations like the US and European markets. Despite this, it is able to ease payment constraints. The ‘PanAfrican Payment and Settlement System‘ development by the African Continental Free Trade Area makes it easier to navigate 50 countries and 40 currencies.
Continuing the growth
The growth in the number of fintech companies in Africa highlights the growth of global fintech funding. The funding jumped to a record high of $131.5billion in 2021. The number of fintech unicorns reached 235 with 34 alone born in Q4-2021. Fintech companies now represent more than 20 per cent of total tech unicorn value. In the prior year, fintech firms represented only 15 per cent of the unicorn value.
This growth of the fintech sector in Africa can be seen in a number of reports released this year. Crypto markets have also been shown to be growing the fastest in North Africa and the Middle East.
Ngozi Megwa, senior vice president of digital partnerships, the Middle East and Africa at Mastercard spoke on the report findings. She said: “It is encouraging to witness the growth of the fintech landscape across the region, creating multiple opportunities for start-ups, scale-ups, enablers and micro, small and medium enterprises to bring more people into the digital fold.
“At Mastercard, we are helping to fuel fintech acceleration by offering access to our expertise, network and technology. We provide a portfolio of technology solutions, APIs, developer tools, partner networks, startup programs and a community experience for every fintech company and payments developer, helping turn their bold ideas into reality.”