African Fintech Landscape Trends

The major cause of investment on the continent of Africa continues to be fintech.

Arturas Svirskis

7/12/2022 1 min read

In terms of capital raised, African fintech businesses continue to outperform other startups. According to the African Tech Startups Funding Report, African startups got a total of $1,123,556,000 in funding during the first two months of 2022, with 34 fintech companies receiving $434,296,000, or 38% of the investment pie. According to the African Private Capital Activity report, fintech in Africa garnered 30% of the $7.4 billion in private capital deals raised last year.

Dr Segun Aina, Chair of Africa Fintech Network, detailed the following key factors impacting the continent's fintech sector:

Fintech firms are acquiring banks.

Fintech businesses are expanding quicker and have a wider reach than banks. Banks are being purchased by well-funded fintech businesses looking to expand their operations. Branch International, a digital lending financial solutions provider, acquired a controlling interest in Century Microfinance Bank (Century MFB) to launch a digital bank through its local subsidiary Branch Kenya. Fintech firms acquire banks in order to provide their clientele with a far broader range of financial services.

Fintech businesses are growing outside of their home nations

When fintech innovators develop products, they consider the whole African continent, not just their own country. Most African nations have similar issues, and breakthrough technology may be easily copied in markets other than their host country. They have the financial resources to expand into new markets. Tanzanian firm NALA, which received $10 million to expand to 12 African nations by the end of the year, is one example of a fintech that has lately moved beyond its native country.

CBDC-style central banks

A CBDC is the virtual representation of a country's or region's base currency. As the globe adopts digital payments, the cryptocurrencies and stablecoins gain popularity, central banks throughout the world are considering implementing the technology. Ghana, Morocco, Egypt, Kenya, and South Africa are investigating the practicality of CBDC.

Telco companies shifting their focus to fintech

Since the successful debut of Kenyan telco Safaricom's mobile money transfer service Mpesa in 2007, African telecommunications providers have aggressively shifted their focus to fintech. MTN Nigeria, the Nigerian affiliate of MTN Africa, gained final clearance from the Central Bank of Nigeria (CBN) to operate a Mobile Money Payment Service Bank last month (MoMo PSB). Vodafone and the French telecoms firm Orange are two more mobile companies that offer digital banks in Africa.