Africa’s fintech sector is growing and maturing, with more startups active in the space than ever before, platforms increasingly offering a variety of services, and investment and acquisitions taking place to an unprecedented degree.
Disrupt Africa has released the Finnovating for Africa publication, which tracks the extraordinary development of the fintech ecosystem across Africa over the last few years.
The 2021 edition of the report, which is for the first time available free to all as part of an open-sourcing initiative in partnership with key partners Flutterwave and GreenHouse Capital, as well as MFS Africa, truID, Paga, DEMARS, Quona Capital, JUMO, Abjel Communications and Kuda, reports sustained – if slower – growth in the number of ventures, but also details major developments in terms of ecosystem maturity.
The number of active fintech startups has increased by 17.3 per cent to 576, which represents a slowdown in growth on the previous two years, but nonetheless means the number of fintech startups active in Africa has increased by 89.4 per cent between 2017 and 2021. This growth story is taking place continent-wide.
Notably, the variety of services offered by these startups is on the rise. Though the onset of the fintech revolution in Africa was largely based on startups “unbundling the bank”, focusing on niche segments such as payments and lending, the space is now rushing to “rebundle”. In 2021, 143 of the 576 fintech startups tracked in 2021 are multi-category, representing 24.8 per cent of the total, up from 73 companies (14.9%) in 2019.
The major developments in the fintech sector over the last two years, however, have come in terms of investments and acquisitions, where the space is a continental leader. African fintech startups are far more likely to raise funding, or get acquired, than a company operating in any other sector of the continent’s growing tech and innovation space.
Since January 2015, 277 fintech ventures have banked US$874,968,465, more than twice that raised by any other vertical over the same period. The amount raised by fintech startups on the continent is growing each year, at even greater rates, with the sector having already doubled its 2020 total in the first six months of 2021.
The report finds that fintech businesses are also more likely to be acquired than those in any other space. The sector has seen seven acquisitions in a period of two years, compared with 10 in the previous eight; and in the reported US$200 million acquisition of Nigerian fintech startup Paystack by Stripe last year can lay claim to one of the landmark moments of the African tech space in the last decade.
“We’re very pleased to continue our drive to make data around the African startup landscape accessible for all, and are excited to present this open-source edition of Finnovating for Africa, together with our fantastic partners. We hope this report unlocks the fintech landscape for all those interested – it has certainly been a busy and stimulating space to watch these past two years, in spite of the pandemic-induced challenges facing businesses and economies alike,” said Gabriella Mulligan, co-founder of Disrupt Africa.
“We might not be witnessing the same levels of explosive growth in terms of new startups launching in the fintech space as we have seen before, but instead we are seeing the increasing maturity of the fintech ecosystem in Africa. Startups are building out their solutions for the benefit of their customers, expanding to new markets, and raising millions of dollars in capital. It is an exciting time to be involved in African fintech, whether you are an entrepreneur, investor, traditional financial institution or customer,” said Tom Jackson, co-founder of Disrupt Africa.
Previously available for sale, previous editions of Finnovating for Africa have been purchased each year by leading tech companies from Africa and the rest of the world, Big Four consulting firms, banking and fintech leaders, venture capital firms, supranational investors and international trade bodies. This year, however, Disrupt Africa is making it open source for the first time, to make it accessible to those for whom the information is most valuable – African entrepreneurs.
It has done this with the help of partners key partners Flutterwave, an African fintech company that allows clients to use its APIs and work with its developers to customise payments applications, and which recently obtained “unicorn” status, and GreenHouse Capital, a Lagos-based fintech investment company that invests capital and specialised expertise into companies that will power Africa’s economic future.
Section partners are MFS Africa, a leading pan-African fintech company, operating the largest digital payments hub on the continent; truID, the largest Open Finance platform in South Africa; and Paga, a mobile payment company building an ecosystem to enable people to digitally send and receive money, creating simple financial access.
The other partners are DEMARS, an inclusive financial technologies provider that builds wallets and APIs for peer-to-peer money transfers; Quona Capital, a venture capital firm that invests in fintech innovations advancing inclusion in emerging markets; JUMO, a market-leading Banking as a Service platform that powers AI for financial services in emerging markets; Abjel Communications, a social enterprise communications agency; and Kuda, a full-service, digital-only bank with a mission to make banking more accessible, affordable and rewarding for every African on the planet.