Africa’s Fintech Sector Growing & Maturing, With More Startup Active In Space Ever Before, Platform Increasingly Offering Variety Of Services
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. Every two years since June 2017, startup-focused news and research company 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.
FlexClub, E-Settlement, BitLipa, Eversend, Sun Exchange, Kwaba, Finplus, Peach Payments and LipaLater are also supporters. Disrupt Africa’s partners expressed their excitement at playing such a key role in this open-sourcing project.
“We are excited to partner with Disrupt Africa in making important fintech data and insight available to African entrepreneurs at zero cost. We have always believed in the unlimited potential of young people in Africa, needing support to actualise their dreams. This is our way of making much-needed help available to the growing technology ecosystem in Africa. We believe that when African entrepreneurs win, we all win. The growth of fintech in Africa has been remarkable and to sustain this, we must be data-driven in our processes and strategies. We are happy to be a part of this initiative to improve data access to African entrepreneurs,” said Olugbenga ‘GB’ Agboola, chief executive officer (CEO) and founder of Flutterwave.
“We are thrilled to be a major partner in this project. Such data and analysis is valuable to better understand and appreciate the growth of the African fintech sector. We are proud of our contribution to its growth,” said Bunmi Akinyemiju, partner at GreenHouse Capital.
“We believe that high quality data is critical in demonstrating the untapped potential of the African fintech market. We are proud to partner with Disrupt Africa, in their mission to track the progress of the African fintech sector, in order to inform large corporations, policymakers and investors of the progress being made by the sector. We believe that this will contribute immensely to attracting more resources across the continent, helping fintech companies serve the underserved,” said Dare Okoudjou, founder and CEO of MFS Africa.
“Disrupt Africa, their name says it all. They’re in-the-know on all things tech on the continent which means more data, deeper insights and wider reach than anyone else. They should be everyone’s go-to publication to know more, they’re ours for sure!,” said Paris Valakelis, co-founder of truID.
“With our purpose of making it simple for a billion people to access and use money, we were thrilled at this fitting opportunity to partner with Disrupt Africa to enable African and international businesses access to and use of rigorous, reliable and free data to drive real and sustainable transformation across the continent,” said Daniel Oparison, head of growth at Paga.
“Finnovating for Africa features startups building a new vision for the financial services industry in Africa. DEMARS is privileged to be part of this incredible ecosystem, where one size most certainly does not fit all, and we get to solve big problems – together,” said Shaun Burrow, founder and CEO of DEMARS.
“It’s great to partner with Disrupt Africa in support of the Finnovating for Africa report,” said Johan Bosini, Quona Capital’s Cape Town-based partner. “There is tremendous value in looking at the fintech ecosystem and funding trends on the continent in a holistic way, and as investors in financial inclusion, we welcome the expansion of consumer-first and MSME-first products that enable more people to thrive.” Quona’s Africa investments since the firm’s inception include Yoco, Sokowatch, Cowrywise, Lulalend, Zoona/Tilt and AllLife.
“We are really excited about the capability we can now offer our customers and partners on the platform,” said JUMO CEO Andrew Watkins-Ball. “We have dropped the cost of risk by 90 per cent in the last five years. This allows us to share the benefits of better products with customers and partners. We believe everyone should have access to the best choices. It’s an incredible space that we operate in with lots of growth and opportunity, so we’re really pleased to be partnering with Disrupt Africa to share information on the fintech startup landscape.”
“Data is crucial for the growth and survival of businesses and organisations around the world. It is even more critical in Africa as the continent looks to build a new vision with fintech startups leading the way. This is why we are so pleased to partner with Disrupt Africa as they launch The Finnovating for Africa report, and for the first time, they will be able to offer this for free to the many African startups who would benefit from its content,” said Adisa Amanor-Wilks, CEO of Abjel Communications.
“Partnering with Disrupt Africa to launch this year’s edition of Finnovating for Africa is a move to democratise access to reliable and in-depth reporting on the continent’s fintech startup ecosystem – something that has been a luxury in the past. Distributing this report free of charge resonates with our mission at Kuda, and we’re proud to be associated with Disrupt Africa,” said Bradley Want, head of growth at Kuda.
This news was originally published at Disrupt Africa.