There Are More Fintech Startups in Africa Now Than Ever Before

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Image sourced from Payspace Magazine.

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% to 576, which represents a slowdown in growth in the previous two years, but nonetheless means the number of fintech startups active in Africa has increased by 89.4% 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 fintech space is now rushing to “re-bundle”.

In 2021, 143 of the 576 fintech startups tracked in 2021 are multi-category, representing 24.8% of the total, up from 73 companies (14.9%) in 2019.

Major Developments in Fintech:

The major developments in the fintech sector over the last two years, however, have come in terms of investments and acquisitions, where the fintech 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 nearly $875-million 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 the reported $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,” says Gabriella Mulligan, co-founder of Disrupt Africa.

“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,”

“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,” says Tom Jackson, co-founder of Disrupt 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.”

What Disrupt Africa’s Finnovating for Africa Publication Means according to Fintech Partners:

“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 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,” says Olugbenga ‘GB’ Agboola, CEO and founder of Flutterwave.

“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,” Agboola concludes.

Edited by Luis Monzon
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