The African Fintech Sector Matures Faster as Startups Secure Multinational Investment Deals
By Anton Grant · 5 January 2022
Across the continent, Fintech is at the center of the maturing digital market, as African Fintech startups managed to secure more than $900 million in investments in the last five years. 2021 has again been a promising year for these startups, as statistics revealed that more than 31% of multinational investments for 2020 were awarded to fintech startups. While most of the continent pushes out of an economic slump caused by the global pandemic, confidence from foreign investors reveals an untapped market offered by African nations.
The four leading startup hubs, Egypt, Kenya, Nigeria, and South Africa have managed to attract some lucrative investment deals in 2021. But with the rapid advancements in tech and software, Ghana, Lebanon, and Rwanda are offering confident growth for fintech startups.
- Tech startups grew by 16% in the first quarter of 2020, up from 2019.
- More than $543 million of investments went to startups working in payments and remittances.
- As of 2021, there were around 567 fintech startups scattered throughout the continent.
- A total of four unicorn startups valued at over $1 billion are housed in Nigeria and Egypt, respectively.
In North Africa, Egypt
, home to Fawry, one of the four unicorn startups on the continent, has attracted foreign investment from both outside and inside Africa. In November 2021, South African mobile operator Vodacom, the largest in the country, is set to buy a majority stake in Vodafone Egypt. The purchase, which will see a $2.7 billion injection
into the country’s economy, will put Vodacom on the fast track to develop fintech services such as mobile banking for 38 million Vodafone Egypt prepaid subscribers. Vodacom is part of the UK-based parent company Vodafone Group with majority ownership (60%) of Vodacom.
Kenyan startup
Asilimia secured a $2 million investment last month with Bpifrance, GreenTec Capital Partners, and Frederik Jung Abbou. The startup is set to expand services and development for its mobile transactional app, Leja. Co-founder and CEO, Tekwana Mwendwa, shared that expansion is crucial as Asilimia has seen week-on-week growth of 30%. With more than 27,000 Leja users, and $20 million in transactions the app allows traders and normal users to easily make mobile transactions.
Still, in Kenya, the ImaliPay startup received an undisclosed amount from an Australian-based TEN13 company in April 2021.
In a recent round of funding, South Africa- and UK-based company, JUMO raised $120 million after securing a deal with Fidelity Management and Research Company. Services and products of JUMO include savings, personal and business credit, and eMoney operators. Since its inception in 2015, the company has marked $3.5 billion in loans to its more than 18 million customers. With Cape Town and Nairobi as primary African cities of operations, other key markets include Ghana, Kenya, Ivory Coast, Uganda, and Zambia.
As of 2021, South Africa is home to around 154 fintech startups
.
Nigeria is currently leading
the African fintech sector. In 2019 alone, the region managed to secure 37% of total venture capital investment, with more than 60% of this being for fintech startups. Nigerian fintech and tech startups are going global at an exponential rate.
A round of funding for Flutterwave led by Tiger Global secured more than $170 million in March
. This round of funding helped the company become a unicorn. Fast-forward to October, and Tiger Global again secured a $15 million deal with fintech startup Mono.
The $400 million funding
OPay received from SoftBank Japan helped it become Africa’s most-valued startup. Valued at $2 billion, Chinese investor group Sequoia Capital is now backing most of the funding for OPay. Nigerian fintech and eCommerce startups are reaping in millions of foreign-backed funding, and 2021 was the biggest year yet.
Although considered as the best destinations for fintech startups in Africa, analysts shared a report on the growth of early-stage fintech startup hubs that will come to life in the coming years. Morocco, Rwanda, Uganda, Ivory Coast, and Zambia startups are keeping their finger on the pulse in the hopes to secure multinational investments early in 2022.
Tiger Global has already managed to invest $3 million in Zambia's Union54 platform. These countries are rapidly diversifying their market offering with the introduction of innovative fintech software. Albeit a leading sector in these African nations, cleantech and healthcare are ranking in big investments as national economies restructure themselves.
A few years ago fintech investors were focused on western counterparts in Europe and the United States. The course of development has seen a massive shift in the last decade, and African nations are now attracting interested financiers from not only the west but Asia and the Middle East. African-based fintech startups will only grow bigger in the coming year, putting them in the run to compete against global players. Companies in this story: JUMO, Fawry, Asilimia