In 2021, African fintech startups accounted for 61% of the $2.7 billion in venture capital funding that was deployed on the continent, a new study has found. While its share of global fintech funding is just over one percent, the continent’s fintech sector still recorded one of the highest year-on-year growth rates globally.
‘Record-High Number of Deals Closed’
According to the findings of a new Mastercard study, African fintech startups — whose number grew from 311 in 2019 to 564 in 2021 — accounted for “61% of the USD 2.7 billion deployed across Africa in 2021.” The findings also show that fintechs’ share “of the record-high number of deals closed” in that year was 27%.
When compared with the $131.5 billion that was raised globally, African fintech’s share of the total remains very low — just over 1% of the 2021 total. However, in terms of the funding growth rate, the study noted that the continent — the Sub-Saharan Africa region in particular — had one of the highest year-on-year growth rates globally. The study report explained:
In the Sub-Saharan Africa (SSA) region, fintech startups recorded 894% year-on-year growth in funding in 2021 – the second highest in the Middle East, Africa, and Pakistan region during the period, and the highest yearly growth rate over the past five years. SSA received USD 1.56 billion in funding, the highest in the region by a wide margin.
Concerning the funds raised by fintech startups per country, the study findings show that Nigeria, which is home to some of the continent’s fintech unicorns, had in fact emerged as a leading fintech hub not just in Africa but across the Middle East and Pakistan. According to the study’s findings, the West African nation’s fintechs alone “accounted for a third of all funding deployed into fintech in 2021.” Within the country, fintechs’ share of all venture capital raised during the same period topped 71%.
Fintechs and the Financial Exclusion Gap
Regarding why the fintech sector continues to get a disproportionate share of the funding, the study, titled the “Future of Fintech in Africa,” points to the continent’s longstanding financial exclusion gap and how fintechs are “building inclusion from the ground up.”
Much of the sector’s past and projected success in the future is also tied to improved smartphone penetration. As shown in the 2022 GSMA report, there is an expectation that the number of smartphone connections will grow from the 6.2 billion seen in 2021 to 7.5 billion by 2025.
Meanwhile, the report suggested that Nigeria, along with South Africa and Kenya, will continue to drive the sector growth. However, the study suggested that the fintech sector growth rate will depend on regulators’ and policymakers’ continued prioritization of “affordable internet and mobile penetration.”
Register your email here to get a weekly update on African news sent to your inbox:
What are your thoughts on this story? Let us know what you think in the comments section below.
Terence Zimwara
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
More Popular News
In Case You Missed It
Tony Hawk’s Latest NFTs to Come With Signed Physical Skateboards
Last December, the renowned professional skateboarder Tony Hawk released his “Last Trick” non-fungible token (NFT) collection via the NFT marketplace Autograph. Next week, Hawk will be auctioning the skateboards he used during his last tricks, and each of the NFTs … read more.
