Africa poised for fintech boom as funding momentum builds on record 2021

By the numbers: Tech funding in Africa grew faster than any other region globally in 2021, reaching a total of $5.2 billion, according to private equity firm Partech.

  • Africa attracted twice as much activity as 2020, with 681 rounds, and the amount invested more than tripled.
  • Fintechs attracted an outsize portion of funding, aided by an influx of new investors and larger average deal sizes.
  • Fintech startups got 63% of total investments, or around $3.3 billion, compared with just 25% the year before.

What this means: Soaring funding highlights growing confidence in Africa as investors and firms recognize the continent’s huge potential for fintech sector growth. The region’s success can be compared with that of Latin America, where investments tripled last year to hit a record $15.3 billion.

Momentum carries into 2022: Big deals from all corners of the continent have shown no sign of letting up this year.

  • Mauritius: Finclusion Group raised $20 million in a pre-Series A round last month. The fintech uses AI to sell its credit-centric products and has issued more than $300 million in loans to date.
  • Ghana: Float raised $17 million in a January seed round, which it will use to expand geographically. The startup lends to micro-, small-, and medium-sized enterprises (MSMEs)—businesses that find it challenging to get financing from traditional banks. More than half of the 44 million MSMEs in sub-Saharan Africa need more funds than they can access to grow their businesses, per World Bank data.
  • Uganda: Asset financing startup Asaak aims to make motorbike ownership easier for motorcycle taxi operators who are often shunned by established lenders. It approves riders for financing using data like their earnings and trips made. Last month, it secured a $30 million pre-Series A funding round.
  • Egypt: This week, investment app Thndr raised $20 million in a Series A round. Thndr targets underserved consumers in the Middle East and North Africa, where less than 3% of people invest in financial assets. The region is home to roughly 400 million people with $500 billion in annual savings, but most people have minimal exposure to investing.

What’s next? We predict funding for African fintechs will climb further in 2022. Following a similar pattern as other maturing markets like Latin America and Southeast Asia, the funds will focus on large countries and small businesses.

  • Investment will be spread unevenly across the continent, with Nigeria, South Africa, Kenya, and Egypt likely to continue taking the lion’s share of funding in 2022.
  • New technology will promote bank and fintech integration and aid commerce across the continent.
  • By 2025, Africa will be home to 1.5 billion people, per The Economist, most of whom will have grown up with the internet. The continent’s demographics will include a vast group of digitally literate but underbanked customers who can be tapped by homegrown and foreign fintechs.
  • Africa’s fintech sector is young compared with Europe and the US. But roaring funding growth shows the space is gradually maturing, and global investors are taking notice of the continent’s potential.