Fintech startups in Africa grew 81% in 2021, with South Africa, Nigeria, and Kenya emerging as key hubs on the continent, according to a Mastercard study on the state of fintech in African markets.
The white paper The Future of Fintech: Rapid Growth Attracts Smart Capital, was released at Mobile World Congress (MWC) Africa, one of the continent’s most influential connectivity events, of which Mastercard is a founding partner.
Some of the key findings from the paper include how the fintech sector accounted for 27% of the record-high number of deals closed and 61% of the $2.7 billion deployed across Africa in 2021. The space was further characterized by mega deals of more than $100 million each.
The white paper says fintech innovation in Africa has been driven by the need to resolve multiple pain points, with a focus on increasing financial and digital inclusion. South Africa, Nigeria and Kenya were also seen as among the countries leading the transition to digital payments, with infrastructure and policy frameworks that enable this growth firmly in place.
“It is encouraging to witness the growth of the fintech landscape across the region, creating multiple opportunities for start-ups, scale-ups, enablers and micro, small and medium enterprises (MSMEs) to bring more people into the digital fold. At Mastercard, we are helping to fuel fintech acceleration by offering access to our expertise, network and technology,” said Ngozi Megwa, Senior Vice President, Digital Partners and Enablers, Eastern Europe, Middle East and Africa, Mastercard.
Global Fintech Funding
Megwa said Mastercard provides a portfolio of technology solutions, APIs, developer tools, partner network, startup programs and a community experience for fintech companies and payments developers, “helping turn their bold ideas into reality.”
The growth in the number of fintech companies in Africa is reflective of global fintech funding which jumped to a new record of $131.5 billion in 2021. The number of fintech unicorns reached 235 with 34 alone born in Q4-2021. Fintech companies now represent more than 20% of total tech unicorn value, compared to 15% in the previous year.
The study showed that on the demand side, the role of MSMEs has been crucial to fintech’s growth. MSMEs use fintech and e-commerce solutions to scale, source and reach. The growth in alternative payment rails and emerging platforms are shaping the commercial landscape.
Buoyed by demand, fintech has seen products based on multi-faceted innovation in emerging and mature economies. Providing scalable financial services using the internet, blockchain, and algorithms, fintech companies have widened the reach of financial services traditionally offered by banks, including loans, payments, investments, or wealth management.