Why you should invest in African Fintech

According to CBInsights in the year of 2022; a lot happened in fintech. There was only $75.2B worth of funding in 2022 marking a 60% drop from 2021.

Banking funding declined 63% year on year making it the sharpest drop across fintech sectors.

US funding fell 50% year on year to $32.8 billion. 

But here’s the kicker:

Africa- based fintechs saw a record 227 deals in 2022, leading to a 25% increase year on year.

The African market is poised for a new era, there are plenty of undeserved opportunities that still exist in markets and there is no doubt several unicorns(billion dollar valuation companies) will emerge.

There is already several highly successful fintechs that reached massive adoption like M-PESA from Kenya,(represent! 🇰🇪) OPay from Nigeria and Fawry from Egypt.

So what makes these African based fintech companies so exciting??

The majority of fintechs in Africa have built their success on rapid customer acquisition (the number of users onboarded using the service or application).

They tend to have multiple monetization strategies for example; having a B2B and B2C components like M-PESA allows users to send money to anyone with a phone, but also has lending services.

As a matter of fact, 90% of all transactions in Africa are cash based, the successful fintechs had to go and find ways to reach their clients offline and they achieved that by building out either:a) Agency networks

b) Using existing infrastructure like physical shops.

Services like M-PESA managed to have a very strong market adoption because of its relationships with physical shops allowing users to deposit money in those shops in return for money on their accounts.

With Africa growing youth and rapid digital adoption, I would not be surprised by Africa being the next global fintech superpower.

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