Fintech startups in Africa grew 81% in 2021

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.

Fintech startups were the subject of a White Paper from Mastercard entitled ‘The Future of Fintech: Rapid Growth Attracts Smart Capital’, the White Paper 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 White Paper include how the sector accounted for 27% of the record-high number of deals closed and 61% of the USD 2.7 billion deployed across Africa in 2021. The space was further characterized by mega deals of more than USD 100 million each.

Fintech: Focusing on financial and digital inclusion

The White Paper elaborates on how 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 are 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. We provide a portfolio of technology solutions, APIs, developer tools, partner network, startup programs and a community experience for every fintech company and payments developer, helping turn their bold ideas into reality,” said Ngozi Megwa, Senior Vice President, Digital Partners and Enablers, Eastern Europe, Middle East and Africa at Mastercard.

Rising global funding

The growth in the number of fintech companies in Africa is reflective of global funding, which reached a new record of USD 131.5 billion in 2021. The number of fintech unicorns climbed to 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 White Paper revealed that, on the demand side, the role of MSMEs has been crucial to the sector’s growth. MSMEs use financial solutions to scale, source, and reach. The growth in alternative payment rails and emerging platforms are shaping the commercial landscape.

Buoyed by demand, the sector has seen products based on multi-faceted innovation in emerging and mature economies. Providing scalable financial services using the internet, blockchain and algorithms, companies have widened the reach of financial services traditionally offered by banks, including loans, payments, investments or wealth management.

These trends are line with the dominant position of fintech within the regional investment scene.

The White Paper can be downloaded here.