African fintech startups raised more than US$2.7 billion in VC funding in the last two years, according to a new report.

Disrupt Africa’s Finnovating for Africa publication, released every two years since June 2017, tracks the extraordinary development of the fintech ecosystem across Africa.

The fourth edition of the report is released in partnership with AZA Finance, an African fintech company offering secure and efficient financial infrastructure for payments, foreign exchange, and settlement; and Curacel, an insurance infrastructure company that helps insurers and partners in Africa and other emerging markets increase the reach and functionality of insurance through cloud-based tools and APIs.

The fintech startup ecosystem is continuing on its growth trajectory from an activity perspective, with the number of startups operating in the space increasing by 17.7 per cent to 678 in 2023 as compared to 2021.

But what about funding? Well, in this regard, the fintech space has seen unprecedented growth in the last couple of years.

Since Disrupt Africa began tracking funding in the African tech startup space in 2015, 540 fintech startups from 25 countries have raised an extraordinary US$3,635,823,965, an amount the company estimates to be at least three times that of any other sector.

There has been extremely impressive growth since Disrupt Africa last analysed the space back in June 2021. Then, 277 fintech ventures on the continent had accumulated a combined US$874,968,465. In the two years since then, the number of funded ventures has essentially doubled, while total funding has exploded, with more than US$2.7 billion flooding into the ecosystem in the last 24 months.

Total investment per year has been on a fairly steady upward trajectory since 2016, bar a small hiccup in 2019, peaking at just shy of US$1.5 billion in 2022. This year, however, looks set to see a decline, as fintech feels the effect of the global capital shortage, or the reset. Well into the second half of 2023, just over US$600 billion has been raised by fintech companies so far, and with more than half of that attributable to Egypt’s MNT-Halan, it is clear we should expect reduced figures once 2023 draws to a close.

Nigeria is by far the leader when it comes to fintech investment in Africa. Since January 2015, over US$1.5 billion has been invested in the country across 257 rounds, far more than anywhere else.

Indeed, the country more than tripled its total raised funding over the last two years, with more than US$1 billion invested into Nigerian fintech startups in that period.

The vast majority of fintech funding in Africa goes to the “big four” startup ecosystems, with Nigeria, South Africa, Egypt and Kenya swallowing up 91.2 per cent of investment. This was, however, marginally down on 2021, when the same four countries shared 93 per cent of funding, so a small “trickle down” does appear to be taking place.

Historically the two dominant sub-sectors of African fintech, the payments and remittances and lending and financing categories increased their combined share of African fintech funding to 81.2 per cent between 2021 and 2023, from 77 per cent two years previously. The two most populated categories, this pair have always also been the most attractive to investors, and there is little sign of that changing.

That said, the dynamic between the two has changed somewhat, with payments’ share of total funding falling dramatically, from 62 per cent to 43.4 per cent, while lending’s share of investment has leapt, to 37.8 per cent from 15 per cent in 2021.

“It is clear that African fintech is in its prime, driving forward financial inclusion and powering the commercial revolution occurring on the continent. And investors agree,” said Disrupt Africa co-founder Gabriella Mulligan.


Disrupt Africa 

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