Mobile money is a fast-growing trend in fintech in Africa. Fintech firms are focusing on mobile technology, opening up new opportunities for financial inclusion in the unbanked market.
Mobile money has been a boon to fintech solutions providers in Africa. In 2015, fintech investments into Sub-Saharan Africa were estimated at $73 million, higher than Western Europe or North America that year according to World Bank Finance estimates. In 2016, this figure grew even faster with VCs from Asia spotting an opportunity to gain a foothold in startups–mainly based in Kenya and Nigeria–offering innovative fintech products. 2021 has seen explosive growth in fintech firms, with investment influxes of over $6 billion. Mobile fintech innovation is showing promise throughout the continent, using solutions to provide financial inclusion for the unbanked, thereby boosting economic development in Africa. Fintech startups can reduce cash in circulation costs which can be up to three percent of GDP and create incomes opportunities that benefit the broader economy. Meanwhile, multinational fintech giants like MasterCard, Visa and Vodafone are capitalising on the opportunity by investing billions into infrastructure upgrades, including laying thousands of miles of fiber optic cable across Africa and making mobile money transfers and deposits more accessible than ever before. Telecom companies like MTN Group Limited (MTN), Bharti Airtel Limited (Airtel) and Econet Wireless (EWN) are making fintech innovation part of their core business, using fintech to drive revenue growth and stay ahead of the game.
The Future of Fintech
The fintech industry is broadening its mind share across global markets and gaining traction within low-income developing economies. With over $20 billion pledged to fintech ventures worldwide since 2012, it's no surprise this sub-sector has opened new funding opportunities for low-income economies keen for a slice of fintech innovation. Fintech in Africa is a broad subject that covers financial services, payments systems and fintech infrastructure. This fintech investment by multinational fintech giants, which have paired with fintech startups to provide innovative financial solutions for Africa, will boost economic development, reduce cash circulation costs–which can be up to 3% of GDP in some countries–and create jobs that benefit the entire economy. In 2017, global fintech funding reached a record high, with North America continuing to dominate the fintech market and accounting for more than half of global fintech investments according to KPMG/CB Insights MoneyTree Report. However, this is changing as fintech startups have created innovative ways of increasing fintech investment into African markets, previously restricted by lack of internet infrastructure. Fintech firms have found a way to work around this through fintech mobile applications and fintech crowdsourcing platforms. Africa also lags in fintech startups, though fintech hubs like Nairobi boast more fintech startups than any other city on the continent. Nigeria is Africa's largest economy, followed by South Africa and Kenya, which all rank high on global fintech startup maps. However, Kenya & Nigeria account for over 5% of Fintech investment into African countries, compared with less than 0.5% from South Africa. This indicates that fintech firms are looking beyond the traditional hubs to newer startups in emerging micro-lending service hotspots. Africa is a diverse continent with a potential fintech industry that spans borders and regions. However, fintech funding into African fintech startups reached a record high in 2017. This was an increase of less than 0.5% from 2016. In the Kenyan market, loan companies are providing millions in capital to partners to provide loans for small businesses via mobile phones and broaden their user base to include those who do not have smartphones or access to the internet. In Nigeria, fintech firms have been focusing on fintech infrastructure to increase investment and innovation. Fintech4Good, an investor in fintech startups in Nigeria, has already supported five fintech startups, including Yego, which raised $1 million from Impact hub Lagos. In August 2021, The Central Bank of Nigeria announced Bitt Inc. as the technical partner for implementing its digital currency, eNaira, a clear indicator that fintech technology is here to stay.
Growth in Electronic Payments Powers Boom
The tech revolution has been happening in Kenya for years, but now it's West Africa's turn. Lagos is leading the charge and attracting over $1 billion from Silicon Valley and funding from China via its re-emerging fintech industry. In 2020, when the coronavirus pandemic hit, African startups began fundraising and raised a fifth of all those available funds, with nearly 40% going towards finance sector IT companies that are bringing new ideas into this growing space. Lagos, in particular, had a massive influx of money that included roughly $400 million during one week when three major investors made investments into Nigeria-based–including Sequoia Capital China and SoftBank Ventures Asia, with Visa throwing its support behind these companies and investing alongside them.
Disrupting Traditional Banking and Revolutionizing Customer Service
The fintech revolution is changing the way we manage transactions and changing the platform of customer engagement. With access to new channels such as social media, customer-oriented solutions are becoming more accessible than ever before. Over 80% of banking sector respondents believe their business model offers consumers services "to some extent." It's time for traditional banks (or at least those working with digital technologies) to take note: this sector needs 24/7 attention if it is to be successful in the years ahead. This, coupled with the explosion of mobile money, financial services and enterprise-ready startups in Africa, has faced a unique response and adaptation in the face of the COVID-19 pandemic. National technological advancements in 2020 have led to a "tele-everything" world. In 2025, 915 innovators responded with their thoughts on how technology has affected lives today and is impacting what is to come for society. It has become increasingly clear that as society relies more and more on digital connections for daily commercial transactions, education and health care, industries such as the fintech sector will become ever more important. And, being at the forefront of the fourth industrial revolution, Africa will undoubtedly see tremendous growth in digital and technological advancements. Telecom giants are ramping up their networks and building new facilities to capitalise on the growth of this revolution. There is indeed an ongoing "data race" in the continent, with large technology companies like Facebook and Google competing to upgrade their digital footprint.
Current Investment Trends
The African continent is at the forefront of digital financial innovation, with over $30 billion raised by fintech startups. This steep influx provides evidence that this will continue to be a prominent area for growth in the coming years. A data center boom is already underway. Global internet companies have also noticed that investing in upgrading Africa's digital infrastructure could give them the edge they need to cut costs for consumers accessing their services. For investors, this optimistic outlook signals tremendous portfolio growth in fintech investments. This revolution, however, is not without its challenges. The race to build out Africa's digital future will depend on politics, collaboration and technology. It requires governments, local businesses and NGOs alike to be willing participants in this technological revolution by making laws that promote data protectionism while also passing policies with the frameworks for innovation. The pandemic has changed online behavior and has pressured these power bodies to adapt to the growing technology boom in the country. Fintech in Africa is changing the way we live and do business. Attracting more than $6 billion of investment, fintech has been one of sub-Saharan's most promising industries for years now, yet its potential goes beyond financial services alone: it holds great promise as an opportunity to improve the livelihoods of those living within or outside of Africa.