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2021 witnessed an unprecedented surge in fintech investment across Africa, setting new records that are poised to continue growing. Following a slight downturn amid the COVID-19 pandemic in 2020, investment activity rebounded vigorously, fueled by a influx of foreign capital. Data indicates that over US $1.6 billion was injected into the African fintech sector through 153 deals, marking a significant upsurge from the US $800 million invested in 2020 and representing a 50% surge in transaction volumes.

Nigeria, Kenya, and South Africa remain pivotal markets in the West, East, and South respectively. Additionally, countries like Egypt have also experienced substantial investment inflows. Notably, Nigeria saw the value of deals in the first quarter of 2021 surpass the total for the entire year of 2020. The magnitude of foreign financing garnered by these markets is unprecedented, underscoring the growing confidence and interest in Africa’s fintech ecosystem.


The financial technology across Africa is undergoing a metamorphosis, driven by the burgeoning rise of fintech, a blend of finance and technology. This continent, brimming with potential yet grappling with financial inclusion challenges, is proving to be fertile ground for innovative fintech solutions.

The proliferation of smartphones across Africa stands out as a key catalyst for the increasing adoption of fintech services. With smartphones becoming more affordable and widespread, users gain access to a plethora of mobile apps and tools, leveraging the groundwork laid by the highly successful M-Pesa service for money transfers, which originated in Kenya on basic analogue phones.

Primarily, payment services and transfers remain pivotal, with significant focus on foreign remittances. The COVID-19 pandemic notably accelerated this trend. For instance, there exists a substantial Zimbabwean diaspora in South Africa that traditionally transported cash across the border. While the emphasis is on digital banking and payment solutions, lending is emerging as another significant growth sector, considering the sizable untapped market.

In Nigeria, for instance, credit penetration hovers at approximately 3%. Fintech companies are pioneering alternative approaches to credit scoring, leveraging AI and machine learning techniques, thus enabling them to undertake higher-risk lending, a domain from which traditional banks have largely retreated. As the fintech market in Africa evolves, there is a growing expectation for the development of other sectors such as wealthtech and insurtech.

Catalysts for Fintech Growth

Several unique factors are fueling the rapid rise of fintech in Africa:

  • High Mobile Phone Penetration: Africa boasts a booming mobile phone market, creating a readily available platform for accessing financial services through mobile apps.
  • Limited Traditional Banking Infrastructure: The inadequacy of traditional brick-and-mortar banks, particularly in rural areas, creates a void that fintech solutions can effectively address.
  • Growing Youth Population: Africa’s young, tech-savvy population is embracing mobile financial services, driving demand for innovative fintech solutions.
  • Government Initiatives: Many African governments recognize the potential of fintech and are actively creating supportive regulatory environments to foster innovation.
  • Increased Investment: Venture capitalists and international investors are recognizing the potential of African fintech startups, leading to a surge in funding.


The emergence of fintechs is ushering in a multitude of new dynamics, and it will be intriguing to observe how these unfold. In South Africa, challenger banks have embarked on a bold move by launching with zero fees – a significant departure in a market where fees were previously ubiquitous, even for basic banking services. Whether traditional banks will follow suit by reducing or eliminating their fees remains uncertain.

Incumbent banks are responding to these developments in various ways. Some are opting for a holding company license to establish their own fintech ventures, which are often separated from the core institution. Others are forging partnerships and collaborations with fintech companies. This arrangement can prove mutually beneficial: for the bank, it grants their customers access to fintech services, while for the fintech firm, the bank’s clientele serves as a ready-made distribution channel.

Fintechs also find such partnerships essential if they wish to attract investments, as thus far, no fintech has been granted a deposit-taking license. Regulatory frameworks in the region typically prohibit non-bank entities, including fintechs, from accepting deposits from customers. However, in certain markets, fintechs have managed to navigate around this hurdle by obtaining micro-finance bank licenses or by collaborating with licensed banks that serve as their deposit-taking partners.

Meanwhile, other traditional banks are focusing on enhancing their digital offerings, aiming to elevate the customer experience and introduce more innovative services. However, they encounter the challenge of being unable to match the agility of their nimble startup counterparts in terms of speed and flexibility.

The Transformative Impact of Fintech

Fintech is not just reshaping financial services; it is impacting individuals, businesses, and the broader African economy in profound ways:

Empowering Individuals:

  • Financial Inclusion: Fintech solutions, like mobile money platforms, enable previously unbanked populations to access basic financial services, including money transfers, savings, and microloans.
  • Convenience and Efficiency: Mobile financial services offer a convenient and efficient way to manage money, eliminating the need for travel to physical bank branches, especially in rural areas.
  • Enhanced Security: Fintech solutions can leverage blockchain technology and other innovations to provide secure and transparent financial transactions.

Boosting Businesses:

  • Access to Credit: Fintech platforms can provide small and medium-sized enterprises (SMEs) with access to much-needed credit, fostering business growth and job creation.
  • Improved Payment Systems: Digital payment solutions make it easier for businesses to receive payments from customers, streamlining operations and cash flow.
  • Data-driven Decision Making: Fintech platforms can provide businesses with valuable financial data and analytics, enabling better decision-making and financial management.

Transforming the Economy:

  • Economic Growth: By fostering financial inclusion, facilitating business growth, and promoting innovation, fintech can play a crucial role in driving economic growth across Africa.
  • Financial Stability: More efficient and transparent financial systems powered by fintech can lead to greater financial stability for both individuals and businesses.
  • Global Integration: Fintech solutions can facilitate cross-border transactions and investment, promoting Africa’s integration into the global financial system.



Although the outlook for fintech in Africa appears promising, with expectations of sustained rapid growth, a notable challenge looms large: the scarcity of talent. Fintech companies rely heavily on their software developers and engineers to conceive, sustain, and advance their services, and the continent is already grappling with severe shortages in this regard. Despite these challenges, the future of fintech in Africa is brimming with promise.  By addressing these challenges and fostering further innovation, fintech can continue to be a powerful force for financial inclusion, economic growth, and a more prosperous future for the African continent.

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James Falodun aka St James is a is a purpose and goal driven person with the passion to consistently invest time and resources into lives of people for a return of impact. I have worked in profit and non profit organization as a volunteer.

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