Businesses across the world have felt Covid-19’s impact, but it is financial technology, popularly called fintech, that has reaped its rewards. The rapid acceleration towards digital solutions in payments, can be directly attributed to this pandemic’s legacy and how fintech companies are innovating today’s banks, with new ways for customers to pay for goods and services.
This digital transformation of financial services is well underway, with new ways to make purchases, withdrawals, savings and get credit — a sign that the world is making a steady shift towards a cashless global electronic economy, with Africa for once, being in that mix.
Fintech funding reached a record $132B in 2021, more than 2x the 2020 mark. To put that into perspective, one out of every five dollars of funding last year went to fintech! Every major fintech category from payments to peer-to-peer lending saw an increase in investment, signalling there’s a big interest for this space among investors everywhere
According to Business Insider Africa, African startups raised a record $4.65 billion in disclosed funding in 2021 on the back of investments, in everything from financial services to fresh produce distribution. TechCrunch says this was double the previous year’s investment, and nine times what was raised five years ago, giving an indication of how much the African startup scene has accelerated over the last few years.
Of the near $5 billion raised last year, 62% or nearly $3 billion went to fintech startups, which is more than double the amount they raised in 2020 and triple what was raised in 2019. The rest went to other sectors such as health and biotech (8%), logistics (7%), education (5%), cleantech (5%), agriculture (4%), eCommerce (3%), mobility (3%), data & analytics (2%) and others.
With increasing access to smartphones and mobile internet, as well as a growing middle class, Africans are turning to digital payments in ever-greater numbers in places like my home country Nigeria, where 50% of our 200 million people remain unbanked but according to the Nigeria Communications Commission (NCC) have nearly 200 million active mobile phones. This provides a significant opportunity for investments into the over 200 fintech companies operating in the Nigerian market alone, according to McKinsey.
