More and bigger deals were closed in Africa in 2021 as tech startups raised funds across the continent nearly $ 5 billion. This amount was twice that of the previous year’s investment, and nine What was surveyed five years ago, an indication of how much the startup scene has changed in recent years.
Fintechs dominated fundraising, accounting for nearly $ 3 billion, or two-thirds of all investments made by startups across the continent in the last year, a report of market insights, shows the company Briter Bridges. This amount was also more than twice as high $ 1.35 billion Investments made by fintechs in Africa in 2020 and triple the amount in 2019.
Among the greatest beneficiaries of fintech capital were Opay, which raised $ 400 million in Series C funding, Flutter wave, which received $ 170 million in one round of Series C, and TymeBank, which grossed $ 180 million in Series B. Jumo and MNT Halan raised $ 120 million, while the MFS Africa digital payment gateway raised $ 100 million. It did so when Zepz (formerly WorldRemit) raised $ 292 million in Series E funding while Chipper Cash behaved $ 250 million , Tala $ 145 million wave $ 200 million in funding sealed.
And, given the gradual funding of fintechs in Africa over the years, the capital injected into these startups is likely to only increase with increased cell phone usage and internet penetration.
The penetration of mobile subscribers across the continent is expected to increase by four percentage points to 615 million – half of the continent’s population – by 2025 according to the GSM Association. With the increasing adoption of lending, digital payments, banking and insurance services, it is also poised for greater growth.
Financial Technology Partners, an investment banking firm focused solely on fintech, in a past review of the sector in Africa said that the continent, with its rapidly growing population, some of the fastest growing economies and an underdeveloped financial services ecosystem, offers an attractive opportunity for fintechs.
“While the payment room starts to see scale-ups like Flutterwave, Chipper, MFS Africa, Cellulant, Jumo playing alongside global, established providers like Visa, Mastercard and Stripe, it will likely (in fact, we are already) in the next few years. see increased movement in other fintech verticals, from lending to KYC, SMB management software, and decentralized finance. That and larger M&A activity as the ecosystem moves towards maturity and consolidation, ”Dario Giuliani, director of Briter Bridges, told TechCrunch.
Offers by stages in Africa over the years. Credit: Briter bridges
Startups that specialize in digital / mobile payment have received the largest funding in recent years, followed by bank / loan startups and insurtechs.
The newest Data shows that the digital payments space in Africa has also seen the greatest growth in terms of funds received and total transaction volume in the last decade compared to other subsectors in fintech. The growth of fintechs is against the background of increasing phone ownership and deeper penetration of mobile money technology and the internet – all of which made it possible to bypass the sometimes restrictive traditional banking infrastructure.
Innovations relating to mobile money and digital payments have made it possible to process payments online and offline via USSD or STK commands, via apps or with the help of NFC technology.
“Africa has a massive population with no and no bank details, but its growing middle class, the proliferation of cell phones and the improvement of communications infrastructure make it uniquely conducive to fintech innovation and mobile financial services,” said Financial Technology Partners.
Emerging fintech services have put the bankless bank on the table, driving financial inclusion as its introduction solves some of the biggest problems businesses and individuals face – like sending and receiving money and accepting payments. For example, startups in the remittance sector such as Wari, sureRemit and Paga have made it possible for African residents to receive money from abroad easily and cheaply.
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Growth opportunities
Africa is considered to be the second fastest growing and most profitable payment and banking market in the world after Latin America this McKinsey study, and it just means that the fintech sector is likely to continue to attract investors who take advantage of the increasing growth opportunities.
The continent is already the world leader in mobile money adoption and is responsible for the majority of mobile money transactions made in 2020 – a year in which the number of mobile money accounts has increased by an increase 43%. The success of mobile money across the continent is likely due to the ease of access made possible by advances in telecommunications technology.
For example, M-Pesa, a mobile money service from East Africa’s largest telecommunications company, Safaricom, does not need an internet connection for its customers to send and receive money and pay utility bills – the wallet turns subscriber phone numbers into a kind of proxy for bank accounts. The service recently surpassed Voice and became Safaricom’s top earner after the platform’s revenues hit $ 745 million for the fiscal year ending March 2021.
Across the region (particularly in Kenya), M-Pesa has served as the anchor for a number of new services going online. In 2012, for example, Safaricom laid the foundation for the introduction of credit apps with the introduction of M-Shwari – a mobile-based savings and loan product. Since then, many more loan apps have hit the market, including Tala and Branch, which are supported by Silicon Valley. This now popular lQuit apps Use customers ‘mobile money transaction history to determine the amount of instant credit granted to borrowers – funds that are then deposited into customers’ mobile money wallets.
Such credit and banking startups have made credit available to the majority of the uncredited, previously banned from formal financial institutions due to lack of banking information.
Insurtechs have also thrived in recent years giving birth to innovative products that are affordable, enable micropayments, and cover growing risks, including climate change. Innovative products related to Insurtech have also promoted the acceptance of insurance products – although the penetration in sub-Saharan Africa (with the exception of South Africa) remains low compared to other regions.
As investments grew in 2021, most of the funding went to a small number of startups. An analysis by Briter, which includes data from both disclosed and undisclosed deals, shows an estimated $ 3 billion of the total went to 20 companies, while over 700 other startups raised nearly $ 2 billion.
