The number of tech startups in Africa has been rising steadily over the last few years, fuelled by increasing smartphone ownership, declining internet costs, expanded network coverage, and a rapidly urbanising young population.
By Mili Soni, knowledge lawyer at Bowmans
Our guide to fintech trends in Africa for 2024, outlines the key trends and developments that have shaped the fintech landscape in various jurisdictions, including Botswana, Ethiopia, Kenya, Mauritius, Namibia, Nigeria, South Africa, Tanzania, Uganda and Zambia.
The guide reveals that, despite the prevalence of global economic challenges, investors continue to display confidence in the potential of African fintech. While venture capital investment remains robust in countries such as South Africa, other African startups have diversified their funding sources to include debt financing, government-backed funding initiatives, corporate venture capital funds, incubators and angel investors.
Africanisation of global technology
The fintech horizon is expected to continue evolving with trends such as the Africanisation of global tech and the rise of embedded fintech.
Fintech is penetrating all sectors, including insurance, savings and investments, utilities, mining, trade, healthcare, and education. Non-fintech firms are also integrating digital financial services into their offerings. African startups have continued to adopt an international approach, with several firms expanding their services worldwide.
This trend includes acquisitions outside the continent and the expansion of fintech services globally.
Solutions for the unbanked
A significant portion of the African population remains unbanked. Fintechs in Africa have been providing solutions to create seamless, borderless transactions, aiming to tap into this large market. Many banks have also been partnering with new fintech companies to solve this problem.
The digital payments market in Africa
Digital banking and mobile money have experienced a surge in Africa. Services like M-Pesa have become successful mobile phone-based financial services in the developing world. The digital payments market has matured faster in Africa than in Europe, with the number of electronic payment transactions growing exponentially.
Fintech digital technology systems and the ‘buy now, pay later’ (BNPL) models have seen a surge in consumer adoption.
Leveraging AI and blockchain
The convergence of AI technologies introduces a spectrum of emerging trends and opportunities. AI, blockchain, cloud and data are central to the function of FinTech technologies and are being leveraged to the advantage of African fintech firms.
Blockchain technology has made significant inroads in Africa, enabling smoother domestic payments, cross-border transactions, peer-to-peer lending and supply chain finance. This technology is also being leveraged for inflation hedging.
Regulations and licences
Regulatory developments are shaping the FinTech landscape in Africa. Fintechs have acquired new licences and expanded across Africa. Mobile network operators (MNOs) have become more active in the fintech space.
The potential for MNOs to be granted mobile money licences has increased competition with traditional banking institutions, especially in West Africa where there is a focus on mobile and online banking.
Looking forward
The African fintech industry has shown remarkable resilience and innovation over the last few years. Despite challenges, the sector has experienced significant growth and is poised for even more expansion in the coming years.
The fintech sector in Africa is at a crossroads, with innovation driving change and regulation shaping the future. The need for a balanced approach to regulation that fosters innovation while protecting consumers and maintaining financial stability is self-evident.
The future of fintech in Africa is bright and presents exciting opportunities that will revolutionise financial services on the continent.