Africa’s FinTech landscape has grown at an annual rate of approximately 24% over the last 10 years
Johannesburg, 17 January 2019
- FinTech growth in Africa is primarily fueled by South Africa, Kenya and Nigeria
The EY report “FinTechs in Sub-Saharan Africa: An overview of market developments and investment opportunities” reveals that the FinTech landscape in Africa has grown at an annual rate of approximately 24% over the last 10 years — fueled by the continent’s three main hubs of South Africa, Kenya and Nigeria. In addition to the three main hubs, recent developments have shown encouraging signs of FinTech growth in Ghana, Uganda, Cameroon and Rwanda.
Jan-Erik Behrens, Partner, Transaction Advisory Services – EMEIA Financial Services, EY Germany, says:
“Sub-Saharan Africa (SSA) represents sizeable opportunities for FinTech investments due to its unique economic and demographic environment. The region is characterized by a less-developed financial infrastructure and a large portion ie about 60% of unbanked population. By providing access to financial services to this population, FinTechs have the potential to profoundly change the financial services landscape and play a pivotal role in improving financial inclusion.”
The EY FinTechs in Sub-Saharan Africa report reveals that the FinTech sector in SSA comprises more than 260 active companies. These active companies are split into local (80%) and international (20%) players. The international FinTechs originate from the UK, the US, Europe, Canada, India and China. Behrens says, “International investors have overcome their reservations about the SSA sector and have started to invest at an increasing rate. Apart from seeking potentially high returns on investments, many investors are driven to the FinTech segment by the opportunity to combine the growth potential of financial inclusion with the positive social impact, as well as a means of diversifying their portfolios.”
South Africa, arguably the epicenter of SSA FinTechs, harbors about a third of the firms, predominantly in Cape Town and Johannesburg. As the most diversified hub, it exhibits great similarities to more developed markets. The sector has an extensive network of venture capitalists and angel investors and is home to many accelerators and incubators.
Kenya, the second largest SSA FinTech hub, hosts around 20% of the entire SSA FinTech landscape, and has a stronger focus on the payments segment. The Kenyan hub is located in Nairobi, which is home to more than 50 FinTechs. FinTechs are already one of the main drivers for financial inclusion in SSA.
Nigeria is the SSA FinTech sector’s third largest hub, with most of its FinTechs based in Lagos. Like Kenya, the Nigerian FinTech sector is dominated by the payments segment.
Behrens says, “Both private and public investors worldwide have started to pay more attention to the development of FinTechs in SSA as is evidenced by a steady increase in investments in the SSA FinTech market. Overall, the sector exhibits promising signs of accelerating growth, ample investment and new business opportunities.”
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